Foxconn Will Double Salaries for Lowest-Paid China Workers After Suicides

[makapaaa]

Foxconn Will Double Salaries for Lowest-Paid China Workers After Suicides

<CITE class=byline>By Tim Culpan and Janet Ong - Jun 6, 2010 </CITE>

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Hon Hai Group founder and chairman Terry Gou speaks during a news conference at the company's Foxconn plant in Shenzhen. Photographer: Qilai Shen/Bloomberg

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June 7 (Bloomberg) -- Bloomberg's Susan Li reports on employee wage increases at Foxconn Technology Group after the company was criticized for contributing to worker suicides at its plants. Foxconn, the manufacturer of Apple Inc. iPhones and Hewlett-Packard Co. computers, said for the second time in less than a week that it will raise wages, more than doubling base salaries at its Shenzhen factories within four months. (Source: Bloomberg)



Hon Hai Precision Industry Co., the manufacturer of Apple Inc. iPhones, dropped to the lowest in nine months after the company said it will more than double base salaries at its Shenzhen factories over four months following a spate of suicides.
The stock fell 4.8 percent to NT$118.50 as of 9:04 a.m. in Taiwan, the lowest since Sept. 1, while the benchmark Taiex index fell 2.7 percent. Hon Hai has lost 22 percent this year.
Hon Hai, also known as Foxconn Technology Group, will boost monthly pay for most first-line workers, their line managers and supervisors to 2,000 yuan ($293) from 1,200 yuan effective Oct. 1, the Taipei-based company said in an e-mailed statement late yesterday. On June 2 the manufacturer raised base pay from 900 yuan, effective immediately.
Hon Hai, which was criticized by labor groups for putting profit ahead of employee welfare after at least 10 workers committed suicide, joins Honda Motor Co. in boosting wages in China. Apple Chief Executive Steve Jobs last week said the suicides were “very troubling” and said his company is “all over” Hon Hai to resolve the issue.
Foxconn Technology Co., an affiliate of Hon Hai, which makes metal computer cases, dropped by its 7 percent limit to NT$106.50.
“The pay raise is even more than we would have expected; it’s crazy,” said Calvin Huang, who rates Hon Hai Precision “buy” at Daiwa Securities Group in Taipei. “Their clients must be required to absorb this too.”
Estimates Cut
Huang cut his six-month share price estimate for Hon Hai Precision to NT$144 from NT$180 after last week’s 30 percent pay increase was announced. Morgan Stanley lowered its estimate to NT$150 from NT$168 and kept an “overweight” rating following the earlier wage rise, while Goldman Sachs Group Inc. cut it to NT$156 from NT$188 and kept a “buy” rating on the stock.
At least 10 workers have died from suicide, five during May, with three more attempts, according to Hon Hai. The deaths prompted Chairman Terry Gou to open factories to the media and apologize. “Many of these deaths have been linked to the horrible conditions at Foxconn facilities, where employees are expected to work for 10 hours per day,” New York-based China Labor Watch wrote in an e-mailed statement today.
Honda Motor
Honda, Japan’s second-largest automaker, last week reached an agreement with most of the 1,900 employees at a Chinese parts factory to raise pay by 24 percent to 1,910 yuan after workers walked out May 17. The strike shut its car-assembly plants and stopped production.
Hon Hai spokesman Edmund Ding declined to comment on what effect the wage increases will have on the company’s earnings or clients. More than 400,000 workers will be affected by the pay raise with overtime hours worked by employees likely to decline after the higher wages are implemented, he said.
“This wage increase has been instituted to safeguard the dignity of workers, accelerate economic transformation, support Foxconn’s long-term objective of continued evolution from a manufacturing leader to a technology leader and to rally the best of our workforce,” Gou said in yesterday’s statement. “We recognize our responsibility as a global leader in electronics manufacturing, and take this responsibility very seriously.”
Three-Month Evaluation
David Shane, a spokesman for Palo Alto, California-based Hewlett-Packard declined in an e-mail message to comment. Steve Dowling, a spokesman for Cupertino, California-based Apple, and Jess Blackburn, a spokesman for Round Rock, Texas-based Dell Inc., didn’t respond to e-mail or voicemail messages seeking comment Sunday.
The higher base wage will be effective after a worker passes a three-month evaluation period, Hon Hai said in its statement. Further pay raises for current line-leaders and supervisors will be determined by Aug. 1, while wage increases for factory workers in other parts of China will be determined according to local conditions and announced from July 1, it said.
“The company remains a typical sweatshop, as are all factories that overlook the basic needs of their workers for the sake of profit,” China Labor Watch wrote in a June 3 statement. Gou and Jobs have both denied Foxconn is a sweatshop.
To contact the reporter on this story: Tim Culpan in Taipei at [email protected].

