Foxconn Technology Group, a key supplier for Apple Inc. and other major U.S. tech companies, overworks its employees and violates the country’s overtime laws, according to a major Chinese labor union. The All-China Federation of Trade Unions, the country's nonindependent, government sanctioned labor organization, singled out the Taipei-based electronics manufacturer during an event Monday to discuss Chinese labor violations.
“Many companies could learn from Foxconn – that from overworking staff, the company has earned greater profits to become a Fortune 500 member,” Guo Jun, the head of the union’s legal department, said during a conference in Beijing. Foxconn ranked 32nd on the list of Fortune 500 companies last year, making it one of the world’s largest companies based on revenue.
Foxconn, the world’s largest contract electronics supplier, employs about 1.3 million workers during peak operations, such as when a new iPhone or the latest Sony PlayStation comes out. The company has been criticized in the past for employee treatment and a rash of worker suicides in 2010. The union says Foxconn and other suppliers continue to violate the country’s overtime laws, with the long hours leading to psychological problems for the workers.
Independent labor organizations are illegal in China. Unions in China must be approved by the government and workers in China do not have the freedom to choose their own collective-bargaining representatives.
“We can hope that this sudden openness in the official union might have some sort of downward pressure on overtime hours and an upward pressure on wages,” said Kevin Slaten, program coordinator for China Labor Watch, a New York-based labor-rights group. “When it comes to the issue of social stability in China, the government is concerned about the countervailing pressures of wages that are too low and the need for businesses to remain competitive.”
Under China’s labor laws, workers must be paid overtime for working more than 40 hours. But the number of overtime hours is generally limited to 36 hours a month, or about nine additional hours a week. Under some circumstances companies can get permission from local governments to assign more overtime in a given month, but only if there are other months where workers get no overtime.
The aim of the law is to prevent companies from forcing workers to put in well over 50 hours a week regularly. Companies can get around these limitations with connections to local political elites that allow them to place workers into long, grueling workweeks of rote labor.
“This is a gray area, where the local government allows companies to go past the limit if you have connections,” said Slaten. “It’s a perverse notion that a human being loves doing repetitive work 12 to 14 hours a day. If you ask the workers, they’ll tell you that a higher base wage is preferable to [more] hours.”
Foxconn workers typically earn a base salary of between 1,800 yuan ($287) and 2,000 ($319) a month, which is typically higher than the local minimum wages where these factories are located. Minimum wages vary in China depending on the province and city, but the average is roughly 1,900 yuan a month, or about $300.
Chinese factory wages have been on the rise as the country rapidly industrializes. Competition from other Asian economies, like Vietnam and Indonesia, is putting pressure on wages in China for rote factory work. India is emerging as an ideal secondary location for companies like Foxconn that have traditionally relied on mainland factory workers.
“Most multinationals that produce labor-intensive goods, like textiles and apparel, are actively seeking to diversify beyond China to reduce costs and mitigate political and supply-chain risks,” said a 2013 report from McKinsey & Co.