x Abu Dhabi, UAESaturday 22 July 2017

Pay doubles as suicides rock Foxconn

Electronics giant decides to increase staff wages for second time in a matter of days after a string of tragedies hit computer maker

Workers assemble electronic components at the Taiwanese technology giant Foxconn's factory in Shenzhen.
Workers assemble electronic components at the Taiwanese technology giant Foxconn's factory in Shenzhen.

SHENZHEN // In a desperate bid to end an apparent suicide crisis at its south China plant, the giant Taiwanese electronics maker Foxconn is planning to raise wages by almost 70 per cent, the second big pay rise in days at the Shenzhen factory.

Foxconn is the world's biggest computer parts maker and makes iPhones and iPads for Apple plus a host of products for Dell and Hewlett-Packard. It has been rocked by a series of what seem to be suicides among staff this year. There have been 10 such deaths at the company's giant factory complex in Shenzhen in a series of falls from dormitory roofs at the site, while an 11th worker died at another factory in northern China.

The news of a further wage rise at Foxconn hit the company's share price. The group's parent company, Hon Hai Precision, dropped the most in a year in Taipei trading, falling 5.6 per cent to close at NT$117.50 (Dh13.29), the biggest fall since May 12 last year. The overall TAIEX index fell 2.5 per cent. Hon Hai's Hong Kong-listed affiliate Foxconn International Holdings fell 5.5 per cent to HK$5.66 (Dh2.66) before trading was halted.

Last Wednesday, Foxconn raised monthly pay for its Chinese assembly line workers by 30 per cent to 1,200 yuan (Dh645.03), which means that with the new rise the company will have almost doubled wages. Yesterday, Foxconn said it would increase the salary for its assembly line workers in Shenzhen by a further 70 per cent, to 2,000 yuan a month, from October 1 if the employees pass a three-month performance review.

Some workers and labour activists have said the apparent suicides were prompted by poor pay, tough working conditions and long hours. The crisis has led to widespread criticism that salaries were too low, forcing staff to work a lot of overtime to boost wages. "The wage increase will reduce overtime work as a personal necessity for some employees and make it a personal choice for many workers," Foxconn said.

The Foxconn founder Terry Gou, one of the best-known entrepreneurs in Taiwan, showed reporters around the plant last week in a bid to prove he was not running a "sweatshop". Mr Gou said raising wages was a way to "safeguard the dignity of workers". "We recognise our responsibility as a global leader in electronics manufacturing and take this responsibility very seriously," he said. The pay increases would probably raise the monthly costs of production at the factory by about NT$2 billion (Dh226.4m), Mr Gou said.

Hon Hai reported first-quarter profits this year of NT$18bn in the three months to the end of March. Foxconn has clearly decided the costs are worth paying as the negative publicity related to the case could cause even greater business problems for the company. The Apple chief Steve Jobs commented publicly on the situation, saying he was upset by the deaths, although he insisted the plant was "no sweatshop".

"You go in this place and it's a factory but, my gosh, they've got restaurants and movie theatres and hospitals and swimming pools," Mr Jobs said. "For a factory, it's pretty nice ? but this [the deaths] is very troubling to us. We're all over this." business@thenational.ae