Nightmare on Sesame Street by Institute for Global Labour and Human Rights

NIGHTMARE ON SESAME STREET

“Ernie” Made in Chinese Sweatshop

National Labor Committee 75 Varick Street, Suite 1500 New York, NY 10013 Tel: 212-242-3002 Fax: 212-242-3821 www.nlcnet.org nlc@nlcnet.org Research: Charles Kernaghan, Barbara Briggs, Jonathann Giammarco, James Saylor, Danielle Rosenthal Design: Tomas Donoso July 2008

TABLE OF CONTENTS Introduction

Executive Summary

Kai Da Toy Factory

Chinese Toy Workers Speak Out

All Temps Hired on Six Month Contracts

Excessive Hours

“Ernie” Sesame Street Toy to be Released on July 15, 2008 Made by K’Nex in a Sweatshop in China Wages: Workers Systematically Cheated of Half the Wages Legally Due to Them

“Ernie” on the Assembly Line—Sweating for Pennies

Workers housed in Primitive dorms

Workers IN CHINA HAVE COME TO DISLIKE ERNIE

Will Sesame Street, K’NEX and Hasbro Do the Right Thing?

CHINA SUBSIDISES TOY EXPORTS

Company Information

One toy worker asked parents who purchase the Ernie toy to—“think of how much sweat and tears we paid in order to make these toys.”

Photographs smuggled out of Ka Dai factory.

Introduction By Charles Kernaghan Why is it we never have the chance to meet the Chinese workers? In China, the busy toy season is already in full swing as thousands of factories work around the clock churning out millions of holiday toys, which will start arriving in the United States and Europe by September. Like last year and the years before, the American people will spend over $21 billion on 3.6 billion toys this holiday season. At least 85 percent of these toys are made in China by three million mostly young women workers toiling long hours in 8,000 factories. And these are only the factories that have export licensees, leaving aside the many smaller subcontract toy plants. Just stop to think of it for a second. Year after year we purchase tens of billions of dollars of toys and sporting goods made in China by more than three million mostly young women, yet we have not had the chance to meet or hear from any of these workers—not a single one, not even once. There is, of course, a reason for this. The corporations do not want us to know the conditions under which their toys are made. Corporations like Sesame Street, K’NEX, Hasbro and others want to move the harsh factory conditions and low wages faced by the young toy workers as far away as possible from the clever and sweet images they use to advertise their toys. This report on the abusive sweatshop conditions under which Sesame Street’s ‘Ernie’ is made by K’NEX at the Kai Da factory is a modest first step to allow the parents and children who purchase these toys to hear directly from the young workers in China who make them.

Eight workers share each dorm room, sleeping in narrow, double-level metal bunk beds. The workers drape old sheets or pieces of plastic over their cubicle openings for privacy. The dorm rooms lack water or a toilet.

Photographs smuggled out of Ka Dai factory dorm.

Nightmare on Sesame Street “Ernie” Made in Chinese Sweatshop • Sesame Street's Kid K’NEX “Ernie” construction toys are made at the Kai Da factory in Shenzhen City, China, by 600 mostly young workers, including a hundred 16 year old high school students, and even several children. The child workers were seen in the factory in April, which is exactly the time a local newspaper in China exposed that hundreds, if not thousands of children were trafficked from Sichuan Province to the south of China, where they worked under slave labor conditions in toy and other assembly plants. • Every single labor law in China is systematically and grossly violated at the Kai Da Toy factory. • Illegally, all workers are hired as temps with contracts lasting just three to six months. Once inside the factory, workers cannot leave until their contracts expire.

all-night shifts before the toy shipments must leave for the U.S. or Europe.Workers are typically at the factory 103 hours a week. All overtime is mandatory, and the 49 hours of overtime worked each week exceeds China’s legal limit by 489 percent! • Workers are systematically cheated of half the wage legally due them. Many workers earn just 43 cents an hour which is 31 percent below Shenzhen City’s minimum wage of 62 cents, which is itself not a subsistence level wage. Workers are paid just $36.55 for working an 89-hour week, including 49 hours of overtime. They should have earned at least $77.84. Management routinely cheats the poor workers of over $100,000 a month in wages due them. After deductions for primitive room and board, take home wages can drop to just 28 cents an hour.

If anyone does quit, they will be docked one-month’s wages. • Routine 13-14-15 hour shifts, from 8:00 a.m. to 9:00, 10:00 or 11:00 p.m., seven days a week, with the workers toiling for months without a single day off. There are also mandatory 19 and 23 ½ hour

NIGHTMARE ON SESAME STREET • Workers sweat as they race to assemble 50 Ernie toys per hour, and up to 650 in a 13-hour shift. The workers are paid less than a penny for each toy they assemble. Workers must complete one operation every four seconds, 950 per hour, and 12,350 options in the 13 hour shift. • Workers handle potentially toxic oil spray paints and solvents without being provided even the most rudimentary protective gear. • Workers are denied basic work injury and health insurance, despite the fact that this is mandatory under China’s laws. • Eight workers share each dorm room, sleeping in narrow, double-level metal bunk beds. The workers drape old sheets or pieces of plastic over their cubicle opening for privacy. The dorm rooms lack water or a toilet. • The workers’ cafeteria is filthy, with grease on the floor and infested with mice. For breakfast the workers are fed a rice gruel. The egg soup, which is in a dirty vat, is made with just 34 eggs to serve 600 workers. The so-called meat dishes have little or no meat.

