An unintended consequence of enforcing ‘fair’ worker treatment – reduced income for migrant workers more than willing to work excessive overtime!
WSJ: “Nets to catch would-be jumpers still sag ominously from Hon Hai Precision Industry Co.’s buildings.
But two years after a spate of suicides at the Apple Inc. supplier’s campus here, workers are more concerned about another measure designed to protect them: limits on overtime.
Hon Hai in March said it would change its workplace practices after an audit by a U.S.-based nonprofit worker-safety group found widespread breaches of Chinese law and Apple policies at three plants, including the excessive use of overtime. Hon Hai responded by pledging that it would bring its overtime policies into alignment with Chinese law by next year, allowing workers to work no more than nine hours of overtime a week. The Taiwan-based company, also known as Foxconn, pledged to improve health and safety conditions at its campuses across China as well.
But more than 15 workers on the Shenzhen campus said in interviews that they work more than the legal limit of nine overtime hours a week. A majority said they work 10 to 15 overtime hours and would prefer more, having left their distant homes to make money in this southern Chinese boomtown on the border of Hong Kong.
“I think a lot of the more experienced people from the technology production lines will leave” if the policy to limit overtime goes into effect, said a worker who asked to be identified only by his surname, Ma. “We don’t know how much our salary will go up. But after being here three years, I don’t have much incentive to stay, since my wage probably won’t rise much.”
Mr. Ma, who earned roughly 3,400 yuan ($540) a month including overtime when he arrived three years ago, said he now earns about 5,000 yuan. To make extra money, the 26-year-old buys used car parts cheaply on an e-commerce website and then resells them.
Basic pay at the Shenzhen Longhua plant is 2,200 yuan, before overtime.
Keeping Mr. Ma and its 1.5 million other Chinese workers satisfied, while manufacturing complex, time-sensitive consumer electronics profitably is becoming more challenging for Hon Hai. The company’s labor costs will rise by roughly $1.4 billion when the new labor policies roll out next year, according to a Bernstein Research estimate. Hon Hai’s operating profit margin had declined since the second quarter of 2010 because of rising wages. The figure rose to 3.4% in this year’s third quarter from 2.2% a year earlier as the company raised what it charged customers, analysts said.
Hon Hai isn’t alone in facing such challenges. Employee protests over working conditions and the willingness of staff to change employer for more pay have forced electronics manufacturers to raise wages throughout China. Hon Hai and other companies have moved some operations to countries such as Vietnam and Mexico, where costs for labor or transportation to end markets are lower.”
CHINDIA ALERT: You'll be living in their world, very soon 