 

[Leongsam]

That's bad news. It may push up prices. :(

There's 1.4 billion of them. Surely they can spare a handful every couple of days.

 

[Sperminator]

Just about five years ago in 2005, I was in Foxconn.

Its truly a gigantic company.

You get to see Battalion, after Battalion of people marching for their food... it's truly an amazing sight.

I heard from the workers back then, that their basic pay was minimum wage, RMB 450. I guess, back then it is still possible as the USD : RMB exchange rate was USD 1 : RMB 8.2

With the USD 1 : RMB 6.82 today, and expected to increase the price of RMB...

What I am observing is that the price of raw materials will increase.

The price of importation could reduce a little, however, for international companies like Foxconn, they are receiving USD as their payments from Dell, Apple, HP, Motorola, Cisco, etc... all the branded companies pay Foxconn USD.

I am quite surprised that Foxconn mentioned that their base pay is RMB 900 for production workers.

The Taiwanese do not really treat the PRC workers with respect and dignity.

Everything is all about cost control, efficiency, and volume production.

Living with 7 other people in a small room, have anyone really know what it is like?

What I see is that, this is a true representation of Modern Serfdom, Economic Slavery.

All these young lads, have to work 12 hours a day, sometimes 7 days a week. Depending on production requirements, there could be 2 shifts of 12 hours each, ramp up the production for global demand.

That would explain the high profit margins of the companies who outsourced to Foxconn. The manufacturing industry's margin is marginal, a mere 5% is considered good.

With domestic raw materials increasing in price, labor force demand of higher pay, worst, increase of RMB value against USD...

This would mean that the cost of export, for China, would increase dramatically.

Causing the big boys to consider going deeper in lands for their manufacturing demands, as the cost of labor is surely lower in the 2nd / 3rd tier cities of China.

With reference to Karl Marx's Das Kapital, or Capital Volume 1, the only way to reduce price of any commodity (which have use value, and exchange value) is the consider increasing the efficiency of the labor force, increasing production quantities, and paying them lesser.

When anyone worked long hours, 7 days a week, 12 hours a day, there will be absolutely no time for social well being, therefore social time is exchanged for money.

There will be more unhappiness in the production facilities of China, all demanding higher wage.

The dictatorship of the proletariat is happening, and the proletariat will protest...

 

[Einfield]

You Sam never fail to out do yourself, to be the worse or human kind.
I really like to open your skull and see what it is made up of inside.

That's bad news. It may push up prices. :(

There's 1.4 billion of them. Surely they can spare a handful every couple of days.

 

[longbow]

But you must look at it from their point of view. They are now offered US$300 per month. Board and Lodging is included.

That is pretty good money in China. From 1st world nations these job conditions may look bad but compared to their previous work of toiling in the farm, this is a cake walk and the pay is very good. Nothing is as tough as working in small farms. Your could toil a whole season only to have a late rain destroy everything.

For these girls at Foxconn, they can easily save US$2.5K a year and that if a fortune in the small villages.

In fact some of the maids in Singapore get less than that and on top of it they have to stay in foreign country, pay for the airfare and may have worse living conditions.

Read about the Honda strikes in China. One thing is don't play play with the workers there.

Just about five years ago in 2005, I was in Foxconn.

Its truly a gigantic company.

You get to see Battalion, after Battalion of people marching for their food... it's truly an amazing sight.

I heard from the workers back then, that their basic pay was minimum wage, RMB 450. I guess, back then it is still possible as the USD : RMB exchange rate was USD 1 : RMB 8.2

With the USD 1 : RMB 6.82 today, and expected to increase the price of RMB...

What I am observing is that the price of raw materials will increase.

The price of importation could reduce a little, however, for international companies like Foxconn, they are receiving USD as their payments from Dell, Apple, HP, Motorola, Cisco, etc... all the branded companies pay Foxconn USD.