• One toy worker asked parents who purchase the Ernie toy to—“think of how much sweat and tears we paid in order to make these toys.” • K’NEX is an official licensee of Sesame Street Toys. Hasbro owns 4.5 percent of K’NEX’s international operation. • Parents and children should demand that Sesame Street, Hasbro and K’NEX immediately clean up the Kai Da Toy factory and take concrete steps to guarantee that the legal rights of the workers will finally be respected. There is absolutely no reason why these powerful toy companies could not pay fair wages and treat the workers as human beings. • The American people purchase $21 billion-worth of toys each year—more than 85 percent of which are made in China.

Kai Da Toy Factory Xixiang Town, Bao’ An District Shenzhen, Guangdong Province China Phone:

(86) (755) 2748 3255

• The Kai Da Toy factory is owned by Hong Kong investors who established the company 22 years ago in 1986. A new Kai Da factory building was completed at the end of 2003. • Approximately 600 workers. • Production: Mostly plastic toys such as ‘Ernie’ and other Sesame Street construction kits; cars; helicopters; train and village sets, for export to the U.S. and Europe. According to worker estimates, production for K’NEX makes up about 80 percent of total factory output. Workers in the molding department say they also produce for Hasbro. K’NEX is an official licensee of Sesame Street toys. There appears to be some confusion. K’NEX claims it manufactures 95 percent of its toys in the U.S. and only ships the pieces to China for assembly. However, workers at the Kai Da Toy factory believe they are producing entire K’NEX toys and not merely assembling them. In fact, the Sesame Street Kid K’NEX Construction toy kits state that the standard parts are made in the U.S.A., while the special components are made in China and that Sesame Street’s Ernie is assembled in China. K’NEX should clarify exactly what the “special components” are. There is a very close relationship between K’NEX and Hasbro. Hasbro owns 4.5 percent of K’NEX’s international operation and 10 percent of its domestic operation.

Product photograph smuggled out of Kai Da factory.

All temps hired on three to six month contracts: Workers describe management at the Kai Da plant as chaotic, with a high turnover rate as new workers are always entering as others are quitting. One worker described the situation like this: “Every day there are workers coming in and out. New workers can just notify management and start working. Anyone can go in and out there.” Sixty to seventy percent of the workers come to the factory through numerous recruiting agencies, which sign contracts with factory management. The manpower agencies then sign contracts with the workers, generally lasting six months. The majority of workers at the Kai Da Factory come from Sichuan Province, where recruiting agencies play a major role in transporting young workers hundreds of miles south to work in toy and other assembly factories in Guangdong Province. Only a minority, 30 to 35 percent, of the workers are hired directly by the factory, but these workers are also only hired on a temporary basis. If the workers pass a three day probation period, they are typically hired on contracts lasting just three-months. During the three-day probation period, the workers receive free food and accommodation. (continue on top of page )

China’s Toy Workers Speak Out Sesame Street’s “Ernie” Made by K’NEX in China

Ernie Toy Worker #1: Young workers forced to toil a grueling 23 ½hour shift, from 8:00 a.m. to 7:30 a.m. the following morning…Everyone was exhausted and broken…eyes closing…feeling dizzy…forced to work faster…needing permission to use the toilet…and anyone who had to leave, even after 22 hours of work, would be docked the whole day and night’s wages for daring to leave “early.” (continue on bottom of page 8)

NIGHTMARE ON SESAME STREET Once the workers sign their three to six-month contracts, no one can leave the factory. Quitting is prohibited. No matter how serious the reason, if any worker must leave the factory, he or she will forfeit a full month’s back wages as punishment. (Management—again illegally—always withholds one month’s back wages.) Illegally, workers are not allowed to keep a copy of their contract, which is retained by management.

“I worked in the hydraulic cutting and press department. On the morning of May 31, it seemed the factory had a rush order. All the workers in my department were told to work in the assembly department at 8:00 a.m. None of us had worked in the assembly department before, but management didn’t care. We worked until 12:00 p.m. to have lunch. At 1:00 p.m. we resumed working. We were working nonstop, but the supervisor still kept telling us to work faster. We took a break at 5:00 p.m., but we had to work again from 6:00 p.m. After a while the manager told us that we had to work overnight until 7:00 a.m. tomorrow morning. So we continued working. At around 3:00 a.m., I wanted to go to the bathroom. I asked the group leader to take my shift for a moment. But he said he was too busy, although he was only hanging out over there. I said I hadn’t gone to the restroom the whole day. He said, hold it. I didn’t care anymore. So I went to the toilet. Working overnight was really exhausting. I was hardly awake while working. I don’t know if the products I made had any problems. Everyone else was the same. All looked beaten. As long as there was a free moment, I would close my eyes to rest, even if just for several seconds. I could hardly keep my eyes open during work and felt very sleepy. But the assembly line was always moving. If I stopped, the products would pile up. So (continue on bottom of page 9)

Excessive Hours • • • • •

Workers at the factory 103 hours a week. Routine 13-14-15-hour shifts, from 8:00 a.m. to 9:00, 10:00 or 11:00 p.m. Seven-day workweeks—going for months without a single day off. Some all-night 23 ½ hour shifts. Mandatory overtime exceeds China’s limit by 489 percent!

