Apple Foxconn Investigation Finds ‘Significant Issues’ in Labor Standards

Apple has been constantly hit with criticism over the labor practices of its suppliers and manufacturing facilities in China. The company commissioned an independent study to assess labor conditions in its supply chain, and the investigation has found that there are “significant issues” that Apple and its China-based facilities will need to address.

Staff members work on the production line at the Foxconn complex in the southern Chinese city of Shenzhen, China in this file photo. An Apple-commissioned investigation by the Fair Labor Association has found "serious issues" in labor practices in Foxconn's facilities in China. (AP Photo/Kin Cheung)

Foxconn is one of Apple’s biggest suppliers in China, manufacturing the Cupertino, CA company’s mobile devices, like the iPhone and iPad. But given stringent specifications and cost considerations, Foxconn is often accused of cutting some corners, particularly relating to labor practices, in order to meet cost and manufacturing requirements.

Fair Labor

Apple has sought the assistance of the Fair Labor Association in assessing and auditing its own supply chain, and the latter’s findings report that Foxconn employees are overworked, and at risk of health and safety violations.

These findings had been released in time with Apple CEO Tim Cook’s visit to China to personally inspect Foxconn facilities.

The FLA found that Foxconn employees often worked 60 hours a week — exceeding China’s maximum of 49 — and that employees are sometimes required to work seven-day workweeks, without the mandated day-off. Employees are also asked to render unpaid overtime, and are often exposed to health hazards.

It can be noted that the FLA president earlier lauded Foxconn for having “first class” working conditions, although this was an initial and informal assessment.

Apple, Foxconn to Improve Labor Standards

For its part, Apple has said it “fully accepted” the FLA report’s recommendations. “We share the FLA’s goal of improving lives and raising the bar for manufacturing companies everywhere,” Apple said in a statement.

Foxconn has told the FLA it will comply with the recommendations, such as by reducing the working hours to 49 per week. Foxconn has also said it will hire more workers to compensate for the loss in man-hours. Foxconn has earlier committed to increasing salaries in some of its facilities in southern China.

Auret van Heerden, the FLA’s CEO says Foxconn is actually the first company in China to comply with this regulation, as the 49-hour workweek maximum is often ignored in manufacturing facilities in the country.

Apple is a model of efficiency for a manufacturing business. IHS iSuppli estimates each iPhone 4S to cost US$ 188 for components and US$ 8 to assemble. The company then sells each unit to carriers for US$ 600, which usually offer these to consumers for US$ 199 under contract.

Apple might have to absorb some of the extra cost associated with the improved labor practices. According to iSuppli, this might be minimal, at an extra US$ 2 for each iPhone produced.

However, unions have criticized Apple’s and Foxconn’s efforts to be inadequate. “The report will include new promises by Apple that stand to be just as empty as the ones made over the past five years,” says, a consumer and trade union group, in a statement released prior to the FLA report.