Apple And Foxconn's Agreement Will Raise Bar For Working Conditions In China

Yesterday Fair Labor Association published the results of its investigation into three Foxconn facilities. The inspection has revealed a number of violations of the labor law, and following FLA’s recommendations Apple and Foxconn have agreed to bring overtime and working hours in line with the Chinese legal limit of 36 per month and 49 per week. Also Foxconn will hire thousands of new workers and provide a compensation package to ensure employee’s salaries remain at the same level amid reduced overtime and working hours.

In the interview (showed above) with Reuters, president of the FLA Auret van Heerden notes that agreement between Apple and Foxconn could raise standard for working conditions in China.

“Given that Foxconn and Apple have now decided to raise the bar… dramatically improved conditions for workers… other factories are going to start losing workers, workers are going to choose to go and work at Foxconn… you work less and you get the same money, and you get time to spend it. Other factories will have to raise their offer in order to attract and retain workers… Apple and Foxconn will set the bar that everyone else will have to meet”.

One inevitable result of reducing hours and maintaining the same salaries for workers is increased costs that potentially will pass down to customers. Not just to Apple’s consumers, but to customers of all Foxconn partners, including Motorola, Microsoft, Amazon, Dell, HP, Sony and Nokia. However, with huge margins, Apple will likely be in more advantageous position than other Foxconn partners who will have to pass down higher prices to their consumers.

While several reports noted that labor costs connected with assembly account for a small percentage of total production costs, HP Chief Executive Meg Whitman said in February:

“If Foxconn’s labor cost goes up … that will be an industry-wide phenomenon and then we have to decide how much do we pass on to our customers versus how much cost do we absorb.”

Throughout the year the FLA will continue its audits of Apple’s suppliers including Pegatron, Quanta Computer and Wintek.