Typically, Kai Da toy workers are required to toil three or four hours of overtime a night from 8:00 a.m. to 9:00 p.m. or 10:00 p.m. The assembly and spray paint departments routinely work a 14-hour shift, while some other departments may be allowed out “early” at 9:00 p.m. There are no scheduled weekly days off. If a worker is lucky, he or she will receive one day off a month, usually pay day. Otherwise, workers can go for months at a time without a single day off. (continue on top of page 10)

I couldn’t stop for a second. Three o’clock, four, five, six… Time passed second after second. So slow! At 6:00 a.m., the sky began to brighten. But we still had not finished our quota. Some other assembly lines finished, and they went to rest. By 6:30 a.m. we still had over 900 pieces unfinished. By our speed, we would have to work until 9:00 a.m. to complete it. The supervisor said that we could get off once we finished. But we couldn’t take the fatigue anymore. The group leader still told us to work faster. One girl said, ‘I’m about to pass out.’ A girl from the next assembly line couldn’t stand it and walked away. The group leader threatened her, ‘If you leave now, I’ll count it as an absence without leave and you won’t get paid!’ Under such pressure, the girl went to the restroom and came back to work. By 7:00 a.m., we still hadn’t gotten (continue on bottom of page 10)

NIGHTMARE ON SESAME STREET If workers are forced to toil an all-night shift, they will be allowed the following day off. Some all-night shifts stretch from 8:00 a.m. to 7:30 a.m. the following morning, or 23 ½ hours straight. During the busiest periods—which is currently the case this May and June—workers are routinely toiling from 8:00 a.m. to 11:00 p.m., a 15-hour shift, including five hours of overtime a night. In May, workers also reported being kept for 18 to 19-hour shifts stretching from 8:00 a.m. to 2:00 or 3:00 a.m. the following morning. Even on weekends, which are supposed to be the workers’ days off, they are regularly kept toiling until 10:00 p.m. and not allowed out “early” at 5:00 p.m., as is the practice at some other factories. Right now the factory is so busy that the cafeteria staff is delivering food to the factory, especially to the injection molding department, so the workers can save time by eating at their workstations without having to walk back and forth to the cafeteria. In this case, rather than receiving an hour break for lunch and supper, the break is cut back to around 30 minutes. During such busy periods, the workers are at the factory 103 hours a week, while actually toiling 89 hours, including 49 hours of overtime, which exceeds China’s legal limit on permissible (continue on top of page 11)

off work. Everyone was listless. I almost broke down. By 7:28 a.m., when we didn’t have any energy, the supervisor let us leave the workshop. Afterward, I walked to the dorm. On the way, I felt my body was very light and I couldn’t walk steady. Never did I want to sleep so eagerly. When I got to the dorm, I fell into bed to sleep.”

overtime by 489 percent. Monday through Friday, the workers are at the factory 15 hours a day while toiling 13 hours. On Saturday and Sunday, the shift is 14 hours a day, from 8:00 a.m. to 10:00 p.m., with two hours off for lunch and supper. All overtime work is strictly mandatory.

Routine 14 to15-Hour Shift • • • • •

8:00 a.m. to 12:00 noon (work /4 hours) 12:00 noon to 1:00 p.m. (lunch/ 1 hour) 1:00 p.m. to 5:00 p.m. (work/ 4 hours) 5:00 p.m. to 6:00 p.m. (supper / 1 hour) 6:00 p.m. to 10:00 or 11:00 p.m. (overtime/ 4 to 5 hours)

Even when the factory enters “slow” periods, the workers still toil eight hours a day, seven days a week for a total of 56 hours, including 16 hours of overtime, which exceeds China’s legal limit on overtime by 93 percent. The regular legal workweek in China is eight hours a day, five days a week, for a total of 40 hours. By law, overtime cannot exceed 36 hours a month. (continue on top of page 12)

Ernie Toy Worker #2

from Guanxi Province:

Sixteen-year-olds work 13 to 14 hours a day, seven days a week for wages of just 43 cents an hour, [31 percent below the legal minimum wage of 62 cents]… Some all-night 19-hour shifts from 8:00 a.m. to 5:00 a.m. the following morning… tired and bored… housed in crowded dorm and fed rice gruel for breakfast. “My teacher organized us to work here. We are over 100 people in total… Those who came are registered to study in a specialized [technical training] high school. We are all 16 or older. “We are paid 3 RMB per hour [43 cents U.S.]. Each month the teachers only give us 100 to 200 RMB [$14.40-$28.80) to spend. The teachers keep the remaining money. They say it will go (continue on bottom of page 12)

NIGHTMARE ON SESAME STREET Workers are required both to swipe their cards when they enter the factory and to sign up with their group leader. If representatives from Sesame Street, K’NEX or Hasbro paid a surprise visit to the Kai Da Toy factory, they might be able to obtain these real time records. (When corporate audits are announced in advance it is very common for factory management to prepare doctored employee wage and hour records.)

34 Million Toys and Other Products Recalled From China In the seven months between June and mid-December 2007, more than 34 million toys and other products made in China were recalled by U.S. companies. International Herald Tribune, Bloomberg News, December 21, 2007.

into our tuition fund. [Tuition fees are 1,100 to 1,500 RMB per semester, $158.40 to $216.] They also deduct 50 RMB each month [$7.20] from our salary for ‘management fees.’ “I feel bored working here. Work hours are long, 13-14 hours every day. The supervisors say that the orders are urgent these days. So [we have to work] overtime. Last night we worked until 5:00 a.m. [a 19-hour shift]. After working in the workshop for a long time, I feel very tired. “The food is not good. There is no oil in the dishes. Breakfast is only congee [rice gruel] and a steamed bun. None of them is tasty. Meat dishes rarely have meat. “The conditions in the dorm are rather bad. Now there are six people in the room. We have to shower in the restroom.”

