Foxconn to raise salaries 20% after suicides

Foxconn plans to raise the wages of its Chinese workers by about 20 per cent after a spate of suicides at its main plant in southern China prompted international scrutiny of working conditions at its factories.

The company, the world’s biggest contract maker of electronics and China’s largest employer, makes most of Apple’s iPhones and iPods and many other consumer products.

Its decision to raise workers’ wages suggests that employers in southern China, dubbed the workshop to the world, could be obliged to improve working conditions at their factories.

Foxconn’s move could also put pressure on its customers, which include Dell, Hewlett-Packard and Nokia, to raise the prices of their products if the contract manufacturer passes on a portion of the higher costs.

But Edmund Ding, vice-president and spokesman at Hon Hai Precision Industry, the company’s Taiwanese parent company, said it would take several months to determine the net impact of the wage increase.

Mr Ding said the pay rise would depend on location but would “be about 20 per cent on average”. He said the increase would be implemented soon.

Ten workers have committed suicide at Foxconn’s plant in Longhua, near Shenzhen, since the start of 2010. Another tried to kill himself on Thursday but survived, according to the official Xinhua news agency.

A local government official in Shenzhen said Beijing had sent an investigation team, including officials from the labour and public security ministries, to the plant. The Shenzhen plant employs and houses about 300,000 people. Foxconn has about 20 plants in China employing 800,000 people.

Some of Foxconn’s top customers said they were looking into conditions at the plants. Sony said it was re-evaluating the environment at Foxconn and had asked all suppliers to comply with its code of conduct. Apple, Dell and Hewlett-Packard have said they will investigate working conditions at Longhua.

Foxconn pays its workers according to China’s legal minimum wage, but most make at least double that through constant overtime. Labour activists have been asking for a 50 per cent pay rise. The base monthly salary at the Longhua plant is Rmb950 ($140) but staff said they made almost Rmb2,000 a month including overtime.

Additional reporting by Robin Harding in Tokyo

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