Foxconn problems and remedies
2010-2011 have been calamitous years for Foxconn in the area of labour relations. Of the 23 suicide attempts that occurred on the premises of the massive Foxconn City industrial park, 18 involved workers jumping from buildings claiming 14 young lives. The suicides caught the eye of the domestic and international media along with strong expressions of concern from local and central government, resulting in a number of unprecedented investigations launched by Foxconn’s customers.
While the suicides were tragic, they constituted a tiny fraction of Foxconn’s approximately 1 million workforce, with the suicide rate at about 1.5 per 100,000, well below the national average. Soon after the initial suicides in 2010, the Economist magazine readily came to Foxconn’s defense: “Conditions at the firm are actually not that bad compared with many others, says Boy Luthje of the Institute of Social Research in Frankfurt…In response to the suicides, the company is said to have surrounded buildings with nets, hired counselors, brought in Buddhist monks to pray and toyed with asking employees to sign a ‘no suicide’ pledge…”
But a lengthy report (involving interviews with 1800+ workers from Foxconn factories in 9 Chinese cities) compiled jointly by 20 Hong Kong, Taiwan, and the Mainland universities in late 2010, reproached the Taiwanese company for its Spartan (militaristic) management style, extensive hiring of teenage students, and failure to report numerous industrial injuries with little compensation meted out.
Workers were forced to work 80-100 hours of overtime a month, well above the legal limit of 36 hours. Many teenage vocational students worked without contracts or insurance and received paltry salaries beyond free room and board, resulting in turnover rates of 30-40% annually.
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| On May 26, 2010 Terry Guo attended a cross-Taiwan Straits psychological and sociological research forum. Here he bows in apology.http://news.sina.com.cn/c/2010-05-26/200417567843s.shtml |
‘Quotations’ of President Terry Guo on the stairwell of a Foxconn building; the first one reads: “Mistakes are not frightening; what’s frightening is making the same mistake”. Source:http://www.hkcd.com.hk/content/2010-05/27/content_2530993.htm |
In response to the severity of the accusations, Apple released the results of its 2011 audits of contractor factories in its Supplier Responsibility 2012 Progress Report, the highlights of which appear below:
- In 2011, Apple conducted 229 audits throughout our supply chain — an 80 percent increase over 2010 — including more than 100 first-time audits.
- Apple-designed training programs have educated more than one million supply chain employees about local laws, their rights as workers, occupational health and safety, and Apple’s Supplier Code of Conduct.
- Apple’s audits have always checked for compliance with environmental standards. In 2011, in addition to our standard audits, Apple launched a specialized auditing program to address environmental concerns about certain suppliers in China. Apple uncovered some violations and worked with our suppliers to correct the issues. Apple will expand our environmental auditing program in the coming year.
- Apple has a zero-tolerance policy for underage labor, and Apple believes their system is the toughest in the electronics industry and has broadened our age verification program. Cases of underage labor were down significantly, and our audits found no underage workers at their final assembly suppliers.
- Apple offers continuing education opportunities at our suppliers’ facilities free of charge. More than 60,000 workers have enrolled in classes to study business and entrepreneurship, improve their computer skills, or learn English. And the curriculum continues to expand.
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| Workers at an Apple supplier facility in Shanghai assemble parts for the MacBook Pro. | An independent auditor checks ID and other documents to verify the age and status of workers at a facility in Shanghai. Suppliers are required to maintain all relevant documentation and produce it during audits. |
In addition, last February, Apple commissioned a probe by the independent Fair Labor Association (FLA) in a bid to further quell intense criticism of supplier practices. FLA anonymously surveyed over 35,000 randomly-selected Foxconn workers to find excessive overtime and overtime compensation lapses, health and safety risks and crucial communication gaps “that have led to a widespread sense of unsafe working conditions among workers”, said the FLA in report release statement.
In a landmark agreement with Apple thereafter, Foxconn committed to reducing weekly work hours to 49, including overtime, with total compensation kept at current levels. To keep pace with demand, Foxconn would hire tens of thousands of additional workers as well as building more housing and canteens. Apple CEO Tim Cook had just inspected some of Foxconn’s facilities in Zhengzhou, Henan (in central China) and elsewhere.
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| On Mar 29th, 2012, Apple CEO Tim Cook visited Foxconn’s Zhengzhou factory. |
| Source: http://hrfoxconn.com/wordpress/?m=201203 |
In February, Foxconn announced that it would be raising basic wages by 16-25% to between 1800 RMB (US$290) and 2500 RMB (US$400), not including overtime at its Shenzhen factories. (In Shenzhen, the monthly minimum wage is 1500 RMB (US$240).) Under the agreement, FLA will make onsite verification visits to assure compliance along with inspections of other contractors such as Quanta Computer Inc., Pegatron Corp., Wintek Corp., and other companies that have been secretive about their operations.
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Workers’ salary will be increased by16%~25% to CNY1,800~2,500/month but will Apple pay up? 2012-2-26 11:39:56 source: China Business |
The impact of the deal will be far-reaching for China’s IT product assembly industry and for the welfare of young Chinese migrant workers. Interviewed by Reuters, FLA President Auret van Heerden said, “Apple and Foxconn are obviously the two biggest players in this sector. Since they are teaming up to drive this change, I really do think they set the bar for the rest of the sector.”
» Apple’s market capitalization rose (briefly) above $600 billion on April 10th, just 28 trading days after it reached $500 billion.
The Economist