“Ernie” Sesame Street Toy to be Released on July 15, 2008 —Made by K’NEX in a Sweatshop in China— “Ernie’s” Sesame Street Lid Kids Canister, made/assembled by K’NEX in China, is being released on July 15, 2008 and will retail for $10.99. “Each Lid Kids Canister features the colorful, oversized, easy-snap KID K’NEX pieces in a fun-faced container. Their uniquely packed sets also include fun stickers and an educational activity sheet along with all the necessary character building pieces. “The first wave of “Sesame Street” KID K’NEX building sets will be available in July 2008 at retail stores nationwide.”

NIGHTMARE ON SESAME STREET Wages: Workers Systematically Cheated of Half the Wages Legally Due to Them • Temporary workers—making up 60 to 70 percent of the workforce—are paid just 43 to 50 cents an hour, 19 to 31 percent below the legal minimum wage of 62 cents an hour—which is in itself nowhere near a subsistence level wage. After deductions for primitive room and board conditions, the temps’ take home wage amounts to just 28 to 35 cents an hour. • Including mandatory overtime, temps are routinely cheated of 53 percent of the wages legally due them, earning just $36.55 for working a grueling 89 hour week, instead of the $77.84 they are legally owed. Even workers directly hired by the factory are still cheated of 49 percent of the wages due to them, earning just $39.88 a week, instead of the $77.84 also owed them. • Factory management cheats these poor workers of over $104,000 a month in wages legally due to them. (continue on top of page 15)

Ernie Worker #3

from Shaanxi Province:

Forced overtime, seven days a week… feeling very tired… wanted to quit but was not allowed…little savings. “I work in the assembly department. The hours are long. Every day I have to work 11 or 12 hours. Now the factory is rushing production orders, so overtime is especially long. I cannot rest well. So [I feel] very tired. I earn about 900 to 1,100 RMB a month [$129 - $144]. [Note: this worker was required to work 77.6 hours a week, including 37.6 hours of mandatory overtime, and should have earned at least $66.07 for the week and $286.30 for the month. Instead she was paid just an average of $136.80 per month, which is a little less than half of what she was legally owed]. (continue on bottom of page 15)

• Despite enduring grueling 13-to-15-hour shifts, seven days a week, while living in primitive dorms, the workers report they are able to save just $10.00 to $13.29 a week. • Illegally, factory management withholds one month’s wages from the workers. Every worker is cheated: The legal minimum wage in the Bao’an District of Shenzhen City where the Kai Da Toy factory is located is 750 RMB a month, or $108, based on the regular 40 hour workweek. Legal Minimum Wage (750 RMB a month) • 62 cents an hour • $4.97 a day (8 hours) • $24.83 a week (40 hours) • $108.80 a month • $1,296.00 a year

(Exchange rate of 6.9444 RMB = $1.00

(continue on top of page 16)

U.S./Wall Street Journal, May 29, 2008)

“It’s true that overtime is long right now. It’s just I feel tired. I’ve written a resignation application twice, and both were rejected. [Note: If she left without permission, as punishment, management would confiscate one month’s back wages.] “I don’t know about the labor law. I signed a contract when I came. But there was only one copy of the contract and the factory took it. “Living expenses are very high in Shenzhen. I don’t have much money up to now.”

NIGHTMARE ON SESAME STREET All overtime work—which must be voluntary—is limited to no more than 36 hours per month and must be paid at a premium. Weekday overtime should be paid at a 150 percent premium, or 93 cents an hour, while work on weekends must be compensated at a 200 percent premium, or $1.24 per hour.

At the Kai Da Toy factory every wage law is systematically violated. As already mentioned, 60 to 70 percent of the toy workers at the factory are hired as temps by various recruiting agencies who place them at the Kai Da factory. The various recruiting agencies pay different wages, ranging from three, to 3.2 to 3.5 RMB, or $.43, $.46, to 50 cents per hour, all of which are well below the legal minimum of 62 cents. The temporary workers are systematically cheated of 12 to 19 cents per hour, or 19 to 31 percent of the wages legally due to them. It gets even worse, as the temporary workers are routinely robbed of the legal overtime premiums they are owed. Formal workers, who are directly hired by the factory, are also cheated. Formal workers earn close to the legal minimum wage, but are grossly underpaid for overtime. Factory management pays a standard overtime rate of (continue on top of page 17)

Ernie Toy Worker #4 from Liangshan, Sichuan: Recruiters traffic young people from Sichuan Province—including teenagers and even several children—to work at the Kai Da Toy factory in the South of China… Paid just 46 cents an hour. “There were seven of us when we came. It was our head [labor contractor/recruiter] who brought us here from our hometown. We listen to him in everything. “I was in the second year of high school before I came. “Our hometown is very poor. Many workers were brought out by others [recruiters]. This factory has many people from our region. They were brought by different heads [labor contractors]. “The hourly rate is 3.2 RMB per hour [46 cents]. [Note: The legal minimum wage is 62 (continue on bottom of page 17)

no more than 5 RMB per hour, or 72 cents, which is well below the legal 93-cent rate for weekdays and $1.24 rate for weekend overtime. For working an 89-hour week, which was routine in May and June, the workers—both formal direct hires and temps—should have earned at least $77.84. The legal minimum wage for the regular 40 hours of work is $24.83 while the 25 hours of weekday overtime should have been paid at $23.25, and the 24 hours of mandatory weekend overtime at $29.76; for a total of $77.84 a week and $337.31 a month. This is certainly not a huge amount of money, as the workers would be earning an average of just 87 cents an hour, including the 49 hours of required overtime each week. (continue on top of page 19)

cents an hour, meaning this young worker is cheated of 26 percent of her regular wages.]

