Apple Foxconn Investigation: Serious Worker Rights Issues Reported, Major Changes For Chinese Workers Promised

Improvement in working conditions may raise prices of electronics.

ByABC News
March 29, 2012, 5:13 PM

March 29, 2012 — -- The Fair Labor Association (FLA) has released the results of its independent investigation of Apple's Foxconn supplier based in China, and has found "serious and pressing noncompliances" with its Workplace Code of Conduct and Chinese labor law, with forced overtime as the top concern.

As a result, Foxconn has promised to lower overtime hours without lowering pay, a move that could raise the cost not just of Apple products but all electronics.

"Social responsibility has a cost. We are asking factories to make significant investment. We all have to be willing to share that cost," Auret van Heerden, the President and CEO of the Fair Labor Association, told ABC News "Nightline's" Bill Weir in an interview.

Read the full transcript of the interview with the President of the FLA here.

After a month-long investigation, which included interviews with 35,000 randomly selected Foxconn workers and in-depth surveys of all of Apple's production lines, the FLA has concluded that there are excessive overtime and overtime compensation issues and health and safety risks within the Chinese factories that make popular Apple products, including iPhones, iPads, and MacBook laptops.

"We found over 50 findings. Findings are either a violation of the law or the code, or just a gap in the management system, which represents a risk, which could lead to a non-compliance in future," van Heerden said.

Overtime Issues and Remedies

The report focuses on four main violations: workers' health and safety, worker integration, wages, and working hours.

Workers' hours and overtime payment issues are the main focus of the 13-page report. Within the last 12 months, at all three of Apple's Foxconn factories -- in Guanian, Longhua, and Chengdu -- the average employee worked over 60 hours per week, the FLA found. The legal limit is 49 hours per week, including overtime.

"There were periods during which some employees worked more than seven days in a row without the required minimum 24 hours break," the report says.

It was also discovered that 14 percent of workers did not receive compensation to which they were entitled for overtime. Unscheduled overtime is only paid in 30-minute increments, meaning that if someone works 29 minutes they will not be paid.

Along with the findings are remedies. Foxconn has vowed to comply with the Chinese legal limits and the FLA standards; by July 1, 2013, the factory has promised to reduce worker hours and stabilize pay.

But to do that, the report said, it will need to increase the number of workers to maintain the same level of production output. While employees will be working less, Foxconn promised it will ensure that workers do not lose income due to the reduced overtime.

Foxconn recently raised the wages of workers by 25 percent, but workers told the FLA survey that the wages still don't meet their basic needs. A cost of living audit in the locations of the factories will be conducted.

Additionally, Apple and Foxconn have agreed to pay any worker retroactively who hasn't received the correct overtime wages. Another audit is being conducted now to determine that amount.

"In the next year, tens of thousands of extra workers will need to be recruited, trained, and accommodated at the same time as hours worked are progressively reduced per worker," the report says.

Van Heerden implied this could affect either the number of products Apple can ship or the price. "We have to be ready to put our money where our mouths are," he added.

Apple recently recorded record sales of its new iPad; three million were sold in their first weekend on the market. Apple would not comment on the impact this might have on product supply and prices.