All that hoopla about working conditions in iPhone and iPad assembly lines seems to have paid off—perhaps literally so, as far as workers are concerned. According to the Associated Press, Foxconn has vowed to pay employees more money and reduce their working hours. The article doesn’t detail the pay raises, but it says weekly work time will be slashed to 49 hours, down from an average of 60.
49 hours is the legal maximum in China, the AP says, but companies like Foxconn have been flaunting the limit openly.
How do employees feel about the change? The Fair Labor Association reportedly found that Foxconn workers were “the happiest with their jobs” when they worked 52 hours a week. However, Reuters quotes a couple of Foxconn workers who don’t sound thrilled about working fewer hours. “We are worried we will have less money to spend,” says one of them, a 23-year-old woman from southern China. Another, a 25-year-old woman who has worked at Foxconn for four years, told Reuters: “We have just been told that we can only work a maximum of 36 hours a month of overtime. I tell you, a lot of us are unhappy with this.” Reuters says she earns about $635 a month.
Apple, meanwhile, could benefit from the changes in the long run—and not just from a public relations standpoint. IHS iSuppli told the AP that, right now, Apple sells iPhone 4S handsets to carriers for “about $600” but only pays Foxconn $196—$188 in parts and $8 in labor—for each device. Labor costs should only rise $2 after the wage hikes and work time reductions are implemented. Apple should be able to absorb that easily, but its competitors, who have thinner margins and also rely on Foxconn for manufacturing, might feel more of a sting.
As of last quarter, Apple’s gross margin was a whopping 44.7%. The company posted a quarterly profit of $13.06 billion, and it had about $98 billion in the bank. Apple announced earlier this month that it would use part of its cash stockpile to repurchase stock and issue dividends to shareholders.