Taipei, Wednesday, July 26, 2017 06:57 (GMT+8)
thunderstorms
Taipei
36°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
  • SPIL net profits hike in 2Q17

    Bits + chips | 9h 8min ago

  • PTI optimistic about 3Q17

    Bits + chips | 9h 11min ago

  • India reportedly to start anti-dumping probe into PV products from China, Taiwan, Malaysia

    Green energy | 10h 8min ago

  • China January-June software revenues reach CNY2.558 trillion, says MIIT

    IT + CE | 10h 21min ago

  • Merry reports strong earnings for 2Q17

    Mobile + telecom | 10h 24min ago

  • Silicon wafer shipments remain at record highs, says SEMI

    Bits + chips | 10h 26min ago

  • Taiwan market: Asustek, HTC face more competition

    Before Going to Press | 10h 13min ago

  • China January-June software revenues reach CNY2.558 trillion, says MIIT

    Before Going to Press | 10h 36min ago

  • Merry reports strong earnings for 2Q17

    Before Going to Press | 10h 37min ago

  • Aaeon nets NT$2.99 per share for 2Q17

    Before Going to Press | 10h 37min ago

  • Taiwan IC design service and IP firms land AI chip orders from China

    Before Going to Press | 10h 39min ago

  • Deren cooperates with Intel to develop USB 3.1 front-panel internal connectors and cable

    Before Going to Press | 10h 39min ago

  • Young Optics expects to post double-digit shipment growth in 2H17

    Before Going to Press | 10h 42min ago

  • Taiwan to host WCIT 2017

    Before Going to Press | 10h 45min ago

Pause
 | 
View more
Global notebook shipment forecast, 2017 and beyond
Wireless broadband developments in Southeast Asia markets
Analysis of China revised domestic semiconductor industry goals
  • 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.