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«Foxconn and Apple Fail to Fulfill Promises: Predicaments of Workers after the Suicides1 6 May 2011 Introduction The series of suicides at Foxconn2 in ...»

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Students & Scholars Against Corporate Misbehaviour

Telephone: (852) 2392 5464 Fax: (852) 2392 5463

Email: sacom@sacom.hk Website: www.sacom.hk

Mailing Address: P.O.Box No. 79583, Mongkok Post Office, HONG KONG

Foxconn and Apple Fail to Fulfill Promises:

Predicaments of Workers after the Suicides1

6 May 2011

Introduction

The series of suicides at Foxconn2 in the first five months of 2010 seemed to have accelerated its

relocation across all parts of China. One year on, the inland provincial governments compete with each other for Foxconn’s investment by offering concessions to the company. In the first round of competition, Zhengzhou of Henan Province has won the project among various interested cities, followed by Chengdu of Sichuan Province after rounds of negotiations. With strong governmental support, the workforce in Foxconn has grown to 1 million, a predominant majority of its workforce is young peasant-workers from the countryside. At recruitment talks, Foxconn paints a whole new rosy picture: high wages and good prospect. It looks like Foxconn might have reflected deeply upon its military management and low-cost production strategy, which had 1 The report is edited by Centre for Research on Multinational Corporations for the European project makeITfair.

2 The Taiwanese owned Foxconn Technology Group, a subsidy of Hon Hai Precision Industries Ltd., is the world’s leading electronics manufacturer. Foxconn ranked 112th among Global Fortune 500 Companies in 2010. Currently, Foxconn has a workforce of a million workers all over China.

1 driven workers to despair. A number of Foxconn’s customers, notably Apple, HP and Dell, have also pledged to “work with Foxconn” to live up to higher international labour standards. A big question is how this hidden electronics supply chain really works. SACOM is interested to track the working conditions of the new Foxconn production sites to ascertain the workplace improvement in place, if any.

While Foxconn is moving to the inner part of China, Students & Scholars Against Corporate Misbehaviour (SACOM) is interested to track the working conditions of the new Foxconn production sites. In this spring, SACOM researchers visited two Foxconn production facilities in Chengdu and Chongqing municipality in Western China, where they are manufacturing Apple iPad 2 and HP laptops. We also revisited Foxconn’s flagship plants in two industrial towns, Longhua and Guanlan in the Shenzhen, where employees are still housed in dormitories surrounding with anti-suicide nets.

Factory profile:

Shenzhen Chengdu Chongqing Campus (1) Longhua and (2) (1) southern plant: Xiyong Micro-electronics Guanlan Chengdu

–  –  –

While Apple commends the measures taken by Foxconn to improve working conditions, SACOM finds predicaments of workers remain. Workers always have excessive and forced overtime in order to gain a higher wage. Workers are exposed to dust from construction site and shop floor without adequate protection. Even worse, they are threatened by potential harm of occupational diseases in various departments. Additionally, military-styled management is still in practice, characterized by “military training” for new workers.

SACOM staged a protest in front of Foxconn shareholder meeting in Hong Kong in 2010.

2 Throughout the investigation, when researchers asked about the feeling of Foxconn workers about the hardship of workers, like low wages, potential harm of occupational diseases, work pressure and exhaustion, the typical answer is “I get used to that”. Despite of grievances from workers, workers feel it is helpless to bring changes. Therefore, they can only submit themselves to the rules and culture of Foxconn or resign. A couple of interviewees with whom SACOM is in contact with have left the factory within 1-3 months to seek better jobs. This reflects human management at Foxconn as merely a slogan.

Foxconn has primary responsibility in labour rights abuses. The clients, including Apple and HP, which declare decent working conditions at their suppliers have indispensible obligations to put their promise into practice. Taking labour rights violations in Chengdu are the most problematic, Apple, the sole buyer of Chengdu plant, must take actions to improve working conditions at Foxconn. SACOM’s international partners of the IT campaign, makeITfair and GoodElectronics network, designated May 7th as the global action day on Apple and Foxconn.3 This report is part of the efforts to invite concerned consumers to voice out our aspiration of fair IT products from both Apple and Foxconn.

