U.S. Firm Sees Rising Number of Child Labor Cases

UNCLAS GUANGZHOU 000455

SENSITIVE
SIPDIS

STATE FOR EAP/CM
STATE PASS USTR CHINA OFFICE

E.O. 12958: N/A
TAGS: ELAB ETRD ECON PGOV CH
SUBJECT: U.S. Firm Sees Rising Number of Child Labor Cases

(U) This document is sensitive but unclassified. Please protect
accordingly. Not for release outside U.S. government channels. Not
for internet publication.


1. (SBU) Summary: Factory auditors from a major U.S. firm have seen
an increase in incidences of child labor at some factories of firms
it contracts with, especially in Shantou, Guangdong and Quanzhou,
Fujian. A senior auditor told us that a tighter labor market, with
employees looking for opportunities in high tech and services areas,
and increasing numbers of student workers have led to the recent
growth in child labor in south China. End summary.

Tighter Labor Market Increasing Child Labor
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2. (SBU) A senior auditor with a major U.S. firm in south China told
Congenoffs that rising wages associated with a tighter labor market
are leading more factories that make the firm's products to hire
underage workers. He said the expansion of high-tech industries and
more capital-intensive manufacturing, such as automobile
manufacturing, in south China, had made it harder for the factories
his firm works with to attract workers. The auditor pointed out
that many of these factories had complained that higher wages in
provinces to the north (Zhejiang, Jiangsu, and Shandong) were making
it more difficult to recruit migrant laborers. In addition, he said
that press reports highlighting poor and sometimes abusive working
conditions in the Pearl River Delta had also made the region less
attractive to workers from other provinces.

Student Work Programs on the Rise
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3. (SBU) While the firm's factory inspection staff has identified
cases of child labor in the past, the auditor said the recent
increase was largely due to the expansion of programs that bring
students at vocational schools to work in factories. He explained
that rural schools often get the approval of the local education
department to send students to local factories to fulfill part of
their education requirement and at the same time earn money that
goes to subsidize the cost of education. According to the auditor,
vocational schools are common in the Pearl River Delta's factory
enclaves, and these schools often require students to spend a year
on the factory floor before they can graduate. He said that Chinese
labor laws, including the new Labor Contract Law, do not protect
students, enabling factory owners to avoid paying minimum wage,
overtime, or benefits.


4. (SBU) The auditor told us that his firm does not permit
employment of student workers interested in earning educational
credit at factories of its manufacturing partners, unless the work
at the factory "has a very close relationship with the subjects
students are learning." The firm also enforces China's legal
minimum work age, 16 years, for any workers at the factories. He
noted that just two weeks ago the firm's auditing team discovered
over 100 student workers under the age of 16 at several small
factories that make its products. The firm maintains a
"three-strike" policy; factories found to have violated its labor
standards three times are barred from making its products.

Shantou, Quanzhou "The Worst"
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5. (SBU) The auditor pointed out that increasing instances of child
labor led the firm to perform an internal analysis of the frequency
of its occurrence at the factories it inspects. Their 2005 analysis
showed a significant increase from two years earlier. The auditor
believes that the situation has continued to deteriorate. He also
noted that the factories he and his team visit in Shantou, Guangdong
and Quanzhou, Fujian are "the worst" and the most likely to have
child laborers. He sees child labor cases in these areas so
frequently that his team doesn't give a warning before they arrive
for an inspection.

GOLDBERG