[Note: It was exactly at this time, in April 2008, that a local newspaper in Guangzhou City revealed that hundreds,

“There used to be a few children working here. Some days ago [in late April 2008], their group left.

not

were

thousands, trafficked

children

from

Sichuan

Province to the South of China where they worked under slave

“Working outside is not as good as staying at home. But I have no alternative. My family is poor. When I work outside, I can still send some money home.”

labor conditions in toy and other assembly plants.]

Another worker (#5) described one of the child workers: “He was about 5-foot 3 inches and weighed about 95 pounds. He looked haggard.”

NIGHTMARE ON SESAME STREET Hundreds—if not thousands— of Children Sold as Slaves To Work in China’s Toy and Garment Factories In April 2008, the Southern Metropolis newspaper in Guangzhou City broke the story that hundreds, if not thousands, of children from impoverished areas in Liangshan Prefecture in Sichuan Province were being sold to work as slave laborers in booming toy and garment factories in the south of China. As of late April, government authorities said they recovered over 100 children just in factories in Dongguan City. The children—13 to 15 years old—were forced to work 70 hours a week for wages averaging 43 cents an hour, which is well below China’s legal minimum wage of 62 cents an hour—which itself is not a subsistence level wage. Labor recruiters working in Liangshan would transport the children more than 600 miles south, where they were sold to factories. According to The New York Times, (NYT, May 1, 2008, “Child Labor Cases Uncovered in China” by David Barboza), “The newspaper [Southern Metropolis] said recruiters and labor agencies working in Liangshan often transported the children south and then ‘sold’ them to factories at virtual auctions in Guangdong Province, one of China’s biggest manufacturing centers and home to a huge population of migrant workers. “At some coastal factories, children were even lined up and selected based on their body type, the journalists wrote. “In its report, Southern Metropolis said some children were threatened with death if they tried to escape from labor recruiters.” A typical contract between a labor recruiter and factory management was as follows: “Party A [the factory] guarantees Party B [the recruiter] that the workers clock a total of 300 hours per month. If Party A cannot fulfill the stipulated number of hours for any reason, then Party A will provide monetary compensation for the shortfall of hours worked to Party B. Party A must not pay the salaries or any other fees directly to any of the workers of Party B; both parties must keep this arrangement secret, so as to avoid unnecessary trouble.” (China Labor Bulletin, May 21, 2008) [Note: This contract would require a minimum 70-hour workweek including 30 hours of overtime each week, which exceeds China’s legal limit by 261 percent.]

Mandatory 7-day, 89-hour Workweek ($77.84 a week / $337.31 a month)

$ 24.83

• Weekday overtme, five hours per day, Monday-Friday: (5 days x 5 hours = 25 hours; 25 hrs x $0.93 = $23.25)

$ 23.25

• Regular 40 hours of work:

• Weekend overtime, 12 hours per day: $ 29.76 (12 hours per day x 2 days = 24 hours; 24 x $1.24 = $29.76) Total: $77.84/week and $337.31/month

Despite working overtime every single day of the month, the temporary workers still report earning just 900 to 1,100 RMB per month, or $129.60 to $158.40, which is less than half of what they are owed. Even if we take the highest temp wage of 1,100 RMB per month, this is just $36.55 a week, which means—at best—the temps are being cheated $41.29 each week, or 53 percent of the wages legally due to them. (continue on top of page 20)

Fifty-nine Percent of U.S. Toy Jobs Lost The U.S. toy industry declined from a high of 42,300 jobs in 1993 to just 17,400 in 2005. In the 12-year period, the U.S. lost 24,900 jobs, or 59 percent of the total.

NIGHTMARE ON SESAME STREET They should have earned at least $77.84 for the 89-hour workweek and not the $36.55 they were in fact paid. Formal workers, or direct hires, fair just slightly better than temps. Formal workers report earning 1,100 to 1,200 RMB per month, or $158.40 to $172.80, despite also being required to work overtime every day of the month. Again, if we take the highest wage of $172.80 a month and $39.88 a week, this means that the formal workers are also being cheated of $37.96, or 49 percent, of their wages legally due to them. Instead of earning the $77.84 owed to them for the 89 hour workweek, they were paid just $39.88.

Robbing the young toy workers puts over $100,000 a month into the pocket of management. Crime pays at the Kai Da Toy factory, where 390 temporary workers are cheated of $41.29 in wages legally owed to them each week, while another 210 formal workers are each robbed of $37.96 a week In the course of a week, the temps are collectively robbed of $16,103, while the formal workers are cheated of $7,972, for a total of $24,075 each week. Management is robbing their poor toy workers of $104,324 a month. (continue on top of page 21)

Ernie Toy Worker #6 from Sichuan Province: Young workers exposed to potentially toxic oil paints and chemical solvents…not provided with even the most rudimentary protective gear such as gloves or cheap disposable respiratory masks. “I work in the oil spray painting department. I know oil paint is harmful to the human body. But the factory does not provide any protective equipment. I wanted to quit earlier, but didn’t get permission.” Another worker (#7) related the following: “One worker in my dorm is from the oil spray paint department. His hands are full of yellow oil paint. There’s also paint in his nose. It can’t be washed off. He said, ‘F*#k, what kind of garbage factory is this!” We all feel the same.” (continue on bottom of page 21)

Factory owners in China—as elsewhere—are often not angels and if they can cheat the workers and get away with it, they will. Also, the local labor bureaus in China, for whatever reason, are extremely lax in attempting to enforce China’s labor laws. But another critical factor in robbing the workers is the constant drive by U.S. companies like K’NEX, Hasbro, and Sesame Street to cut the prices they are willing to pay their contractors. They are also responsible.

