Foxconn Reportedly Plans to Double Worker Wages

Foxconn is reportedly planning to increase workers monthly wages in its mainland China factories from 2,200 yuan (US$350) to 4,000 yuan (US$630) by the end of next year. This would be an 82% increase and would match mainland wages with those available in Foxconn’s home base of Taiwan.

A Foxconn Factory

A Foxconn Factory

Recently, however, the company’s president and chairman, Terry Gou, said that wasn’t enough. He wants to double those wages to 4,400 yuan (US$690) per month instead.

Foxconn has been accused of unfair labor practices and sweatshop working conditions. However, both Foxconn and Apple claim to have taken steps to and clean up their reputation. In addition to working condition and labor practice changes, Foxconn has also increased wages three times since 2010.

This latest report from Want China Times would be the fourth, and largest, wage increase for workers, who would now be earning five times what they were back in 2009. At that ime, the average wage was 900 yuan (US$140).

With one million workers in mainland China, a salary increase won’t come cheap for Foxconn, some analysts expect it to hit the bottom line significantly. The first salary increase back in 2010, which applied to only 800,000 workers at the time, cost Foxconn about 200 million yuan (US$31.5 million). And in the first quarter of 2012, the gross margin of Hon Hai Precision Industry, Foxconn’s parent company, was down 0.5% from last year.

However, other observers expect Foxconn to adjust. The value-added per worker has increased in recent years and a salary increase is expected to encourage even more gains.

One other possible outcome of the salary change would be workers from Taiwan coming to the mainland to take advantage of the higher wages. The outlook for increasing salaries in Taiwan is not good. Many Taiwanese workers reported not having a raise in over three years.

Foxconn is the major manufacturer for Apple’s iPhones and iPads.

[Via Macworld UK]