[Press Release] Workers as Machines: Military Management in Foxconn

Foxconn Technology Group, a subsidy of the Hon Hai Precision Industries Ltd., is the world’s leading electronics manufacturer. It ranks 112th among Global Fortune 500 Companies. Currently, Foxconn has a workforce of 900,000 workers all over China. The corporation is going to expand the workforce to 1.3 million people by the end of 2011.1 According to market research firm iSuppli Corp., in 2009, Foxconn took over 44% of the global revenue of the entire electronics manufacturing and services industry. iSuppli estimates that Foxconn will gain half of the industry revenue by 2011.2Notwithstanding the fall of profit margins over the years, Foxconn’s business has been growing. This implies that Foxconn will keep pressing down labour cost to maintain its competitiveness in the industry.

There is a close relationship between low wage, excessive overtime work and harsh management. While campaigning for a humane management policy, Students & Scholars Against Corporate Misbehaviour (SACOM) looks forward to Foxconn’s wage increase proposal, even though it is still below the living wage standard that we advocate. In June, Foxconn announced that the basic wage for frontline workers in Shenzhen will be increased to CNY 2000 with conditions. The management also promised that the wage increase will apply to all production facilities in China. However, Foxconn did not disclose details of the pay rise. At first, SACOM has high hope that the wage increase will allow workers to earn enough by working less hours so that they can enjoy the right to leisure and ease their work pressure. However outrageously, until the 11th October, Foxconn did not inform workers about the details. Workers were not informed about the wage increase. At the same time, there is no structural reform in the company’s management methodology.

Other than Foxconn, electronic brands like Apple, Nokia, HP, Dell, Sony, Sony Ericsson, and Motorola, which have placed orders with Foxconn, also bear indispensable responsibility in the tragedies. All these brands are making huge profit at the cost of the workers. Likewise, we are consuming the blood and tears of the workers, a fact hidden from us by fancy advertisements.

This report aims to reveal the actual working and living conditions of workers at Foxconn to mobilise public support for their struggle against their plight. Instead of ineffectively pleading corporations to restrain themselves against labour rights violations, SACOM urges concerned organizations, consumers, investors, and the government to join the workers to pressure electronic factories to deliver decent working conditions in the electronic industry.

Wages and Working Hour

Having been named a “sweatshop” corporation, Foxconn rebukes by claiming that it has been in compliance with local laws. SACOM researchers found that Foxconn continued to violate the law in terms of overtime payment and working hour. Importantly, China is a fast-growing economy; minimum legal standards as a safety net cannot guarantee decent living conditions in the cities.

Workers were not informed in wage increase plan

When the suicide cases reached a climax in May, Foxconn made wage increase announcements for twice. The first wage increase to CNY 1200 was launched in June. Soon after that, Foxconn claimed there will be a rise in basic wage to CNY 2000 for Shenzhen workers who pass an evaluation. The wage increase will be implemented in October. Nevertheless, until the mid of October, workers on the Longhua campus did not know about the details of the pay rise. There was no formal announcement from Foxconn. Workers who have been working at Foxconn for 3 months are eligible for evaluation. However, many workers with seniority have not participated in such tests. As such, workers may only know about the wage increase from their wage stub for October, which they will receive in November.

There are rumors among workers about who can benefit from the wage increase. For example: only those who have an outstanding performance; those who are in special departments, those who have worked in the factory for over 6 months; and those who have made a special contribution to the company. Some workers doubt that all the workers will have a pay rise to CNY 2000; they believe some may get CNY 1600, CNY 1800 or CNY 1940.

Basic wage is just slightly more than minimum wage

From June 2010 onwards, frontline workers’ basic wage was raised from CNY 900 to 1200 per month in Shenzhen. Nevertheless, the so-called generous 30% pay rise only last for a month. In July, the local government raised the minimum wage to CNY 1100 per month. In other words, the basic wage of frontline workers at Foxconn is only CNY 100 more than the minimum wage.

The basic wage for Foxconn frontline workers in Hangzhou is CNY 150 more than the local minimum wage (at CNY 1250 per month). However, in other Foxconn production facilities, the basic wage is only slightly more than the minimum wage. For example, the basic wage in Foxconn Tianjin is only CNY 20 or 2% more than the local minimum wage (at CNY 940 per month).

Basic wage is far below living wage

Foxconn management pointed out that one of the motivations for the wage increase was to combat the problem of high turnover rate of workers. In other words, the purpose is to stabilize the workforce. In late May, SACOM advocated that the basic wage (which was equivalent to the minimum wage) was insufficient for workers to maintain decent living conditions in Shenzhen. The monthly food consumption in Shenzhen is CNY 613. Taking an Engel’s coefficient at 0.5, and a dependency ratio of 1.87 (an earner supports 1.87 family members on average), the monthly living wage should be CNY 2293.6 Using the same formula, the living wage in other cities should be:

Tianjin Wuhan Hangzhou Kunshan
Food consumption per capita (CNY) 450.42 469.14 581.15 534.96
Monthly living wage (CNY) 1684.5 1754.4 2173.3 2000.5
Local minimum wage (CNY) 920 900 1100 960
Basic wage of a frontline worker at Foxconn (CNY) 940 950 1250 1110

Apparently, the basic wage of the frontline worker is not enough for workers to maintain decent living standards in the cities. In Hangzhou, the difference between basic wage and living wage is CNY 923. Also, basic wages in Tianjin, Wuhan and Kunshan lag far behind the living wage. It is extremely difficult for workers to live in an expensive city on a meagre wage.

[The full report is available here.]