Foxconn agrees to raise worker wages

A Chinese woman walking past a Foxconn factory sign in an industrial district of Foshan City, in southern China's Guangdong province.

Sarah Gardner: If I say Foxconn, you probably think exploited factory workers in China who work long days for slave wages to bring us a host of devices like the iPhone and the iPad. A spate of worker suicides put the company -- and its customers like Apple -- front and center in a debate over the costs of cheap labor.

But over the weekend, the Taiwan-based company made news by agreeing to raise worker wages up to 25 percent, and cutting down on excessive overtime.

The wage hike comes amid inspections by the Fair Labor Association. Labor experts say Foxconn's not the worst of China's manufacturers when it comes to overall working conditions.

We called up law professor and China trade expert Anna Han at Santa Clara University to give us the big picture on this company. Prof. Han, thanks for joining us.

Anna Han: Thank you.

Gardner: Prof. Han, give us an idea or a sense of just how big Foxconn is.

Han: Well, I believe no one knows exactly how many employees Foxconn has, but the estimate is approximately a million worldwide. And within China itself, several hundred thousand. They have about 13 factories in China.

Gardner: How important is Foxconn to global technology manufacturing? I understand that, you know, if we have a gadget, an electronic gadget, they might have had something to do with making it.

Han: Yes, they very well may have. For example, together with a couple of other manufacturers in China, they supply about 90 percent Apple's products. They also make Kindles and a number of gaming systems as well.

Gardner: I understand that the Foxconn campuses are like mid-sized cities -- just how big are they?

Han: In fact, they're called cities. It's called Foxconn City, in terms of one of the locations. They have something around 15 actual factories, along with dormitories and cafeterias. It's about one square mile.

Gardner: And they are filled with workers who come from rural areas all over China. And they live there, right? They don't just work there, they live there.

Han: That's right.

Gardner: Now of course, the controversy has been over not only wages, but also about excessive overtime and working conditions. And the agreement with Foxconn is that they will raise wages and reduce overtime. How significant is that, that the company agreed to that?

Han: Well I think it's a significant concession, but I don't think it addresses all of the issues that the workers are concerned with. They work very, very long hours. The estimate is anywhere from 12 to 18 hours a day. And another major issue I see is that because these workers do live and work in this one location, that is all they do. Their entire social circle consists of sleeping, getting up, working, eating, having short breaks in between and then going back to bed. It's very difficult for these workers to get out of the complex and actually do something, because most of them do not live in that city.

Gardner: I can imagine that some of these Chinese workers, though, Prof. Han, actually want that overtime, don't they?

Han: Yes, they do. That's assuming they actually get paid. One of the biggest complaints that I've heard is that Foxconn sometimes makes them work, but they do not always pay the overtime that's due the workers.

Gardner: What do you think this means for other Chinese manufacturers? Will they follow suit, will it affect them?

Han: No, I don't believe they will, unless the media exposes more of these types of practices. And it really does take the purchasers of the products, such as Apple, to require that the suppliers actually comply with fair wage and labor practices.

Gardner: Bottom line: How is this going to affect the American consumer?

Han: Well theoretically, if the wages are increased at Foxconn, I assume some of that will be passed on to Apple and in turn passed on to the consumers. It is also possible, obviously, for Apple to hold the line on the prices of the products that it sells, and simply absorb the costs in terms of increased manufacturing costs.

Gardner: Anna Han is a professor of law at Santa Clara University. Prof. Han, thanks for joining us.

Han: OK, thanks.

About the author

Sarah Gardner is a reporter on the Marketplace sustainability desk.

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