Foxconn pay hike has other companies worried

Rue Liu - Mar 30, 2012, 2:52pm CDT
Foxconn pay hike has other companies worried

Following the highly public report on the working conditions and labor law violations at Foxconn’s factories in China, the major Apple supplier promised to make several improvements, including reducing work hours and increasing wages. Although it was surprising that workers were actually more concerned than elated, it’s quite understandable that other factories now worry that they’ll have to follow suit.

The FLA’s investigation found that workers at Foxconn’s factories worked more than 60 hours a week, often working more than seven days in a row, but did not receive enough compensation to meet basic needs. Foxconn has promised to reduce overtime hours to a maximum of 36 hours per month while maintaining the same monthly pay for workers, which essentially boosts their hourly wages.

Other large manufacturers, such as Toshiba Group, which employs 32,000 workers in China, must now also step up its factory standards. The Japanese company has said that it too will be taking measures to reduce overtime work and to create safer working conditions.

This pay hike could have a ripple effect on other factories in China. When Foxconn responded to employee suicides back in 2010 by more than doubling its monthly salary, strikes ensued that forced Toyota and other Japanese automakers to also grant pay hikes that same year.

Increasingly higher wages will likely force manufacturers to automate more of their assembly lines. Some companies in more labor-intensive industries have already begun to migrate their assembly lines to Vietnam and other lower-wage markets.

[via Mercury News]

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10 Responses to Foxconn pay hike has other companies worried

    • I really pity the companies. The poor companies have to pay a salary that people can live of and limits the work time to only 60hours a week. The shareholders and bankers are probably going to send their children to public schools, wait with the second yatch and lay of the butler. /s

  1. Automated assembly lines: fewer jobs. Outsourcing: Fewer jobs. Dilemma: What’s better? Low-paying job or no job?
    The key question is how far can the prices for consumers be raised while maintaining higher pay levels for humans?
    Would you be willing to pay 100 $ more for the same device if you could be certain the laborers earned more? Like a few people are willing to pay more for fair trade coffee?

    People not willing to pay the price a product costs under certain manufacturing conditions which allow the manufacturing company to stay in business.

    This is the same problem many US citizens are now whining about that so
    little is still “Made in US”, it’s immediate consequences are different,
    but it’s the same key issue.

  2. While it’s obviously concerning for companies to routinely not pay a living wage as is implied here  (but not validated ofc)… it’s sure annoying when an employee wants to work overtime and the company can’t grant it because of red tape.   

    There’s a happy balance here guys…  companies need not to be inhibited by so many rules they can’t be profitable, and employees need to be able to earn an honest living.

    I do find it interesting how often that balance gets overlooked, either by conservatives who too often protect the company at the expense of the employee’s, or by liberals who sometimes fight for increased wages and employee security until a company is so hidebound it can’t be profitable or flexible enough to change with markets.  

    Then of course… both groups will complain whenever the price seems high on their favorite items. 

  3. Its not their fault. Apple and other companies don’t give them enough money.
    For example apple after all expenses has about a 35% profit margin. Foxxconn which gets 50% of its revenues from apple alone has about a 2% profit margin.
    They can’t do much if apple is keeping all the cash to itself

  4. the need to put the money on new factories, more empoyees and better dormitories instead of more pay in order to increase capacity.  not just throw money at fatigued workers… jeesus. simple math

  5. Say goodbye to free Android phones as profile margins will decline.  All this witchhunt about Foxconn should start to look at other factories that produce those $99 Android tabs and see how much they’re paying for workers.

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