Foxconn wants clients to share wages burden

Foxconn, the world’s largest electronics contract manufacturer, expects its customers – which include Apple, Dell and Sony – to help shoulder the burden of a large wage increase for its factory workers.

Hon Hai Precision Industry, Foxconn’s Taiwan-based parent, said it could not predict how the additional cost would be shared but “we are applying international standards now. The time has come for the global food chain to face these issues”.

Foxconn late on Sunday announced a revamp of the pay structure in its main production base in Shenzhen, in the clearest sign yet of big changes in the labour conditions in Chinese export manufacturers.

The group said that as well as a 30 per cent wage increase from July 1, workers who reach certain performance standards would also get another 66 per cent pay rise from October 1.

“The monthly wage for all first-line employees and their line leaders and supervisors in Shenzhen will be elevated to Rmb2,000 ($290) as early as October 1 2010,” if the workers successfully passed a three-month evaluation period, the company said.

The latest pay rise would more than double the basic pay of assembly line workers in Shenzhen and bring it to a level they currently only reach by working 12-hour shifts, six days a week.

The wage rise comes amid a spate of suicides among workers at Foxconn’s Shenzhen plant and a strike at a Honda plant in China.

These events have triggered calls for better conditions for the tens of millions of migrant workers who have been powering China’s export manufacturing machine. Foxconn said the three-month evaluation period was aimed at keeping workers from job-hopping.

Combined with the pay rise, it is meant to change Foxconn from a high-pressure, low-loyalty employer into one seen as more attractive to workers.

The Taiwanese group, which makes to order electronic gadgets such as iPhones and PlayStations, is China’s largest employer with a headcount of 800,000 in the country.

Contract manufacturers are starting their annual negotiations with customers – branded electronics companies such as Apple, Hewlett-Packard and Motorola – for next year’s orders.

But some, such as Quanta, the PC maker, said it had raised wages in the first quarter and was therefore unlikely to follow suit.

Allen Pu, analyst at Fubon Securities in Taipei, said that while Hon Hai’s earlier pay increases had merely ensured they matched rising legal minimum wage levels, this move was “clearly a gesture to show that they are offering better terms than the
minimum wage and their competitors”.

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