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Foxconn Pay: Chairman Pledges To Keep Raising Worker Salaries

Foxconn Pay

First Posted: 04/ 1/2012 4:02 am Updated: 04/ 1/2012 2:20 pm


(Adds quotes, details)

By Lee Chyen Yee and Jeanny Kao

BOAO, China April 1 (Reuters) - Foxconn Technology Group will keep on increasing worker salaries in China and cutting the hours of work, Chairman Terry Gou said on Sunday, after it came under fire for poor working conditions for employees making Apple iPhones and iPads.

As part of its efforts to relieve the pressure on its existing factories in Chinese cities such as Shenzhen and Chengdu, Gou said Foxconn would be building high-tech manufacturing facilities in Hainan, as well as expanding operations in Brazil.

"We are a saying now in the company, 'you work fewer hours, but get more pay'," Gou told Reuters at the 2012 Boao Forum for Asia in China's Hainan island province. "We won't stop here and will continue to increase salaries."

"Salaries in Brazil are even higher but we will continue with our investments there. We've just entered a deal with Hainan Airlines and they will eventually be our way of connecting our supply chain (from China to Brazil)."

The 61-year-old Taiwanese tycoon said Foxconn would lift workers' overall salaries as some employees at its sprawling factories in Shenzhen had complained that they would not make enough money if hours were reduced.

Apple and Foxconn agreed last week to improve conditions among the 1.2 million workers assembling iPhones and iPads in a landmark decision that could change the way Western companies do business in China.

According to the agreement reached with Apple, Foxconn Technology Group, whose subsidiary Hon Hai Precision Industry assembles Apple devices in China, will hire tens of thousands of new workers, eliminate illegal overtime, improve safety protocols and upgrade housing and other amenities.

The move is in response to the independent Fair Labor Association's findings of violations of labour laws by Foxconn, such as letting long work hours and unpaid overtime.

Foxconn now supplies 50 percent of the world's consumer electronics, with its units assembling handsets for the industry's best known names such as Nokia Oyj and Huawei Technologies Co Ltd, apart from Apple.

"The result we expect is additional hiring to cover the shortfall in labour hours following the reduction of overtime, as well as increased investment in automation equipment to reduce the future impact of continued wage increases in China," HSBC analyst Jenny Lai said in a report.

Foxconn has also been diversifying into other Asian markets, such as Vietnam, partly to reduce its reliance on China, though the move has been limited so far.

"Vietnam's development hasn't been as fast as China," said Gou, who is Taiwan's third richest man according to Forbes.

He added that Foxconn saw Hainan developing as one of its manufacturing bases in the southern part of Asia although some incentives, such as taxes, and the availability of labour still needed to be ironed out.

"We'll be breaking ground in Hainan at the end of this year and the facilities will be making high-tech products - that I can say. But as to what kind of products and other details, I can't divulge too much now," Gou said. (Editing by Greg Mahlich)

Also on HuffPost:

Flip through the slideshow to see some of the most surprising facts ABC discovered earlier this year during an investigative report at one of Foxconn's "iPad Factories."
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  • Handmade Gadgets

    On February 21, <a href="http://www.huffingtonpost.com/2012/02/22/nightline-apple-supplier-foxconn_n_1293393.html?ref=technology" target="_hplink">ABC aired a "Nightline" segment featuring Bill Weir's visit to a Chinese Foxconn factory</a> responsible for making some of Apple's popular devices. During a tour of the factory, Weir says he "expected more robots" but in fact most of the gadgets at Foxconn are made the old-fashioned way: The high tech parts are put together by hand. For example, iPhones are assembled by hand in 141 steps. One iPad takes five days to assemble and passes through 325 sets of hands.

  • Insane Output

    Two shifts of workers toiling in 12 hour shifts can make 300,000 iPad camera modules in one day, not to mention shape sleek iPads out of "raw hunk[s] of aluminum" at a rate of 10,000 per hour. <a href="http://abcnews.go.com/watch/nightline/SH5584743/VD55173552/nightline-221-apples-chinese-factories-exclusive" target="_hplink">Image via Nightline</a>

  • 7 To A Room

    Many workers live at the factory, where they pay $17.50 per month to live 7 to a room in Foxconn dormitories. <a href="http://www.forbes.com/sites/connieguglielmo/2012/02/22/nightline-goes-inside-apple-factories-in-china/" target="_hplink">The average starting salary is $285 per month,</a> and workers must pay for their food. <a href="http://abcnews.go.com/watch/nightline/SH5584743/VD55173552/nightline-221-apples-chinese-factories-exclusive" target="_hplink">Image via Nightline</a>

  • No Free Lunch

    Workers get two hour-long meal breaks during each 12-hour shift. They eat together in a cafeteria where they pay $.70 a meal. This is about a quarter of their hourly wage. <a href="http://abcnews.go.com/watch/nightline/SH5584743/VD55173552/nightline-221-apples-chinese-factories-exclusive" target="_hplink">Image via Nightline</a>

  • Tim Cook Investigated Suicides

    In 2010, after a spate of suicides at Foxconn's Shenzen plant, then COO Tim Cook flew to China to investigate the matter. <a href="http://abcnews.go.com/watch/nightline/SH5584743/VD55173552/nightline-221-apples-chinese-factories-exclusive" target="_hplink">According to Nightline,</a> Cook put together a team of psychiatric experts to examine the issue. It was at that team's suggestion that the infamous nets were installed between the buildings to prevent suicides. There have been 18 worker suicides at Foxconn since 2010. <a href="http://www.reuters.com/article/2012/02/15/us-china-apple-idUSTRE81E1FQ20120215" target="_hplink">According to Reuters' interview with Fair Labor Association president Auret van Heerden, the group's initial findings from its audit of Foxconn</a> suggested that the suicides could have been "a function of monotony, of boredom, of alienation perhaps."

  • Young Workers

    Weir said he was surprised to see how young the workers were. He said many were in their late teens and no one looked like they could be over 30. Many had left their hometowns, oftentimes in the countryside, in order to get jobs at Foxconn. Weir also toured Chengdu and spoke with the relatives of workers who had left for jobs at Foxconn. According to Cult of Mac, <a href="http://www.cultofmac.com/147878/foxconn-employees-say-underage-workers-were-hidden-before-fla-inspection/" target="_hplink">Foxconn may have hidden underage employees</a> when the Fair Labor Association conducted its inspections. While Apple allows for workers as young as sixteen to assemble their products, those eighteen and under are afforded "special protections," <a href="http://www.appleinsider.com/articles/12/02/22/factory_workers_claim_foxconn_hid_under_age_employees_before_fla_inspection.html" target="_hplink">according to Apple Insider.</a> These include not being allowed to perform some tasks and working shorter hours than older workers.

  • Foxconn Exec Wants To Pay More

    When asked how Foxconn would react if Apple suggested doubling workers' pay, Foxconn executive Louis Woo told Weir that the company would welcome a raise for employees. "Why not?" Woo said. "That would be good for the employees and also definitely good for China and good for us."

  • Air Showers

    Workers have to wear static-proof jackets and take "air showers" to make sure the work area remains dust-free. Even one spec of dust could prove ruinous to the iGadgets' delicate innards. <a href="http://abcnews.go.com/watch/nightline/SH5584743/VD55173552/nightline-221-apples-chinese-factories-exclusive" target="_hplink">Image via Nightline</a>

  • WATCH A CLIP FROM THE NIGHTLINE SEGMENT

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Filed by Catharine Smith  |