–  –  –

Research Methodology From March to April, SACOM researchers interviewed about 120 workers in Shenzhen, Chengdu and Chongqing. The extensive majority of the interviewees are frontline workers, and about 10 of them are frontline supervisors and middle management. Most of the interviewees are young people aged 16-30. Researchers approached workers outside the factory compound and in the living community of workers. In general, workers are open to interviewers, but some did not dare to tell their basic salary, position, product that they produce, fearing that will constitute a breach of “confidential agreement”. All the names appear in this report are pseudo names in order to protect their identities. Pictures of the report were taken by researchers and provided by workers.





3 Time to bite into a fair Apple, makeITfair, http://makeitfair.org/.

–  –  –

Findings

1. Recruitment Foxconn hires workers from 4 main channels, namely recruitment counter at government offices, vocational schools, labour agencies and its own recruitment centres.

Government’s taskforce for Foxconn recruitment The Sichuan government plays an influential role in the recruitment process. In fact, most of the interviewees in Chengdu highlighted that they were recruited by the local governments of the respective towns and villages. The endeavour of the governments in village level can be explained by pressure from the Chengdu government in order to boost the economic development.

The government also set up “Project No. 1” which facilitates the investment and production of Foxconn in Chengdu. On the website of Pi County of Chengdu, it reveals that the local government has to accomplish the recruitment project for Foxconn in line with “Project No. 1”.4 The Chengdu’s Pi County government states it has to fulfill the task of Foxconn recruitment project.

Source: Pi County government website dated 15 April 2011.

Misleading job advertisement from government Job seekers saw a job advertisement posted by the government in their hometowns which showed the salary at Foxconn was CNY 1600, and the salary would be increased to over CNY 2000 after the appraisal. Many young people find the terms are attractive and apply for jobs at Foxconn subsequently.

“At that time, the job advertisement from the government showed there was 8-hour work shift a day. And the monthly salary in the first six months is CNY 1600. Although I can make CNY 2000 a month, it’s all because of the overtime work I have,” a 20-year-old male worker said.

4 “Recruitment Project for Foxconn in Pitong Town Has Achieved Progress Gradually”, Pi County Government website, http://www.pixian.gov.cn/public_version/detail.php?tid=4621068 (in Chinese).

–  –  –

Weary journey to Foxconn To facilitate the recruitment, the local governments arrange free transportation and health examination for workers. In spite of free transportation, the journey from the countryside to Chengdu is not relaxing. A girl who joined Foxconn in February 2011 recalled her experience, “We traveled by bus for 6-7 hours. Our group arrived in Hongguan Town around midnight. The government housed us in a simple hostel. We were divided into groups. A room was shared by 10 persons. We were all exhausted but could not have a space to lie down. All of us did not sleep throughout the night”. Xiao Ying, 22 years old, experienced the same. She joined Foxconnn after the Chinese New Year. She and other villagers were put on a bus to Pi County. The journey took 5 hours and the bus was packed and there were no seats available and no lunch. When they arrived at the dormitory, it was already 9:00 pm. There were no beddings provided by Foxconn which made some workers sick due to the cold weather.

5 “Chengdu Project” in Shenzhen Foxconn in Shenzhen ceased hiring new workers for Shenzhen plants after the Chinese New Year.

All new workers will be sent to Chengdu under “Chengdu Project”. The notice also states Foxconn needs lots of female workers in Chengdu plants. Apparently, Foxconn prefers female workers because they can be easily controlled. Apart from sex discrimination, this also implies that new workers will not benefit from a wage increase in Shenzhen. The new workers will only have status of trainees in Shenzhen and will be sent back to Chengdu permanently.

Recruitment Counter in Shenzhen no longer hire workers for Shenzhen. The notice shows that the company is recruiting female workers for Chengdu plants. And the workers have to stay in Shenzhen for training for 3-6 months.

