Apple and Foxconn Promise Big Changes in Chinese Factories

Absent the sensational sideshow that became of Mike Daisey’s play “The Agony and Ecstasy of Steve Jobs,” there are real issues at stake. Poor working conditions at the Chinese factories that build and supply mobile equipment, electronics and gadgets to the masses have been well documented.

Following a couple years of growing interest and unfavorable media exposure, Apple became the first technology company to join the Fair Labor Association. Apple subsequently ordered its largest supplier,Foxconn, to submit to an independent audit by labor rights experts led by FLA president Auret van Heerden.

FLA’s investigation uncovered significant problems. “The nearly month-long investigation found excessive overtime and problems with overtime compensation; several health and safety risks; and crucial communication gaps that have led to a widespread sense of unsafe working conditions among workers,” FLA wrote in its report released Thursday.

“During peak production periods, the average number of hours worked per week exceeded 60 hours per worker. There were periods in which some employees worked more than seven days in a row without the required 24 hours off,” the report continues.

As a result, Apple and Foxconn have agreed to bring the factories into full compliance with Chinese legal limits and FLA standards on working hours by July 2013. In theory, that means workers won’t work more than 49 hours per week, including overtime, and Foxconn has agreed to make up the difference in lost income due to reduced overtime.

Foxconn, which already employees more than 1.2 million workers who build 40 per cent of the world’s electronics, will have to hire tens or hundreds of thousands of new employees to fill those hours. The company is already seeing astronomical growth as it is, but if more technology companies choose to follow these standards, the demand for more workers at even more manufacturing plants will grow across the entire sector.

Ancillary to overtime limits, FLA also discovered a systematic approach to unscheduled overtime that resulted in no compensation. “The assessment found 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. Foxconn committed to pay workers fairly for all overtime as well as work-related meetings outside of regular working hours. In addition, FLA secured agreement from Foxconn and Apple to retroactively pay any worker due unpaid overtime. The companies are currently conducting an audit to determine the payments due to workers,” FLA writes.

Some workers are less than convinced about the seemingly swift change of heart for Foxconn and Apple though. A 23-year-old worker tells Reuters: “We are worried we will have less money to spend. Of course, if we work less overtime, it would mean less money.”

Bill Weir of ABC’s “Nightline” followed up on his report from six weeks ago when the FLA inspection began at three of Foxconn’s largest factories in China. Van Heerden tells ABC that he found no evidence of child labor or forced labor, but overtime was rampant.

“Forced overtime is one of the most pervasive workers’ rights problems in China. The law here says no one can work more than 49 hours a week, but no one actually obeys that law. Apple’s official limit is 60 hours a week,” Weir adds in his report.

“The question is are people doing it voluntarily, do they have a say? If they refused overtime are they going to face any kind of recrimination,” Van Heerden says.

FLA surveyed 35,000 workers anonymously on, you guessed it, iPads. “They’re paid about 20 per cent above the minimum wage, the legal minimum wage. We asked them if they feel that it’s fair and the majority said, yes, they felt it was fair but they also felt wasn’t enough to meet their basic needs,” Van Heerden adds.

Finally, as technology companies and manufacturers absorb additional costs on the build and supply side by following these standards, Weir asks the FLA head if consumers will also have to pick up costs.

“Social responsibility has a cost,” Van Heerden responds, adding that every supplier and company involved will have to absorb the costs. “I think we need to be ready to put our money where our mouths are.”

Indeed, in order to force improved working conditions and labor rights in China on any grand scale, companies like Apple will have to lead the way. While the reaction from Apple has been typically slow and methodical, a few grandiose gestures this week — CEO Tim Cook visiting a Foxconn assembly line and the company’s commitment to FLA’s recommendations — seem to indicate the company is at least willing to change the ways and conditions under which its products are manufactured. Nearly every other company it competes with has not even taken that step.

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