Foxconn plans further pay increase to stop suicides

Foxconn plans to raise pay again for workers in Shenzhen, China, to put a stop to a string of suicides at its main factory there, a campus of over 300,000 workers.

The company has become the focus of media scrutiny because at least 13 people have attempted suicide at its factories in China, mainly at the massive Shenzhen facility. Foxconn’s size and the list of popular products it makes has also put it in the spotlight. It’s the world’s largest contract maker of electronics devices, producing iPhones and iPods for Apple, PlayStation 3s for Sony, Wiis for Nintendo, PCs for Hewlett-Packard and Dell, and mobile phones for Nokia.

Last week, Foxconn announced an immediate 30 percent pay raise for all workers in China, but on Sunday the company said it will take a further step at the Shenzhen facility to raise pay again in October.

“The implementation of this wage increase is designed to ensure that the Foxconn workforce has a stable and more comfortable base of income. While overtime work was always voluntary, this wage increase will reduce overtime work as a personal necessity for some employees and make it a personal choice for many workers,” the company said in a statement.

Monthly pay for front line employees will be raised to 2,000 Chinese yuan (US$292) per month for those that pass a performance evaluation, Foxconn said. New workers will be eligible for the salary increase after three months at the company. The basic salary of Foxconn workers prior to the start of raises was 900 yuan (US$132) a month.

Gartner analyst Jamie Wang said the higher pay will hit Foxconn’s profitability, but that it’s necessary to offset bad publicity that could affect its customer relationships.

“Recent staff suicides and attempted suicides at Foxconn facilities are reported to be related to working conditions, and from a marketing perspective, they have had a very negative impact on the company’s standing,” Wang said, adding that, “a consumer or public outcry could force some major brand owners to move their manufacturing away from Foxconn because of these tragedies.”

Wang noted that a shortage of workers in China poses a risk to companies of “unreliable young workers and susceptible recruits being employed in the industry,” and suggested companies increase pay and improve working conditions in order to retain talented workers.

Although the suicide issue at Foxconn has been attributed by many media reports to factors including working conditions at the company and China’s rapid modernization, medical research shows that these may not be the problems and that the company’s suicide rate is far below China’s national average.

Between 2000 and 2006, China averaged 15.05 suicide-related deaths per 100,000 people, according to a Nov. 2008 study published in The Lancet medical journal. Foxconn employs over 540,000 workers in China, meaning the 10 deaths so far this year at the company put it far below the national average.

Medical researchers in China say the suicides at Foxconn do not appear to have been caused by any of the major factors featured in recent media stories and that a careful study of the suicides needs to be undertaken.

Foxconn has taken a number of measures to prevent further suicides so far this year, including calling in Buddhist monks and psychiatrists to provide counseling, and installing nets on buildings designed to catch people attempting to jump. Most of the attempts have been by jumping from tall buildings. The company has also given press tours of its main facility, the Longhua factory complex in Shenzhen, to show off sports facilities, dormitories and conditions along production lines.

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