A take-home wage of just 28 to 35 cents: After factory management deducts $36 a month for primitive room and board conditions, the temporary workers’ take home wage actually drops to just 28 to 35 cents an hour.

Workers report saving just $9.97 to $13.29 a week Despite all their sacrifice, being required to work 12 to 13 hours a day, seven days a week, often going for months without a single day off, while being housed in crowded, primitive dorms and fed, at best, tasteless and limited (continue on top of page 22)

[Note: Spray painting without proper protective gear does expose workers to health hazards from paint coming into contact with the skin and inhalation of spray materials. Short term harm includes burns to the skin and eyes; vomiting and diarrhea; irritation to the nose, throat and lungs, dizziness and fatigue. Long term potential damage can lead to lung cancer, kidney and liver failure and damage to the reproductive system. Solvents such as benzene can also be absorbed through the skin or by breathing it in. Short term effects can be nausea, headaches and tiredness, while serious long term exposure can result in anemia and leukemia.]

NIGHTMARE ON SESAME STREET food, the workers report being able to save just $9.97 to $13.29 each week to send home to their families. And remember, they are often toiling 89 hours a week. The workers explain that their basic expenses average about $79.20 each month, including snacks, toilet articles, phone calls to their families, occasional clothing purchases, medical expenses, and so on. With the toy workers earning anywhere from $158.40 to $172.80 per month, this means the workers are able to save just $9.97 to $13.29 per week, $43.20 to $57.60 a month, and $518.40 to $691.20 a year.

Illegally, management withholds one month’s wages. Workers are paid their previous month’s wages on the 25th of the following month, which is illegal. China’s law mandates that employers pay their workers no later than the first week of the following month. Also, workers do not receive pay stubs or any record of how their wages are calculated.

Ernie Worker #8: Factory cafeteria is filthy and the food terrible…600 workers share an egg soup prepared with just 34 eggs…mice scurry around the cafeteria floor. “The food is not good. The dishes don’t have any cooking oil. There is no taste except for salt. The [cafeteria] floor is covered with water and grease. The eating utensils are dirty, dark and full of grease. The soup is in a big vat. The vat is also dirty. There’s very little egg in the soup. Altogether, maybe just 34 eggs. But there are so many workers, [approximately 600]. For the rest of us, the soup is just like water. There are mice running around the cafeteria.” Another worker (#2) has already commented that: “The meat dishes rarely have meat.” [Note: The factory cafeteria is located on the first floor of the workers’ dorm and can hold (continue on bottom of page 23)

“Ernie” on the Assembly Line — Sweating for Pennies: K’NEX claims that 95 percent of its toys are made in the U.S. But the workers at the Kai Da factory in China believe they are manufacturing complete K’NEX toys, including Ernie. The workers say the process starts in the machine cutting department where the plastic components—believed to be a sort of polypropylene (PP)—are cut to size and shape. The cutting department is very noisy and at times almost unbearable if any of the machines are malfunctioning. The cut pieces are then brought to the assembly lines. There are approximately nine assembly lines at the factory with—depending upon the nature of the operations—anywhere from 13 to 40 workers on each line. On the ‘Ernie’ K’NEX line there are 20 workers, and sometimes a few more. In April and May the workers reported that “even now we sweat in the factory, and it will get much worse this summer.” There are only a few wall fans and some of these are broken. (continue on top of page 26)

500 to 600 workers at a time. Each meal has three dishes—one so-called meat dish and two vegetable dishes. For breakfast, the workers are given rice gruel and a bun. Temporary workers can eat for free, while the formal workers, or those directly hired by the factory, must pay 200 RMB ($28.80) per month for their food.]

NIGHTMARE ON SESAME STREET Group supervisors scold the young workers to move faster. One worker described it like this: “Otherwise the steadily moving assembly lines clog. We cannot let products pile up. So we have to work faster.” Sometimes when the toy workers are kept late they are provided with snacks. “The snacks are very little” they say, “only a cup of chrysanthemum tea and two small fist-sized buns. And the quality is very poor.” Each assembly line of 20 or so workers must complete a mandatory production goal of 800 to 1200 Ernie toys per hour. The workers are not assembling ‘Ernie’—as it is a construction toy to be put together by children in the United States and Europe—but rather sorting the proper pieces, placing them in bags, packaging them and putting the completed ‘Ernie’ toys into boxes. Essentially, the workers are allowed one or one-and-a-half minutes to finish each toy. For a young temporary worker earning just 43 cents an hour, this means she will be paid just 7/10ths of a cent to one penny for each Ernie toy she completes. [Based on “Elmo” Building Sets made at the Kai Da factory, the National Labor Committee estimates that there are typically 15 plastic pieces per construction kit, which must be properly sorted and placed in a plastic bag, (continue on page 27)

