The budget iPhone's packaging was leaked as well

Apple is once again caught up in China labor woes with another assembly partner, and during the investigation, a factory employee confirmed the existence of a budget iPhone. 

Apple supplier Pegatron Group is currently under the spotlight for poor working conditions at three of its factories in China. China Labor Watch, a labor rights group, sent undercover investigators to the three Pegatron factories (Shanghai, Riteng and AVY) from March to July 2013. 

Pegatron, a Taiwanese manufacturer, makes older iPhone models for Apple (the iPhone 4 and iPhone 4S) and even the iPad mini.

After a thorough investigation and over 200 interviews with Pegatron employees, China Labor Watch discovered 86 labor rights violations -- which consisted of 36 legal violations and 50 ethical violations.

These violations fell into several different categories, including poor working conditions, hiring discrimination, environmental pollution (dumping of cutting fluid and motor oil into the local river), excessive working hours (over 60 hours per week), underage labor, insufficient wages and poor living conditions. 

Apple is reportedly looking into the matter and will work with Pegatron to bring its conditions up to code. Apple has had to do the same in the past for Foxconn factories, which had poor working conditions as well. Problems ranged from underage workers to poor living conditions to unhealthy working environments. There were also many employee suicides. Apple implemented surprise audits and reports to keep an eye on the factories. 

In January of this year, Apple said it upped its audits of suppliers (mainly in Asia) by 72 percent from 2011 to 2012, and even cut ties with suppliers that didn't follow the code of conduct. For all of 2012, Apple conducted a total of 393 audits.

During the course of the interviews that took place at the Pegatron factories, one employee mentioned the plastic iPhones that are not yet being mass produced. Many reports have deduced that this is the rumored affordable iPhone, which has not yet been revealed by Apple. 

In China Labor Watch's 60-page report, an employee said the following:

"Today’s work is to paste protective film on the iPhone’s plastic back cover to prevent it from being scratched on assembly lines. This iPhone model with a plastic cover will soon be released on the market by Apple. The task is pretty easy, and I was able to work independently after a five-minute instruction from a veteran employee. It took around a minute to paste protective film on one rear cover. The new cell phone has not yet been put into mass production, so quantity is not as important. This makes our job more slow paced than in departments that have begun mass production schedules."

The affordable iPhone is expected to be available in many colors and sport a $99 price tag. 

Another leak regarding the budget iPhone slipped from the Chinese website WeiPhone. It posted a picture of plastic packaging for the "iPhone 5C," which is rumored to be the name of the budget iPhone (which stands for iPhone 5 color).  

They're simply white plastic boxes that will hold the device and accessories. A front cover isn't shown for the packaging, but it's expected to be part of the box come mass production. 

Sources: China Labor Watch, MacRumors [1], [2]

"Paying an extra $500 for a computer in this environment -- same piece of hardware -- paying $500 more to get a logo on it? I think that's a more challenging proposition for the average person than it used to be." -- Steve Ballmer

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