Contract manufacturer Foxconn has agreed to sweeping changes to its operations to address working conditions, in a move that some suggest could have implications for the entire Chinese manufacturing sector.
Foxconn has agreed to eliminate excessive overtime, increase its workforce significantly and raise worker pay in response to the audit from the Fair Labor Association, the workers' rights body revealed late last week.
The audit, requested by key Foxconn customer Apple, found “significant issues with working conditions” at three factories inspected, according to the FLA.
These included illegal amounts of overtime, health and safety risks and communication gaps between management and staff on the ground. Around 64% of employees also feel that they are not paid enough to meet their basic needs.
In response, Foxconn has agreed to restrict workers' hours to 49 per week including overtime, which would mean a reduction in overtime hours to 36 from 80.
The manufacturer has promised to develop a compensation package that would prevent workers from losing income as a result of the reduced overtime.
Foxconn and Apple have both also agreed to pay workers retroactively for any unpaid overtime, and increase salaries to meet the requirements for basic needs.
To address the reported health and safety problems, Foxconn will begin reporting all accidents resulting in an injury. FLA said Foxconn has already corrected a number of health and safety problems including lack of or faulty personal protective equipment.
Because of Foxconn's size and prominence in tech manufacturing, and the fact that the changes have been spearheaded by Apple, the FLA has suggested that the move could set the de facto standard for conditions in the Chinese manufacturing industry.
FLA president Auret van Heerden told Reuters that Foxconn and Apple have “set the bar for the rest of the [consumer electronics] sector.”
But US-based advocacy group China Labor Watch has criticized the FLA report and Foxconn's reponse as failing to address employees' primary concerns.
Some Foxconn workers also complained to the news agency that their salaries are likely to be affected by the reduction in overtime, despite Foxconn's assertion to the contrary.