Taipei, Thursday, July 28, 2016 12:58 (GMT+8)
thunderstorms
Taipei
32°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
  • Coretronic nets NT$1.13 per share for 1H16

    Displays | 1h 41min ago

  • MLS upbeat about synergy with Osram

    LED | 2h 48min ago

  • AUO to start 6G LTPS production in eastern China in 4Q16

    Displays | 2h 57min ago

  • Nanya, Inotera deals with Micron still proceeding

    Bits + chips | 3h 9min ago

  • Nuvoton reports NT$1.25 EPS for 2Q16

    Bits + chips | 3h 11min ago

  • Analog Devices, Linear to merge

    Bits + chips | Jul 27, 21:35

  • UMC looks to 2-3% shipment growth in 3Q16

    Bits + chips | Jul 27, 21:34

  • BlackBerry launches new Android smartphone

    Mobile + telecom - Newswatch | Jul 27, 21:33

  • SPIL reports NT$0.90 EPS for 2Q16

    Bits + chips | Jul 27, 21:32

  • Pegatron automates factory in Shanghai, says chairman

    IT + CE | Jul 27, 21:31

  • Nanya 2Q16 profits fall

    Bits + chips | Jul 27, 21:28

  • Connector maker Sinbon reports earnings for 2Q16

    IT + CE - Newswatch | Jul 27, 21:26

  • Digitimes Research: Taiwan ships nearly 8.5 million LCD TVs in 2Q16

    Displays | Jul 27, 21:26

  • Digitimes Research: Over 4,000 models of LTE-enabled devices launched as of February 2016

    Mobile + telecom | Jul 27, 21:24

  • Innolux turns to focus on shipping whole-set products to increase profits

    Before Going to Press | Jul 27, 22:00

  • Sharp reportedly sees improving profitability

    Before Going to Press | Jul 27, 21:59

  • Xiaomi announces new Mi Book Air notebooks

    Before Going to Press | Jul 27, 21:11

  • Connector maker Sinbon reports earnings for 2Q16

    Before Going to Press | Jul 27, 21:10

  • Taiwan sets aside budget of NT$107.85 billion for development of science and technology in 2017

    Before Going to Press | Jul 27, 21:10

  • China reaches total PV installation capacity of 22GWp in 1H16, says NEA

    Before Going to Press | Jul 27, 21:09

  • LeEco to acquire Vizio

    Before Going to Press | Jul 27, 21:08

  • BlackBerry launches new Android smartphone

    Before Going to Press | Jul 27, 21:07

  • Vizio acquisition expected to push LeTV-Foxconn partnership

    Before Going to Press | Jul 27, 21:06

Pause
 | 
View more
UMC
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.