Bad publicity for Apple at Foxconn Plant Leads to Workers being Denied Right to Overtime

The campaign against Apple’s ‘exploitation’ of workers at the Foxconn plant in China has caused distress among employees according to the tech website AppleInsider.

. “If we work less overtime, it would mean less money,” said Wu, an employee from China’s Hunan province.

Another worker from Hunan, 25-year-old Chen Yamei, said she and others are there to “work and not to play.” She has been an employee at Foxconn for four years, and earns about $634 per month.

“We have just been told that we can only work a maximum of 36 hours a month of overtime,” she said. “I tell you, a lot of us are unhappy with this. We think that 60 hours of overtime a month would be reasonable and that 36 hours would be too little.”

This is the predictable andy deplorable outcome of the monstering of Apple over conditions at the Foxconn plant.  This has combined a strong streak of anti-Apple spite amongst a large number of tech commentators who think they can drive traffic up by annoying Apple’s many fans, and a strong streak of anti-capitalism, including a kind of soft anti-capitalism from people who do not condemn market economies as such, but are quick to condemn the way they work in practice to an extent which prevents the real operation of markets, and which would lead us back to state domination of the economy and society if put into practice .

As the result of bad publicity, Apple joined the Fair Labour Association, which audited Foxconn plants in China.  Click here to see the FLA report and decide for yourself if it justifies the anti-Apple monitoring.  I would say not.  The most dramatic finding is that Foxconn is breaking the law in China on working hours which are restricted to 49 hours.   The law is not broken because of Foxconn imposed working hours, but because of the demand by employees to do over time. This is hopelessly unrealistic legislation for a high income country, and even more so for a low income country.  Low paid workers, which generally means low skill workers, want to to work more than those kind of hours.  Increasing basic salaries to counteract that would price such workers out of the market. This kind of legislation leads to institutionalised law breaking.  You can be absolutely sure that many Chinese companies ignore that law and treat workers worse than Foxconn.  The FLA report certainly suggests, if indirectly, that Foxconn is a one of the more decent employers in China.  After the law breaking on hours, the most dramatic FLA criticism is that the company avoided paying 14% (fourteen per cent) of its workers for all overtime worker by only paying for overtime in 30 minute blocks, so that the last 29 minutes worked might not be compensated.  Not great, but worth all the outrage in the West?  Really?

On the Apple bashing side, the illusion and downright lie has been created that Foxconn is purely an Apple operation.  It assembles products for a number of tech companies.  The success of Apple and the unusual devotion of many Apple customers to its products, and sense of identity with the company, creates a counter reaction to put it politely. Putting it less politely, a lot to tech journalists, blog commentators, and sometimes anonymous Microsoft employees (yes really, it is well known that Microsoft astroturfs, creates artificial grass roots reactions, against its rivals), lose touch with objectivity to the extent that lies about Apple spread through the web very quickly.  Some stupid things are said by Apple fans as well, but nothing as concerted and damaging as false claims that Foxconn is a purely Apple operation, and associated exaggerations about working conditions.

Now it’s reasonable that we should all be concerned with the life conditions of fellow humans all over the world, including working conditions, but there are forms of expressing that concern which harm the supposed beneficiaries of that concern.  In the worst case patronising pity, enjoyment of moral superiority, and instinctive anti-capitalism have highly destructive effects.  Let’s identify the main misconception.

If people in less wealthy countries have worse salaries and conditions of work than in the wealthy countries, they are being exploited, and something should be done to improve those salaries and conditions.

What is that way of thinking overlooking?

1. Relatively good salaries and working conditions are the consequence of growing wealth, and cannot be achieved except through growing wealth.

2.  Following on  from the previous point, presuming there is competition between employers, then employee salaries are a reasonable reflection of the productivity of those employees, of the values they are adding while at work.

3. Also following on from the first point, presuming there is competition between employers, working conditions will reflect the trade off workers themselves make between salaries and working conditions.  That is workers will accept unpleasant working conditions if that brings down the cost of their labour in a way that will lead to employers hiring them at a salary those workers consider acceptable.

4. There is a limit on what employers can pay employees, and what the conditions of work can be, set by the price that employers can sell products at, and what they have to pay for other inputs.  If there is competition between employers then employees will have a salary and have conditions which reflects the maximum that can be charged for products and the minimum that can be paid for other products.

5.  Following on from 4, pressure from well meaning lobbies in wealthy countries which push up salaries and/or improve working conditions will lead to less workers being employed by an enterprise.

6.  In a low income country, now, like high income countries in the past, many people will be willing to work for very long hours to reach a minimum standard of living, reach the margin beyond pure subsistence which is narrower than in high income countries.  That is, people want to work long hours to reach a minimum acceptable standard of living, and the wish to do this is the wish of workers not employers who take pleasure in making workers suffering.   Possibly some managers at Foxconn are sadists who want to make workers suffer, but no more so than at any other employer, private or public in the world. Foxconn has workers who work very long hours because those workers prefer it.  There is very limited advantage in employers having workers do very long hours of overtime compare with hiring more workers.  In fact, the trade off between workers who are less efficient and the costs of hiring more full time workers must often lean in the direction of hiring more workers.  However, most employers will feel some need to make existing employees happy and not annoy them too much.

7.  When considering salaries and working conditions we must consider the broad alternatives open to workers,and the conditions that they and their parents experienced in recent history.  The alternative for industrial workers in urban China has been rural property, the harsh life of peasants.  Foxconn is part of the great poverty reduction program created by the liberalisation of the Chinese economy, limited by real, since the late 1970s.  Yes the salaries and conditions do not look good by the standards of high income nations, but the important issue is the direction of living standards in China, and what has produced those increasing living standards.

8. Presuming salaries and conditions do improve in a company where they have been at the low end (and it’s not at all clear that Foxconn is in that category within China) what is the overall consequence?.  Employees clearly benefit, but who those employees are changes.  The workforce becomes ‘gentrified’, that is more highly qualified people from more advantaged groups apply for, and get those jobs.  Those jobs are not open for less qualified people, and those who are historically discriminated against in the labour market and in other ways.   They may well find that all the remaining jobs for which they are considered have worse salaries and conditions than the ‘exploitative’ enterprise had offered.  You cannot legislate all discrimination out of existence by will, an open labour market which does not price disadvantaged workers out, is much more likely to overcome discrimination, by giving everyone a chance to show their worth as employees, though it certainly does not solve all problems.

9.  With regard to the point above, there is competition between employers in large cities in China, so salaries and working conditions do reflect a trade off that has been chosen by employees.  Of course Foxconn employees would like higher salaries (as the FLA report ‘reveals’), who doesn’t.  Of course salaries look terribly low to westerners, but so do all low and middle level salaries in China.

The monitoring of Apple over Foxconn is a long and sordid story.  It began with claims that Foxconn employees were committing suicide in epidemic numbers.  This was based on ignoring two facts: that Foxconn employs hundreds of thousands of people so that the number of people committing suicide was a lot less dramatic than appeared without mentioning that fact; the fact that the suicide rate was lower than the national average in China, so that story disappeared, at least from the mainstream.  Then another wave came, which was partly the consequence of a one man play by Mike Daisey, which was shown to include accusations about Foxconn and Apple based on Daisey’s imagination, not facts.  The multiple discrediting and the ‘revelation’ that a lot of Foxconn employees want long hours, may lead some people to think again.  I can only hope so.

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