Falling iPhone sales could lead to better working conditions in China

Apple’s record-breaking iPhone sales era may have ended last month, cutting the company’s revenues and clouding its stock, but there could be a silver lining: Its Chinese manufacturing partners may be forced to improve working conditions for their dwindling workforces.

Contract manufacturers Foxconn and Pegatron are just two of the companies Apple uses to build devices, partnerships that have enabled the U.S.-based technology company to keep its labor costs low and its profit margins high. But as a New York Times report notes today, falling iPhone sales have led Foxconn and Pegatron to cut back on both employee counts and valuable overtime hours — the latter apparently a key factor inducing Chinese workers to endure the factories’ working conditions. As a result, manufacturing employees are quitting their jobs, and the factories may be forced to treat their next round of hires better.

The conditions inside Apple’s Chinese factories have been well documented over the past decade. Employees are housed in dingy, cramped dormitories with numerous people occupying bunk beds in small rooms, reporting for shifts that are both long and tedious. Facing monthly paychecks that might be a fifth or a tenth of comparable U.S. assembly wages, workers nonetheless commit to overtime shifts that pay better — though in past years, some contract manufacturers either underreported or underpaid workers for their overtime labor.

While Apple has pledged numerous times to keep its manufacturing partners in compliance with local laws, working conditions continue to be questionable at best, and well below U.S. standards. As the report notes, factory supervisors limited employees’ breaks and cut their pay for minor infractions. “Inside the factory, workers are tightly controlled,” Pegatron worker Hou Fu’an told the Times. “If one person does not do well, everyone in the group will be yelled at by the group leader. But they did not yell much when there were not many workers left.”

The reduction in workers has apparently been significant. One Foxconn factory in Zhengzhou has cut its workforce from over 100,000 workers to around 70,000, while a Pegatron factory in Huojiancun claims to employ 70,000, but is now surrounded by “nearly empty” streets with fewer people. Trickle-down results have been a roughly 50 percent reduction in local business revenue and decreased spending on higher-value items.

Consequently, some workers are quitting the factories for better-paying jobs, with one citing a part-time job that pays $600 per month — better than the prior $370 monthly wage earned in a five-day week at the factory without overtime. Chinese companies are now also reportedly finding workers “difficult to lure because they don’t want to work so many hours on an assembly line.” Though declining consumer demand and rising unemployment aren’t ideal provocations, the result could be further improvements in conditions for those who remain.

Reference: Venturebeat.com