Ernie Worker #9 From Jiangxi Province: Illegally, toy workers at the Kai Da Factory are not provided mandatory basic healthcare. This worker had injured his foot. “I asked for advice from the factory clinic. They said it would cost over 300 RMB [$43.20] to cure. I don’t have the money right now. So I didn’t have it treated. I just bought some medical balm in a pharmacy. I soak the injured food in salt water.” [Note: Every single labor law in China is violated at the Kai Da Factory where ‘Ernie’ is being made. By law, management must inscribe all workers in the state’s Social Security insurance system, covering work injuries, healthcare, paid maternity leave, a small unemployment stipend and pension. Management cheats the workers by refusing to pay into the Social Security system, leaving the workers without even the most rudimentary medical care. On their own—despite working overtime every day of the month—the workers do not earn enough money to purchase healthcare.]

including two pieces which are wrapped in tissue paper. The pieces then have to be placed in the Kid Lid canister and finally put in a shipping box. Overall, the process involves 19 operations. This means that on an assembly line with 20 workers assigned a mandatory production goal of 800 to 1,200 Ernie toys per hour, each worker would have to complete, on average, one operation every four seconds, 950 per hour and 12,350 operations during the typical 13-hour shift.

Workers Housed in Primitive Company Dorms The Kai Da Toy factory has one dorm building with the workersâ&#x20AC;&#x2122; cafeteria taking up the first floor, male quarters the second, third and fourth floors, and women occupying the fifth and sixth floors. Eight workers share each room, sleeping on thin double-level metal bunk beds which line the walls. There is no other furniture. The workers drape old sheets or pieces of plastic over their cubicle openings for some privacy. The dorm rooms lack water or toilets. One hundred-plus workers share each floor. The workers report that the dorm is not very clean. There is a public toilet/shower room on each floor with six toilets and shower stalls. The workers complain that the showers and toilets are in the same room just across from each other. With approximately 120 people on each floor, 20 workers must share each shower stall. Temporary workers board for free, while direct factory hires must pay 50 RMD, or $7.20 a month, for dorm fees. Corporate Codes of Conduct Unknown: The vast majority of U.S. and European toy companies claim to have adopted voluntary codes of conduct and private monitoring schemes to see that all relevant labor laws are respected at their contractorsâ&#x20AC;&#x2122; plants. Such voluntary codes and monitoring schemes are, at best, of very limited usefulness, but at the Kai Da Toy factory, the workers had never even heard of any such thing as a corporate code of conduct which is supposed to protect their rights.

Company dormitories.

Workers wash clothing by hand and hang it to dry.

Dorm toilet.

Loading area.

Dorm shower.

Young Workers in China Have Come to Dislike ‘Ernie’ When asked, one young toy maker described her feelings regarding ‘Ernie’ as such: “Imagine if a worker has to work more than 10 hours a day facing the same toy, and day after day, for a salary of only a few hundred RMB each month. Do you think she would be interested in the toy?” Asked if she would like to say anything to the people in the United States or Europe who will buy the ‘Ernie’ toy, she said: “The product in your hand is the work product of our toiling over 10 hours, non-stop every day. We hope when you play with these toys, you would think of how much sweat and tears we paid in order to make these toys.” Told the price of the ‘Ernie’ toy, she immediately responded: “I always wanted to know the price of this toy. At most I thought 40-50 RMB [$5.76 to $7.20]. But I didn’t expect it to be so expensive [76.32 RMD or $10.99]. I can’t believe it, what we make within seconds can be worth several days of our wages. How much profit do they want to make out of us?” [In fact, the $10.99 retail price for the Ernie toy is the equivalent of more than three days’ wages for the typical worker earning just 46 ½ cents an hour, despite the fact that the worker assembles 50 Ernie toys an hour, and up to 650 a day. The workers get paid less than a cent to make each toy.] It is now the responsibility of Sesame Street, K’NEX and Hasbro to rescue Ernie’s workers so they are finally treated like human beings, with respect and dignity.

NIGHTMARE ON SESAME STREET Will Sesame Street, K’NEX and Hasbro Do the Right Thing? What must be done: It is not rocket science. Surely such well known corporations with the size and international prestige of Sesame Street, Hasbro and K’NEX have the power to immediately transform the Kai Da factory, from one where young workers are exploited and forced to work grueling hours while being cheated of their wages, to a factory which at least adheres to China’s minimum wage, hour and other labor laws. But it would certainly please parents and children across the United States and Europe who purchase and play with these toys, if the companies would go further to guarantee that the young workers are treated with respect and dignity and paid a fair wage. What would be completely unacceptable is to have Sesame Street, Hasbro and K’NEX claim that they have already done enough, with their “strong” codes of conduct and “strict” monitoring of the Kai Da Factory over the course of many months if not years. But, alas, it is now clear that the factory is not cooperating properly, leaving the multinationals no choice but to pull their work, as Kai Da must just be one of the “rotten apples.” We have heard this line many times before from corporations. It leaves the companies in a win-win situation. They can thump their chests self-righteously, that despite all their good faith efforts, the factory failed them. Of course, when the multinationals pull out of Kai Da or any other factory, they only further punish the workers—who will be fired and thrown out in the street—and they have already suffered enough. Sesame Street, Hasbro and K’NEX must work with their contractors to finally bring the Kai Da plant into full compliance with China’s labor laws and the core internationally recognized worker rights standards—no child labor; no forced labor; freedom of association; the right to organize and bargain collectively; and descent working conditions.