2. Wages Prior to March, Foxconn paid food and housing subsidies to workers on the top of basic salary. In Shenzhen, Chengdu and Chongqing, the basic salaries are CNY 1200, 950 and 950 respectively.

Currently, Foxconn incorporates the food and housing allowance into basic salary. The new salaries soar to CNY 1590, 1300 and 1350 in the three cities. Food and housing subsidies are cancelled.

–  –  –

Amid suicides in Shenzhen last year, Foxconn announced wage increase in early June 2010 from CNY 900 to 1200. In fact, Shenzhen government was about to raise the minimum wage at CNY 1100 effective July. However, Foxconn always boasted that the first pay rise was 33%. As such, basic salary at Foxconn was only 9% more than the minimum wage after July. Similar to the number game played by Foxconn, the basic salary at Foxconn is raised significantly in Shenzhen, 5 Wages in Chongqing was adjusted in February 2011. The basic salary prior to February was CNY 950.

–  –  –

Discontent in wage level Job advertisement from the government declares the salary at Foxconn is CNY 1600. The basic salary falls short of expectation of workers, especially prior to March when workers only received CNY 950 per month. Interviewees generally feel they are cheated but would stay in Foxconn as they have left the hometowns already.

As the production facilities in Chengdu were not ready in 2010, many interviwees were deployed to Shenzhen. At that time, the basic salary in Shenzhen was CNY 1200. When they were sent back to Chengdu, the wage level dropped to the local level at CNY 950. Therefore, many of them were discontented with the decrease of salary. Foxconn has obligations to monitor the recruitment process. Unfortunately, it simply tolerates the misleading job advertisement circulating around employment practices.

Both advertisements state the comprehensive monthly wage is CNY 1600-2000 during probation.

After the 3 to 6 months probationary period, workers can earn CNY 2100-2500 per month (left) or CNY 2200-2800 per month.

Miscalculation of wages and delay of pay slip Workers give their labour skills to Foxconn in turn for a salary. Deduction of wages is unacceptable. In Chengdu, many interviewees criticized that they were always underpaid. In March, a number of interviewees complained to SACOM that they have not got the pay slips from Foxconn. Hence, they could not verify if there was miscalculation of wages.

“I’m not sure if I have bad luck. In the past 3 months, my salary was miscalculated twice,” a male worker in northern campus of Chengdu told a researcher.

–  –  –

“I take care of about 100 workers in the production line. Every month, I have to report about 50 cases of underpayment to the human resources department,” Mr. Wang, an assistant to the frontline supervisor in Chengdu, said.

“Abnormal in pay slip [mistake in pay slip] always happened. We will report it to the human resources department and workers can get back their deducted wages next month.

It’s very understandable a new factory may have some problems,” a frontline supervisor in Chengdu did not think the miscalculation of wages was disturbing.

While some workers can reclaim their deducted salary, some complain if the amount is less than CNY 200 maybe ignored by the management. Two workers disagree that deducted money will be paid to them in next month. “Our salary was miscalculated in January, until now [April] we haven’t received the deducted money,” one of the male workers said.

The affected workers are helpless and do not know how to resolve the problem if the line manager is too busy to deal with the individual cases.

Arbitrary wages sparked unrest in dormitory Unrest erupted on January 6th 2011 due to the miscalculation of wages. Workers in Southwest Dormitory threw bottles and rubbish from dormitory rooms as protest. Some 200 police quickly went to the dormitory and suppressed the workers. About 20 workers were arrested in the incident.

Foxconn told a different story to the media. The company claimed there was a clash between workers. The clash was not work-related but triggered by personal disputes of two rival groups in the campus.6 SACOM is disappointed that Foxconn intentionally covered up the incident and deceived both workers and the public.

CNY 2000 for those “eligible” Foxconn asserted that 85% of the eligible workers benefited from the wage increase last September.7 SACOM doubts how many percent of the total workforce is eligible to pay rise at CNY 2000. Since March 2011, Foxconn has halted the recruitment of Shenzhen workers.



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