I am quite surprised that Foxconn mentioned that their base pay is RMB 900 for production workers.

The Taiwanese do not really treat the PRC workers with respect and dignity.

Everything is all about cost control, efficiency, and volume production.

Living with 7 other people in a small room, have anyone really know what it is like?

What I see is that, this is a true representation of Modern Serfdom, Economic Slavery.

All these young lads, have to work 12 hours a day, sometimes 7 days a week. Depending on production requirements, there could be 2 shifts of 12 hours each, ramp up the production for global demand.

That would explain the high profit margins of the companies who outsourced to Foxconn. The manufacturing industry's margin is marginal, a mere 5% is considered good.

With domestic raw materials increasing in price, labor force demand of higher pay, worst, increase of RMB value against USD...

This would mean that the cost of export, for China, would increase dramatically.

Causing the big boys to consider going deeper in lands for their manufacturing demands, as the cost of labor is surely lower in the 2nd / 3rd tier cities of China.

With reference to Karl Marx's Das Kapital, or Capital Volume 1, the only way to reduce price of any commodity (which have use value, and exchange value) is the consider increasing the efficiency of the labor force, increasing production quantities, and paying them lesser.

When anyone worked long hours, 7 days a week, 12 hours a day, there will be absolutely no time for social well being, therefore social time is exchanged for money.

There will be more unhappiness in the production facilities of China, all demanding higher wage.

The dictatorship of the proletariat is happening, and the proletariat will protest...

 

[myfoot123]

At least Foxconn tend to be more humane. In Singapore you die your business unless you send a clear signal, via vote, to PAP not to take our lives & kindness for granted.

 

[johnny333]

At least Foxconn tend to be more humane. In Singapore you die your business unless you send a clear signal, via vote, to PAP not to take our lives & kindness for granted.

Many Sporeans are commiting suicides. Other than the ones they can't cover up those doing it at the MRT stations, there are the jumpers,....

The PAP can of course ignore these suicides because they are easily replaced by cheaper foreigners.

 

[Einfield]

The current commie government in PRC is not different from a whore house run by the Pope.

It just don't make sense, Allowing Exploitation of common working folks by foreign capitalist is a sin that will cause you your life in the Cultural Revolution, the whole ruling party will be mock in the street and send to far away remote farmland for "Labor Reform"

They are a showcase to the world that Communism Failed, it exist only as a political and propaganda tool, nothing more.

Isn't it ironic that China gave birth to communism because people are disgruntled with the greed of capitalism!

Now we can find the same greedy people exploiting young and simple minded people in this society!

And we all ended up back to square one!

All the revolutions and many people died for nothing!!!

 

[manokie]

I think the foreign companies in China now know that the Chinese workers cannot be toyed with... They will keep fighting for higher salaries and better benefits.. This is something that the Communist Party cannot help with because they need the people's support... Compare this with the sinkies who just accept the injustice in sinkieland...

The China dream is almost over.. Increase their wages more and you cannot make any profits from whatever products you assemble there..

 

[johnny333]

It just don't make sense, Allowing Exploitation of common working folks by foreign capitalist is a sin that will cause you your life in the Cultural Revolution, the whole ruling party will be mock in the street and send to far away remote farmland for "Labor Reform"

Is it any better than the Spore system

I still remember what a teacher told me many years ago when I was still in school, she described Spore as a "socialist democracy"

I sometimes wonder if this teacher has changed her mind

 

[manokie]

Is it any better than the Spore system

I still remember what a teacher told me many years ago when I was still in school, she described Spore as a "socialist democracy"

I sometimes wonder if this teacher has changed her mind

When was it a democracy???

Another brainwashed teacher.

 

[singveld]

it is the working condition, not the money. this taiwanese should be executed by ak-47 in china.

 

[johnny333]

When was it a democracy???

Another brainwashed teacher.

This was back before the age of internet. Back in those days LKY was a god

It was a time when rumours of his ill health would cause the stock market to tumble,.

It was the age of innocence & ignorance

 

[Einfield]

Along with the ruling party, for colluding with the foreigners.

it is the working condition, not the money. this taiwanese should be executed by ak-47 in china.

 

[johnsgp1]

But you must look at it from their point of view. They are now offered US$300 per month. Board and Lodging is included.