China Subsidizes Toy Exporters The government of China uses a value-added tax system, or VAT, which is levied on the added value that results from each exchange or transformation in the production process. For example, the typical value added in toy manufacturing would be the molding and cutting of pieces, painting, assembly and packaging, which would ordinarily be taxed at the basic rate of 17 percent. However, to promote exports, the central government provides incentives to toy exporters by providing a large, 11 percent rebate of the value added tax. This means that if a toy company in China ships $1 million-worth of toys to the U.S., instead of paying the basic VAT rate of 17 percent, or $170,000 to the government, the government would return an 11 percent VAT rebate to the factory worth $110,000. In the end, the toy exporter is paying a reduced VAT rate of just six percent, or $60,000 in taxes. The government of China uses the VAT rebate as an incentive to increase exports. These toys made in China then enter the U.S. duty free.

Slave Labor—including Children—in China’s Brick Kilns In May 2007, hundreds of workers—including children who had been kidnapped—were rescued from brick kilns in the north and central part of China, where they were being held as slave laborers. One such slave laborer was 16-year-old Zhang Zubo who was duped by a labor trafficker into working at a brick kiln in Shanxi Municipality of Yongyi. He was forced to work 16 hours a day, seven days a week, for no pay. After three months, 16-year-old Zhang begged for his wages. Instead of being paid, his boss beat him and dumped the teenager in the wilderness in below-freezing temperatures and with snow falling. Before being rescued, 16-year-old Zhang lost both his feet from severe frostbite. To date he has not received a single penny of what he was owed or any compensation from the slave master or the government (China Labor Bulletin, May 21, 2008).

NIGHTMARE ON SESAME STREET Company Information K’NEX Company Profile: K’NEX Industries 2990 Bergey Rd. Hatfield, Pennsylvania #19440-0700 Phone: (215) 997-7722 Fax: (215) 996-4222 Chairman and CEO: Mr. Joel Glickman

K’NEX, a privately-owned company founded in 1992, describes itself as the second-ranking children’s construction toy company in the world, behind Lego. While K’NEX controls ten to twelve percent of the U.S. construction toy market, it controls 40 percent of the British market. Hoover’s Inc. estimates K’NEX’s 2007 revenues at $70 million with Europe accounting for 64 percent of total sales, and the U.S. 36 percent.

K’NEX is also an official licensee for Sesame Street toys. K’NEX toys are sold at major U.S. retailers, such as Wal-Mart, Toys ‘R’ Us, and Target, on the company’s online store; and are distributed internationally. K’NEX is also the U.S. licensee for Hasbro’s Lincoln Log building sets. In the United Kingdom, the Entertainer Ltd. Toy store chain is the largest distributor of K’NEX construction toys. As a promotional device, K’NEX gave away construction pieces in Tetley Tea boxes. K’NEX toys are sold in 45 countries around the world. The K’NEX company says it manufactures 95 percent of its toys at their 223,000 square foot Rodon Group factory in Hatfield, but many of its toys are then shipped to China for assembly. K’NEX is owned by The Rodon Group. K’NEX expresses its business philosophy as follows: “We believe that the company can be financially successful while behaving in a socially and environmentally responsible manner.” “We believe that the company has a responsibility to provide a safe and fulfilling work environment, and an opportunity to grow and learn.” Clearly, K’NEX has badly stumbled in China.

Sesame Street Profile: Sesame Workshop 1 Lincoln Plaza New York, NY 10023 Phone: 212-595-3456 Fax: 212-875-6088 President, CEO and Director: Gary E. Knell Sesame Street, which was created in 1969, is about to turn 38 years old. Today, Sesame Street has over 140 contractors who are licensed to produce Sesame Street toys and other products, K’NEX being one of them. In 2007, according to their financial report, Sesame Street made $52,349,000 on product licensing fees, which is more than they made in either program support or distribution fees and royalties. “As a non-profit, we [Sesame Street] reinvest our revenues, from our licensing partners….so every time you buy one of our products, you’re not only helping your child, you’re helping children around the world to reach their highest potential.” The young workers, including several children, who toil under abusive sweatshop conditions producing Sesame Street Toys at the Kai Da Toy Factory in Shenzhen, China would sharply disagree with the above statement by Sesame Street. Sesame Street needs to do much more to hold its licensed contractors accountable to respect fundamental children’s, women’s and workers’ rights.

NIGHTMARE ON SESAME STREET The Hasbro Company: Hasbro, Inc. 1027 Newport Ave. Pawtucket, RI 02862 Phone: 401-431-8697 Fax: 401-431-8535 President, CEO and Director: Alfred J.Verrecchia

Sesame Street and Kâ&#x20AC;&#x2122;NEX toys made/assembled in China.

When asked, one young worker described her feelings regarding ‘Ernie’ as such: “Imagine if a worker has to work more than 10 hours a day facing the same toy, and day after day, for a salary of only a few hundred RMB each month. Do you think she would be interested in the toy?” Asked if she would like to say anything to the people in the United States or Europe who will buy the ‘Ernie’ toy, she said: “The product in your hand is the work product of our toiling over 10 hours non-stop everyday. We hope when you play with these toys, you would think of how much sweat and tears we paid in order to make these toys.” Told the price of the ‘Ernie’ toy, she immediately responded: “I always wanted to know the price of this toy. At most I thought 40-50 RMB [$5.76 to $7.20]. But I didn’t expect it to be so expensive [76.32 RMD or $10.99]. I can’t believe it, what we make within seconds can be worth several days of of our wages. How much profit do they want to make out of us?” It is now the responsibility of Sesame Street, K’NEX and Hasbro to rescue Ernie’s workers so they are finally treated like human beings, with respect and dignity.

Young Workers in China Have Come to Dislike ‘Ernie’