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Key Violations at Foxconn’s Apple Plants

The Fair Labor Association has published the results of its inquiry into working conditions at {complink 2125|Foxconn Electronics Inc.}, the Taiwan-based contractor to major electronics companies, including {complink 379|Apple Inc.}, which commissioned the investigation.

The inquiry “revealed serious and pressing noncompliances with FLA's Workplace Code of Conduct, as well as Chinese labor law” at some Foxconn facilities, and the contract manufacturer has pledged to address the problems within the next 18 months. It has also announced it would jack up wages at its China plants and bring overtime hours in line with Chinese law and Apple's requirements. Foxconn workers currently work more than 60 hours per week, in violation of Chinese law that caps the work week at 49 hours, including overtime.

I have excerpted below the violations unearthed by the FLA and its proposals for resolving these problems. Each alleged violation is followed by the FLA's “remedial action.” The full report is available online: Independent Investigation of Apple Supplier, Foxconn.

  1. Working hours:
  2. During peak production, the average number of hours worked per week at Foxconn factories exceeded both the FLA Code standard and Chinese legal limits. Further, there were periods during which some employees worked more than seven days in a row without the required minimum 24-hour break.

    Proposed remedy: Foxconn has agreed to achieve full legal compliance regarding work hours by July 1, 2013, while protecting workers' pay. In the next year, tens of thousands of extra workers will need to be recruited, trained and accommodated at the same time as hours worked are progressively reduced per worker.

  3. Health and safety:
  4. Our assessors identified numerous issues related to inconsistent policies, procedures and practices. The investigation revealed that a considerable number of workers felt generally insecure regarding their health and safety.

    Proposed remedy: Foxconn has agreed to change the system by which accidents are recorded. In the past, only those accidents that caused work stoppage were recorded as accidents. Moving forward, all accidents that result in an injury will be recorded and addressed.

  5. Industrial relations and worker integration:
  6. Investigators found that workers were largely alienated, in fact or in perception, from factories’ safety and health committees and had little confidence in the management of health and safety issues.

    Proposed remedy: Foxconn has agreed to ensure elections of worker representatives without management interference. All workers will receive a copy of the Collective Bargaining Agreement and new employees will receive information about union activities during their orientation process.

  7. Compensation and social security insurance:
  8. The assessors discovered that unscheduled overtime was only paid in 30-minute increments. This means, for example, that 29 minutes of overtime work results in no pay and 58 minutes results in only one unit of overtime pay. Across China, all workers must have health, accident, social security, unemployment, and maternity coverage, but the system is set up on a provincial and city basis. This means that workers who migrate from other cities or provinces can’t collect their insurance when they return home. Workers are further unmotivated to enroll because of a required co-pay into insurance programs from which they do not benefit.

    Proposed remedy: Foxconn has agreed that the policy and practice relating to such situations warrants improvement; workers will be paid fairly for all overtime and work-related meetings that occur outside regular working hours. After extensive discussions, Foxconn will offer a two-track remedial strategy: to investigate alternative private options to provide unemployment insurance to migrant workers, and work with government agencies to expedite the transportability of benefits. FLA will conduct a cost of living study in Shenzhen and Chengdu to assist Foxconn in determining whether worker salaries meet FLA requirements for basic needs, as well as discretionary income.

20 comments on “Key Violations at Foxconn’s Apple Plants

  1. FLYINGSCOT
    March 30, 2012

    It is ridiculous Apple is making so much money when using contractors who openly abuse their workforce.  I hope the regulators stcik with it until the issues are fixed.

  2. Nemos
    March 30, 2012

    Well said , it is ridiculous …. “Foxconn workers currently work more than 60 hours per week,” also I was wondering about who is behind the Foxconn ?

  3. ahdand
    March 31, 2012

    I also feel the same but its a pity to see a downfall.

  4. Ashu001
    March 31, 2012

    Bolaji,

    You will like this.

    One of the Key recommendation of the Report was to reduce the amount of permitted Paid Overtime per week from 60 hours per month to 36 hours per month.

    What happes when you force people to do something which they don't want to do/is not in their best interest?

    They rebel.

    http://in.reuters.com/article/2012/03/30/apple-foxconn-working-hours-idINDEE82T05J20120330

    Ashish.

    P.S Personal choice and responisbility is key-Always.

  5. JADEN
    March 31, 2012

    All these remedies are mere promises which may not even be fufilled within the speculated time of 18 months.

  6. ITempire
    March 31, 2012

    Now that the news is confirmed and legally approved, its time Apple ensures that doesnt happen again and for future, scrutinizes the company well before outsourcing its operations.

  7. Himanshugupta
    March 31, 2012

    Reading this report sounds like coming straight from colonial period. Labor working without break, minimum wage and no safety net etc are not the way to keep the profit margins up. Foxconn will have to hire, train and deploy tens of thousands of workers to accommodate the basic necessity that should have been provided on the first place in itself. I hope more customer scrutinize their suppliers to find out whether they are buying “blood spare parts”

  8. ITempire
    March 31, 2012

    Well put Himanshugupta @ blood spare parts. 