That is pretty good money in China. From 1st world nations these job conditions may look bad but compared to their previous work of toiling in the farm, this is a cake walk and the pay is very good. Nothing is as tough as working in small farms. Your could toil a whole season only to have a late rain destroy everything.

For these girls at Foxconn, they can easily save US$2.5K a year and that if a fortune in the small villages.

In fact some of the maids in Singapore get less than that and on top of it they have to stay in foreign country, pay for the airfare and may have worse living conditions.

Read about the Honda strikes in China. One thing is don't play play with the workers there.

i am very surprise you said all these things, they are definitely underpaid, work like robots, cant talk during working hrs, forced to work 120hrs of OT, punished if food was not fully consume in the canteen.

 

[singveld]

Along with the ruling party, for colluding with the foreigners.

how to kill the ruling party? they are the one with the most guns. tanks which squash peace protestors, nuclear subs to attack us fleets, a new aircraft carrier to attack maybe japan in future.

 

[Einfield]

What Lonbow say is not entirely wrong, it is relative depending on which angle you look at, one party is willing to exploit, the other is willing to be exploited because from where they come from, life is even worse.

but as they progress, expectation change, standard of living improve, cost of living went up but the one exploiting will try to keep the wages low.

Even if they move to Vietnam or India, the cycle will repeat itself.

i am very surprise you said all these things, they are definitely underpaid, work like robots, cant talk during working hrs, forced to work 120hrs of OT, punished if food was not fully consume in the canteen.

 

[Sperminator]

...

That is pretty good money in China. From 1st world nations these job conditions may look bad but compared to their previous work of toiling in the farm, this is a cake walk and the pay is very good. Nothing is as tough as working in small farms. Your could toil a whole season only to have a late rain destroy everything.

For these girls at Foxconn, they can easily save US$2.5K a year and that if a fortune in the small villages.

....

Dear longbow,

Have you ever made USD 300 before, and attempt to survive in China, even with food and accommodations.

And have you ever tried working 7 days a week, 12 hours a day, doing the same thing over and over again, without going for non-scheduled toilet break?, without resting your eyes, your sore hands, and without talking to your neighboring workers?

Although I have never done that before, I've worked for 1 month straight before, for about 12 hours a day, earning pittance... and I feel like killing myself.

What you are illustrating is from your own imagination about the crops being damaged by one season.

Saving USD 2500 in a year.

Let's say this was possible, and lets convert this to RMB, multiply by 6.6 as this is a fair market exchange rate.

RMB 16,500 cannot even buy enough bricks to build a home in the farm lands, and besides, there are big changes in China that the lands are being bought back by the Government, via Land Tickets or 地票

Now adays, even at the 3rd Tier Cities of China, the housing pricing is estimated to be around RMB 2000 to 3000 per meter square.

So, please do calculate how many years before they can afford a small pigeon hole of 50 meter square?

This is modern serfdom, and economic slavery...

Everyone deserves a well balanced lifestyle.

Why must it be only the Europeans and USA be enjoying these life of balance work life and social well being?

Why can't Asians enjoy work and social well being?

Why must China be the only ones to suffer, so that the world can enjoy cheap products? and to some companies, enjoy good surplus value of profits?

 

[longbow]

And yet they freely chose this job over the thankless farming jobs - where you can spend the whole year over your crops only to have a late rain destroy everything. Must look at this from their point of view. For many, these jobs may mean better future for their kids so many do it.

i am very surprise you said all these things, they are definitely underpaid, work like robots, cant talk during working hrs, forced to work 120hrs of OT, punished if food was not fully consume in the canteen.

 

[longbow]

Sperminator - $300US is very good money if you come from the rural areas. Not even talking about tier 3.

The US$300 x 2= US$600 a month a month could mean better schooling for their kids and that might lead to better future.

You must see where these workers are coming from. You should go ask your maid, why do they pay so much to work in Singapore just to make US$250 a month. Many that go to Middle East get assaulted, raped. What the heck for. Simply because it beats working for no pay at the family plot.

I am talking about risky nature of farming. 1 bad season could set you back 3 good seasons.

So big question is - why work in such a bad job if the money is so little?? Why?? might as well make more working the family farm? Nobody is forcing these poeple to work in these jobs.