Last week Ed Frauenheim, senior editor at our sister magazine Workforce Management, weighed in on the impact of the news reports, in his “Work in Progress” blog.
“Apple and Foxconn blinked,” Frauenheim wrote. “And those blinks are big in the shift away from worker abuse — even in low-wage nations — as a legitimate business model in the 21st century.”
Apple said it would invite an outside labor rights group to audit its suppliers. Foxconn said it would raise salaries 16-25 percent, and reduce overtime.
These appear to be positive steps, and they should help shrink the gap further between worker pay in China vs. North America.
That gap is already a lot smaller than some readers may realize. For proof, see “How big is your year-end bonus?” — a Dec. 22 blog post by my colleague Nina Ying Sun.
She explains that, including bonuses and overtime, some Chinese autoworkers made the equivalent of about $40,000 last year — or more. And that's in cities like Changchun and Chengdu, where living expenses are relatively low — not the higher-wage Pearl River Delta.
Even with all the news coverage about rising costs in China, I think a lot of people are still under the impression that workers in China make a dollar an hour. In that context, the numbers Sun cites are really eye-opening. Chinese auto workers may still earn less than unionized auto workers in North America, but not by the same difference they were a decade ago.
And improvements in working conditions are just as important.
What's the bottom line? Well, Apple will have to absorb those higher costs — it's not immune to the forces of supply and demand. And even if Chinese factories become more expensive links in the supply chain, I don't expect to see made-in-America iPhones or iPads any time soon.
Still, North American factories have become lean and efficient to survive the Great Recession. So, as costs in China continue to rise, North American plastics suppliers should be in a better position to compete for global business.
Loepp is editor of Plastics News and author of “The Plastics Blog.”