Source : Procurement Leaders
An investigation into working conditions in Chinese factories by the Fair Labour Association (FLA) could change the cost of operating in China.
The FLA conducted a month-long investigation of 35,000 workers at three Foxconn plants and found that employees hours were above the legal limit, working conditions were poor and wages were low.
In response to the findings Foxconn has agreed to hire thousands of new employees, improve staff housing, cut overtime and improve safety at factories, a move which is expected to have an impact on other businesses producing goods in China.
The plan to assess and improve worker conditions comes after Apple came under public criticism from Chinese pressure groups and Western media sources over conditions at its suppliers’ factories in China.
After CEO Tim Cook completed a trip to meet suppliers in China, Apple said on Thursday that it would be spearheading a drive to improve working conditions in supplier’s factories.
FLA president Auret van Heerden told Reuters that “Apple and Foxconn are obviously the two biggest players in this sector."
"Since they’re teaming up to drive this change, I really do think they set the bar for the rest of the sector," he added.
According to van Heerden, this could well see wages rising for factory workers throughout China.
"Foxconn is proposing this better deal," he said. “Their competitors will be obliged to offer a similar package just in order to get enough workers," he added.
Dell told Reuters in an email the company was pleased Foxconn is improving its labor practices but, "We won’t speculate how the reduced overtime and higher wages will affect Foxconn’s costs."
"As a result of electronics companies raising wages, that’s going to impact the entire manufacturing sector," said Paul Martyn, vice president of supply strategy at BravoSolution.
Foxconn expects to implement the changes by July 2013.