Electronic Giant Vowing Reforms in China Plants

Responding to a critical investigation of its factories, the manufacturing giant Foxconn has pledged to sharply curtail working hours and significantly increase wages inside Chinese plants making electronic products for Apple and others. The move could improve working conditions across China. 

The shift comes after a far-ranging inspection by the Fair Labor Association, a monitoring group, found widespread problems — including at least 43 violations of Chinese laws and regulations, and numerous instances where Foxconn defied industry codes of conduct by having employees work more than 60 hours a week, and sometimes more than 11 days in a row. The group released a report Thursday with its findings.

The monitoring group, which surveyed more than 35,000 Foxconn employees and inspected three large facilities where Apple products are manufactured, also found that 43 percent of workers had experienced or witnessed accidents, and almost two-thirds said their compensation “does not meet their basic needs.” Many said that the unions available to them do “not provide true worker representation.”

“There’s this lingering sense among workers that they’re in a dangerous place,” Auret van Heerden, president and chief executive of the Fair Labor Association, said in an interview. But Foxconn has “reached a tipping point,” he added. “They have publicly promised to make changes in a manner that they will have to deliver on it.”

Apple, which recently joined the Fair Labor Association, had asked the group to investigate plants manufacturing iPhones, iPads and other devices. In past months, a growing outcry over conditions at such factories has drawn protests and petitions, and several labor rights organizations started independently scrutinizing Apple’s suppliers. Earlier this week a collection of advocacy groups sent Apple an open letter calling on the company to “ensure decent working conditions at all its suppliers.”

Since January, Apple has released the names of 156 of its suppliers — which it had previously declined to identify — and has started posting regular monitoring reports on the number of hours worked by factory employees. Apple, which has audited its suppliers since 2006, said in a statement Thursday that it shares “the F.L.A.’s goal of improving lives and raising the bar for manufacturing companies everywhere.”

Foxconn did not reveal how much it would raise wages or details on how its promises would be put into place. But the impact of Foxconn’s hour and wage reforms could signal a new, wide-reaching change in working conditions throughout China. Foxconn makes over 40 percent of the world’s electronics products — including for such brands as Amazon, Dell and Hewlett-Packard — and is China’s largest and most prominent private employer, with 1.2 million workers.

In response to the report, Foxconn said it was “committed to work with Apple to carry out the remediation program, developed by both our companies.”

Apple, in a statement, said the company fully supported the monitoring group’s recommendations. “Our team has been working for years to educate workers, improve conditions and make Apple’s supply chain a model for the industry, which is why we asked the F.L.A. to conduct these audits.”

Foxconn’s promises include a commitment that by July of next year, no worker will labor for more than 49 hours per week — the limit set by Chinese law. Foxconn, which is based in Taiwan, has also pledged that despite cutting hours, employees’ pay will not decline. Experts say such promises will most likely require Foxconn to hire tens of thousands of additional employees, which along with the wage increases could cost hundreds of millions of dollars annually.

Those moves, in turn, are likely to influence the prices paid by Foxconn’s customers, and could increase the retail cost of consumer electronics products like smartphones and tablets unless Apple and others accept lower profit margins.

“At the end of the day it’s a matter of image, a matter of recognition, a matter of reputation,” said Ricardo Ernst, a professor of global logistics at Georgetown University. But regardless of motivation, when a company as large as Foxconn changes, it reshapes other companies’ decisions, he added. 

This is not the first time that independent monitors have criticized conditions at Foxconn — or that change has been promised. In 2006, Apple said that Foxconn “has enacted a policy change to enforce the weekly overtime limits set by our Code of Conduct.” That change, however, did not bring Foxconn into line with the law or Apple’s regulations.

Last year, Apple wrote in its yearly audit summary that “reducing excessive overtime is a top priority” in 2012. This year, the company began weekly tracking of 110 facilities — including Foxconn — where excessive work-hour violations were commonplace. Last month, according to that tracking, the average employee worked 48 hours, and 89 percent of monitored employees worked 60 hours or less per week, which is the limit mandated in most circumstances by Apple’s supplier code of conduct.

“It is not news that Apple and Foxconn are promising to end labor rights abuses at these factories,” said Scott Nova, executive director of the Workers Rights Consortium, a university-backed monitoring group based in Washington. “They have been promising to do that since 2006. And they have not delivered. I hope this time will be different.”

Mr. van Heerden of the Fair Labor Association said he believed this time the promised changes would occur because his organization would continue monitoring Foxconn and because worldwide attention was focused on the issue more sharply than ever. “I think they have crossed the Rubicon,” he said, of Foxconn and its chief executive, Terry Gou. “He’d be crazy to make these commitments without fulfilling them,” he added.

In the extensive report documenting its findings, the Fair Labor Association said a majority or near majority of workers surveyed said they felt pain after working a full day, that wages were not sufficient to pay for health care or education and that dorms were crowded. But the group’s surveys found that not all employees had complaints or objected to long hours. Some wanted to work more to earn more money. Foxconn workers at one plant start at about $285 a month, and average wages are about $426 to $455 per month, according to the group’s report.

Many of the group’s findings align with what Apple has found in the audits the company performs, said Mr. van Heerden. But the group’s findings that unions and other worker representation groups are dominated by nominees chosen by management contradict Apple’s reports that most factories allow free association among workers.

The association’s findings also strongly contradict Foxconn’s statement, sent earlier this year to The New York Times, that workers generally “are limited to no more than 60 hours per week.”

Among other things, the group found that Foxconn in the past prepped workers with answers to give to monitors to avoid detection of violations.

“We found a cheat sheet,” said Mr. van Heerden. “If you’re asked how many hours you work, say this, for instance. Since we’re not asking the questions that conventional auditors ask, we were able to see what’s really going on.”

The association will soon begin inspecting other companies in Apple’s supply chain, said Mr. van Heerden.