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Apple: No Forced Labor in Chinese iPod Factory

Apple Computer Inc.'s (AAPL) investigation into claims of poor conditions at a Chinese iPod factory found no forced labor but revealed that workers were exceeding the company's limits on hours and days to be worked per week, the company said Friday.

The company said it was taking immediate steps to resolve that and other issues.

The probe by the Cupertino, Calif.-based company was in response to a recent report by a British newspaper, the Mail on Sunday, alleging that workers at the factory were paid as little as $50 a month and forced to work 15-hour shifts making the devices.

"The team reviewed personnel files and hiring practices and found no evidence whatsoever of the use of child labor or any form of forced labor," Apple said in a report on its Web site that summarized the findings of its audit of the facility.

However, the probe did find that in many cases workers were exceeding the company's limits for overtime, which specify a maximum of 60 hours or six days a week.

"We found no instances of forced overtime," the report said.

But it said weekly limits were exceeded 35 percent of the time in a seven-month period and that employees worked more than six days in a row 25 percent of the time.

The company running the factory, which was not named in the report, was ordered to enforce Apple's overtime limits, it said.

Apple's iconic iPod players are made abroad, mainly in China. The company has sold more than 50 million iPods since its debut in 2001.

The company responded vehemently to the allegations made by the British newspaper, saying it would not tolerate any violations of its code of conduct.

Apple said its inspection found that in at least two instances workers were made to stand at attention for disciplinary reasons.

"Apple has a zero tolerance policy for any instance, isolated or not, of any treatment of workers that could be interpreted as harsh," the report said. It said the factory has launched an "aggressive" manager and employee training program to prevent such behavior.

The probe found the workers assembling iPods were paid at least the minimum wage, with more than half earning more than minimum wage, excluding bonuses. Minimum wage for Shenzhen in southern China, where the factory is thought to be located, is about 800 yuan ($100) a month.

The factory, which supplies electronics components and accessories to other companies as well as Apple, is a small city in its own right, with clinics, recreational facilities, buses and 13 restaurants serving its 200,000 workers.

While conditions in the factories, cafeterias and most dormitories were good, the audit found overcrowded or unsuitable conditions at three offsite leased dormitories that were former factories. To address the problem, the contractor acquired more land and was building more dormitories on the factory premises, it said.

Apple has hired Verite, an international consultant on workplace standards, to continue monitoring conditions at the factory, it said.

"We are committed to ensuring compliance with our Code of Conduct and will complete audits of all final assembly suppliers of Mac and iPod products in 2006," the report said.

It added that "in cases where a supplier's efforts in this area do not meet our expectations, their contracts will be terminated."