Taipei, Friday, April 29, 2016 07:58 (GMT+8)
partly cloudy
Taipei
24°C
Commentary: Foxconn faces more labor problems
Ninelu Tu, Taipei; Jackie Chang, DIGITIMES [Friday 21 June 2013]

To show the importance of labor rights, Apple became the first IT company to join the Fair Labor Association (FLA) in 2012 and through the association, Apple began inspections of its major supply chain partner, Foxconn Electronics (Hon Hai Precision Industry). Although Foxconn has been enthusiastic about cooperating with the inspections and implementing changes, the firm now faces the problem of lowering weekly work hours to 49 per week, including over time, before July 2013.

For Foxconn, cutting work hours to 49 hours per week is not easy, as production has been steady and lowering working hours means the firm needs to hire more workers to fill shifts. This could pose a problem for the firm as the labor market in China has been changing and it has been challenging to find production line workers. In addition, workers actually do not care about working overtime as long as they get paid. But with lower working hours, firms need to find strategies to maintain salary levels for workers.

In fact, overtime pay is an important part of the salary structure among Foxconn workers. Commonly overtime in China on weekdays is 100% of standard pay and 200% on weekends. Overtime pay during national holidays such as the Lunar New Year holidays is 300%. Lowering the number of working hours means falling salaries for workers, hence it would be difficult for Foxconn to keep workers from quitting. To maintain cooperation with Apple, Foxconn has to lower working hours. The problem lies on the profit-sharing between Apple and Foxconn. If Apple is not willing to share more profits, Foxconn has to sacrifice its own profits to lower working hours and maintain salaries to keep employees. But to do so is difficult as ODM firms usually have slim profit margins.

Although automated processes may be able to take some pressure off Foxconn, it cannot fully replace human resources. In addition, if Foxconn adopts fully automated processes, then the firm cannot create employment opportunities and may not be welcomed by local governments in China.

With growing globalization, labor relations have become a complicated issue. Firms cannot use a universal strategy to deal with local workforces.

Realtime news
  • Cypress subsidiary Deca to receive US$60 million investment from ASE

    Bits + chips | 10h 36min ago

  • Digitimes Research: Taiwan makers ship 7.35 million LCD TVs in 1Q16

    Displays | 11h 8min ago

  • Macronix posts another quarter of losses

    Bits + chips | 11h 10min ago

  • Digitimes Research: Woskan, iStaging developing VR for use in real estate marketing

    Before Going to Press | 10h 56min ago

  • Transcend 1Q16 net profits fall 25%

    Before Going to Press | 10h 59min ago

  • Senao Networks nets NT$3.21 per share for 1Q16

    Before Going to Press | 11h 26min ago

  • China sets 2020 targets for robot industry development

    Before Going to Press | 11h 27min ago

  • Nintendo to stop production of Wii U in March 2018

    Before Going to Press | 11h 28min ago

  • Chip orders for iPhone SE rise in 2Q16

    Before Going to Press | 11h 29min ago

  • Global Lighting Technologies nets NT$1.33 per share for 1Q16

    Before Going to Press | 11h 33min ago

  • AUO sees rebounding operations in March, says chairman

    Before Going to Press | 11h 34min ago

  • Motech Industries lowers price for new shares issued for capital expansion

    Before Going to Press | 11h 35min ago

  • Gamania Digital Entertainment nets NT$0.12 per share for 1Q16

    Before Going to Press | 11h 35min ago

  • Danen Technology suffers net loss per share of NT$0.21 for 1Q16

    Before Going to Press | 11h 37min ago

  • Notebook-use thermal module makers step into server applications

    Before Going to Press | 11h 38min ago

  • Giantplus Technology posts 1Q16 net EPS of NT$0.30

    Before Going to Press | 11h 39min ago

  • Adlink nets NT$0.26 per share for 1Q16

    Before Going to Press | 11h 40min ago

Pause
 | 
View more
Twinwill
Trends and forecasts for the China FPD industry, 2014-2017
The transition to 4k TV - UHD TV market forecast, 2014-2017
  • Wireless broadband developments in Southeast Asia markets

    As of 2013, the 10 ASEAN nations had a total of over 700 million mobile subscriptions, with the CAGR from 2003-2013 reaching 24%. This Digitimes Research Special Report analyzes the various mobile broadband markets in ASEAN and looks at the respective trends in 4G LTE development for those markets.

  • 2015 global tablet demand forecast

    This Digitimes Research Special Report provides a 2015 forecast for the global tablet market and analyzes the strategies of key market players such as Google, Apple, Intel, and Microsoft.

  • 2015 China smartphone panel trend forecast

    This Digitimes Research Special Report analyzes the strategies of key China-based major panel makers BOE, Tianma and IVO for attacking the different market segments through technology and pricing, and their relationship to local vendors Huawei, Lenovo, ZTE, Xiaomi and Coolpad.