Apple’s Loud and Public Refusal to Aid Decryption is a Promotional Strategy

Foxconn and Pegatron are the two largest Apple product assembly suppliers. CLW’s research has discovered that these two companies’ production has slowed since December relative to the two previous years. In January, the government of Zhengzhou provided Foxconn’s factory there with a subsidy of 80 million RMB (US$12.3 million) to decelerate lay-offs. Foxconn’s business has lagged and it is cutting its workforce due to reductions in Apple’s product sales.

Given its sales, it is easy to explain why Apple is making such a public spectacle of its refusal to decrypt a phone for the U.S. government. The company is using this opportunity to promote iPhone security that even the government cannot crack. The public campaign has won Apple free advertisement of its products from news media.

The core narrative of Apple’s current PR campaign is that it cares about its customers. Apple also frequently promotes a similar narrative: that it cares about the workers who make its products.

In 2014, Apple CEO Tim Cook wrote:

    “We care about every worker in our worldwide supply chain.”

When asked by PBS what he values, he also said:

    “Treating people with dignity. Treating people the same. That everyone deserves a basic level of human rights, regardless of their color, regardless of their religion, regardless of their sexual orientation, regardless of their gender. That everyone deserves respect.”

But the reality is that Apple’s PR campaigns to promote its defense of human rights—whether they be iPhone security or workers’ dignity and well-being—are, at base, efforts to maintain its sales. How Apple distributes its massive revenues is a telling window into its actual treatment of workers.

CLW analyzed 1,261 pay stubs from 2015 of workers from the Pegatron Shanghai factory, a major Apple iPhone supplier. A few conclusions of our research include:


  1. Tim Cook’s stock bonus in 2011 was equivalent to the annual combined base wages of 98,862 Pegatron workers in 2015. (Pegatron only has about 70,000 workers.) His stock’s growth value in 2015 was equivalent to the annual combined base wages of 78,846 Pegatron workers.

  2. If we assume that there are 1.6 million workers in Apple’s supply chain (the number cited in Apple’s own report), and all of these workers’ income levels were the same as that of those workers at Pegatron, then the annual combined base wage of all workers in the supply chain accounts for only 2.6% of Apple’s total revenue in fiscal year 2015.

  3. Tim Cook’s total compensation in 2015 (including stock dividends and benefits) was $10,281,327. This is 2,703 times greater than a Pegatron worker’s annual base wage of $3,803 in the same year. Even after accounting for workers’ overtime and other forms of compensation, Tim Cook’s annual income is still 1,132 times as much as a Pegatron worker’s annual income. In other words, a worker must work consecutively for 1,132 years to earn the same amount of money that Mr. Cook earns in one year.

  4. Pegatron workers are also made to do daily unpaid overtime. In 2015, the total amount owed to 70,000 Pegatron workers for unpaid overtime is estimated to be $10.7 million, just a little more than Tim Cook’s total annual compensation that year.

  5. In 2015, the annual combined compensation of Apple’s six senior executives was $136,486,026. This amount is 35,887 times greater a Pegatron worker’s annual base wage of $3,803. After calculating for workers other overtime and other compensation, Apple’s six senior executives’ combined annual compensation is 15,028 times greater than a worker’s annual income. In other words, 15,028 workers would need to work for an entire year to cover the cost of the six Apple executives’ annual compensation.
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