An investigation by Fair Labor Association on the working conditions at Apple's major supplier Foxconn found contravention of several Chinese labor laws, including excessive working hours, unpaid overtime and inferior safety conditions. FLA has secured commitment from Apple and Foxconn that they will reduce working hours while protecting the pay, improve health and safety conditions, and also give workers more say.
"If implemented, these commitments will significantly improve the lives of more than 1.2 million Foxconn employees and set a new standard for Chinese factories," said Auret van Heerden, President and CEO of the FLA.
The new agreement struck by FLA with Apple and Foxconn would likely become a benchmark in the global technology industry, taking into account the clout both companies enjoy in the industry.
FLA, which surveyed three Foxconn plants and over 35,000 workers, found Foxconn to have violated at least 50 FLA code and Chinese labor laws. In January, Apple joined the FLA and agreed to uphold its Workplace Code of Conduct throughout their supply chains. Apple was the first technology company to join the association, prompted mainly by worldwide criticism on the working conditions at its supplier.
The association found that employees worked longer hours, which exceeded both the FLA's code and Chinese legal limits. FLA also uncovered that some employees even worked for more than seven days in a row without availing a day off. As a solution, Foxconn agreed to enforce a reduction in working hours to 49 hours per week, including overtime, by July 1, 2013, without any change to pay.
The survey also discovered that 14 percent of workers did not receive fair compensation for unscheduled overtime, as overtime was only paid in 30-minute increments. Foxconn has agreed to pay workers fairly for all overtime as well as for work-related meetings outside of regular working hours. Furthermore, Foxconn and Apple have also agreed to retroactively pay workers unpaid overtime.
Foxconn will now have to hire tens of thousands of additional employees to compensate for the lost working hours, and also increase it housing and canteen capacity. Apple would have to pass on the additional cost to consumers or cut down its margins.
Assessors were satisfied that Foxconn pays wages on time and above the legal rates. However, 64.3 percent of workers said they were dissatisfied with their salary and was not enough to cover their basic needs.
FLA said it 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.
More than 43 percent of the workers reported that they have experienced or witnessed an accident. Until now, Foxconn only recorded accidents that resulted in a production stoppage, but from now on it has committed to report all accidents resulting in an injury.
The survey also found that the union at Foxconn is dominated by management representatives and does not provide true worker representation. Foxconn has agreed to ensure elections of worker representatives without management interference.
AAPL closed Thursday's trading on the Nasdaq at $609.86, down $7.76 or 1.26%. The stock further lost $1.96 or 0.32% in after hours trade.
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by RTT Staff Writer
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