|Apple Supplier in China Pledges Big Changes in Working Conditions |
By CHARLES DUHIGG and STEVEN GREENHOUSE Published: March 29, 2012
Foxconn, which manufactures more than 40 percent of the world’s electronics for such companies as Apple, Dell, Amazon and others, has pledged to sharply curtail the number of working hours within its Chinese factories and significantly increase wages, a move that could improve working conditions across China.
The shift comes after a far-ranging inspection by the Fair Labor Association, a monitoring group, found widespread problems -- including numerous instances where Foxconn violated Chinese law and industry codes of conduct by having employees work more than 60 hours a week, sometimes for more than 11 days in a row.
The monitoring group, which in recent weeks surveyed more than 35,000 Foxconn employees and inspected three large facilities where Apple products are manufactured, also found that 43 percent of workers surveyed had experienced or witnessed accidents, and almost two-thirds said their compensation “does not meet their basic needs.” Many said that the unions available to them do “not provide true worker representation.”
“There’s this lingering sense among workers that they’re in a dangerous place,” Auret van Heerden, president and chief executive f the Fair Labor Association, said in an interview. But Foxconn has “reached a tipping point. They have publicly promised to make changes in a manner that they will have to deliver on it.”
Apple, which recently joined the Fair Labor Association, had asked the group to investigate plants manufacturing iPhones, iPads and other devices. In recent months, a growing outcry over conditions at overseas factories have sparked protests and petitions, and several labor rights organizations have started scrutinizing Apple’s suppliers. Earlier this week a collection of advocacy groups sent Apple an open letter calling on the company to "ensure decent working conditions at all its suppliers."
Since January, Apple has released a list of 156 of its suppliers – which it had previously declined to identify – and has begun posting regular monitoring reports on hours worked by factory employees. Apple, which has regularly audited its suppliers since 2006, said in a statement on Thursday. “We share the F.L.A.’s goal of improving lives and raising the bar for manufacturing companies everywhere."
The impact of Foxconn’s hour and wage changes could signal a new, far-reaching turn in reforms. Foxconn is China’s largest and most prominent private employer, with 1.2 million workers, and though the Fair Labor Association’s investigation was limited to Apple factories, the shifts announced today have the potential to increase wages and improve working conditions across Foxconn, which also manufactures products for hundreds of other brands, and at non-Foxconn plants across China.
In response to the report, Foxconn said, “We are committed to work with Apple to carry out the remediation program, developed by both our companies, that has been presented along with the F.L.A. audit findings and we will continue to support Apple’s initiatives to ensure that its business partners are in compliance with all relevant China laws and regulations and the F.L.A.’s Workplace Code of Conduct.”
Apple, in a statement, said the company fully supports the monitoring group’s recommendations. “We think empowering workers and helping them understand their rights is essential. Our team has been working for years to educate workers, improve conditions and make Apple’s supply chain a model for the industry, which is why we asked the F.L.A. to conduct these audits.”
Foxconn’s promises include a commitment that by July of next year, no worker will labor for more than 49 hours per week – the limit dictated by Chinese law. Foxconn, which has its headquarters in Taiwan and is controlled by the billionaire Terry Gou, has also pledged that despite cutting hours, employees’ salaries will not decline. Experts say such promises will likely require Foxconn to hire tens of thousands of new employees as well as raise wages, steps that could cost it hundreds of millions of dollars annually. Those moves, in turn, are likely to influence the prices paid by Foxconn’s customers, which include every major electronics company, and could increase the retail cost of consumer electronics products like smart phones and tablets unless Apple and others accept lower profit margins.
"At the end of the day it’s a matter of image, a matter of recognition, a matter of reputation," said Ricardo Ernst, a professor of global logistics at Georgetown University. But regardless of motivation, when a company as large as Foxconn changes, it reshapes other company’s decisions, as well, he added. Foxconn is the single largest exporter of good from China.
David Barboza contributed reporting.