Apple 2.0

Covering the business that Steve Jobs built

Foxconn needs a better trade union

June 3, 2010: 8:16 AM ET

Jumping off a balcony is not a good way to negotiate a 33% raise

A Foxconn dormitory in Schenzhen. Image: CCTV News

Foxconn, the world's largest manufacturer of electronics and computer components, made headlines Wednesday with the announcement that it is raising the monthly wages of some of the 420,000 workers at its massive facilities in Shenzhen, China, from 900 renminbi ($132) to 1,200 renminbi ($176).

The Taiwanese company was under intense pressure from the U.S. companies that depend on its labor force -- including Apple (AAPL), Hewlett-Packard (HPQ) and Dell (DELL) -- to do something about the spate of worker suicides at its Shenzhen facilities. Ten workers have died after falls from Foxconn's high-rise dormitories so far this year. To prevent further balcony deaths, the company plans to install nets around the dorms.

But nets won't solve the company's labor problems.

Despite the secrecy that surrounds Foxconn's operations, workers regularly complain about excessive overtime and the company's disciplinarian management style. Foxconn workers say they will deliberately drop a part now and then just for an excuse to bend over and stretch their backs. Late last week, according to Reuters, another Foxconn worker died at home from causes his family claims were stress-related. He had been on the night shift for more than a month, they said, sometimes working 24 hours nonstop.

Asked about the Foxconn suicides at the Wall Street Journal's D8 conference Tuesday, Apple CEO Steve Jobs said that Apple had been diligently monitoring the working conditions of its entire supply chain, including Foxconn.

"Foxconn is not a sweatshop," he said. "It's a factory, but my gosh they've got restaurants and movie theaters and hospitals and swimming pools. For a factory, it's a pretty nice factory. But if you count the attempted suicides, [they've had] 13 so far this year.... That's still under the U.S. rate of 11 per 100,000, but it's really troubling." (See video here.)

"We're all over this," Jobs told D's Kara Swisher, using the same phrase he used last week in his first public comment on the matter, an e-mail exchange with a customer named Jay Yerex. He compared the situation in Shenzhen to a spate of copy-cat suicides in his home town of Palo Alto, Calif., where high school kids had been throwing themselves in front of Amtrak trains. He talked about Chinese workers from poor rural areas moving to Foxconn's factory cities less prepared to leave home for the first time than your typical American college student.

"So we're over there trying to understand what's happening and, more importantly, trying to understand how we can help."

"So you all are bringing in psychiatrists?" Swisher asked, not unreasonably, given Jobs' analysis of the situation.

Obviously Foxconn's labor problems -- indeed all of China's -- are too big for even Steve Jobs to solve. But there is a relatively simple solution, one that has served both workers and employers (although not Apple) for three hundred years: allow the employees to negotiate their own wages and working conditions. There is a union at Foxconn, but its leaders are not democratically elected by the workers and they are clearly not doing their job.

Attached to Jay Yerex's e-mail to Jobs last week was a LabourStart petition calling for Foxconn's union to be reorganized according to the Trade Union Labor Law of China so that it can defend the rights of workers through collective bargaining.

That part of Yerex's e-mail, Jobs ignored.

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[Follow Philip Elmer-DeWitt on Twitter @philiped]

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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