    Corporations are unfortunately not that innocent and they always have to be regulated to avoid these kind of activities. If the regulatory monitoring is not so strong, they'l be more than happy to get away with it. What I think, the executives of the corporations should themselves realize that they owe a lot to the world being powerful and these illegal profit-increasing activities should be avoided without any regulation.

  9. Taimoor Zubar
    March 31, 2012

    It is ridiculous Apple is making so much money when using contractors who openly abuse their workforce”

    @Flyingscot: It's certainly depressing to see such disparity between the reputation of the company and the way it's handling it's workforce – albeit outsourced workforce. At least the good sign is that there are recommendations that Foxconn will have to follow with each finding. I hope the working conditions in Foxconn improve because of this.

  10. Anna Young
    March 31, 2012

    Well said Himanshugupta- Absolute slavery! Despite all this damning revelation, it did little to deal a dent  in Apple's sales margin…… I hope this does not repeat itself again and hope more is done to safeguard working conditions any other factory of this sort..

  11. ITempire
    March 31, 2012

    ” Despite all this damning revelation, it did little to deal a dent  in Apple's sales margin”

    @ Anna

    This is something that might encourage more organizations to break laws as they wont have to fear revenue loss. However, with social media becoming more and more powerful, tables may be turned and revenue losses can force organizations to avoid activities that cause bad publicity.

  12. ITempire
    March 31, 2012

    @ TaimoorZ

     “I hope the working conditions in Foxconn improve because of this.”

    With Tim Cook, CEO of Apple, eyeing towards building  strong relations with investors, he is more likely to make efforts to remove such problems for the future as if news like this one can make headlines, there may be several other weaknesses of Apple which may make headlines too and these cumulatively, may become a reason for divestment and revenue fall. Also, not to forget the role social media can play in the debacle.

  13. Anna Young
    April 1, 2012

    @WaqasAltaf, You're correct, the role and power of the media is unparalleled. The bad publicity forced the hand of Apple to review its working relationship with Foxconn and highlighted the factory's working conditions, this is the effect of the changes we read in the report. It's good.

  14. djlevy
    April 3, 2012

    Speaking as a manufacturing leader in China, I can tell you that many people fail to understand one important fact: that companies like Apple and Foxconn get little or no benefit from stressing their workers. Actually, I argue, the hidden cost of doing so ends up greater than the benefit of incrementally lowered labor costs.

    This is why China, despite its rising labor costs, is still an a attractive manufacturing environment– because those increased costs are not that significant in the first place, and also because those cost increases can be offset by implementing lean (not mean) supply-chain strategies.

     

     

  15. Ariella
    April 3, 2012

    @djlevy I like the idea of “mean (not mean) supply-chain strategies.”

  16. bolaji ojo
    April 3, 2012

    djlevy, You are correct companies don't benefit at least in the long term by squeezing workers. Yet, many continue to do this and despite all denials, the reality is that Apple and the other OEMs manufacturing in China didn't by themselves decide to raise employee salaries and improve workplace conditions until activists got involved.

    Your conclusion that the cost to these companies of improving labor conditions and the terms is minimal is also correct. So, why won't they simply do this?

  17. djlevy
    April 3, 2012

    Bolaji, 

    You ask why. The simple answer is this: a failure of imagination.

    The majority of leaders and managers in China manufacturing (including Chinese, Taiwanese, Hong Kong-ers, Koreans, westerners, etc. ) simply cannot imagine Chinese manufacturing done differently than it is done now.  They can only imagine it as it is now, just getting “more expensive” and therefore “less productive”. They respond to reduced productivity by simply doing more of the same, but trying to do it cheaper. And they tend to focus on the one cost driver they think is the most malleable: labor. Workers are getting more money, so speed up the conveyor to get 5% more pcs/hour. (And forget abut the 20% productivy improvement you could get by eliminating waste in your processes, by more creative vendor negotiations, etc. etc.) 

    It's difficult for them to imagine that labor rate does not equal labor costs (counting hidden costs takes too much imagination),  and that labor productivity is not a zero-sum game, erroded by labor costs. Labor value counts too (but accessing the value of Chinese laborers also takes imagination). Factory managers and accountants usually have issues with this type of thinking. 

  18. Ariella
    April 3, 2012

    @Ashish your PS holds true in all cases. 

  19. Ashu001
    April 4, 2012

    Ariella,

    How are you doing????

    Its been ages since I heard anything from you-Longtime No see…

    Yes,you are right-Personal Responsibility& Choice is always the Key.

    There is only so much any Govt no matter how well-intentioned it is can do.

    We have a choice, do we want an incompetent Nanny state(which controls everything) in charge or we do take charge ourselves and decide whats best for ourselves?

    This is why the Foxconn decision to cut Paid Over-time drew so much flak amongst the workers.

    Simon Black writes a very fascinating blog on this very issue here

    http://www.sovereignman.com/expat/occupy-movement-missing-the-point/

    His latest post(which this one is a classic and talks about the real issues we are facing today).

    Regards

    Ashish.

  20. Ariella
    April 4, 2012

    @Ashish, Such a nice reception, thank you! I've been around, though we may have been concentrating on different posts. Nice point in the link, and a great phrase: “ kleptocratic Keynesian fiat bubble  .”

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