Era of Low Cost Chinese Labour at an End

by Matt Klassen on April 5, 2012

For years now technology companies have been outsourcing the manufacturing of our favourite devices to countries like China, countries where labour costs are lower and working conditions, as we’ve heard recently, are absolutely abhorrent.

To date such decisions have made perfect economic sense, pay the supply line less and line your pockets with more, it’s been a capitalists dream. But amazingly voices louder than the siren song of the almighty dollar have been heard of late, voices drawing attention to the ethical atrocities being committed in the production of our favourite gadgets overseas, voices calling for meaningful systemic change to current labour practices.

In response, in a landmark agreement last week both Apple and Foxconn pledged to tackle the issue of substandard working conditions in Chinese factories, changes, analysts predict, that will invariably dethrone China as the world’s “lowest-cost producer of everything.”

While many ethics watchdog groups decried Apple’s hollow platitudes following the New York Times exposé on the working conditions in the Foxconn factories along Apple’s supply line, the not-so-independent independent auditing agency, the Fair Labor Association, delivered a veritable laundry list of violations related to working conditions to Apple and Foxconn last week. The issues ranged from Foxconn allowing (and possibly even demanding) illegal amounts of overtime, failing to provide a safe work environment, as well as numerous safety violations.

In response, Apple and Foxconn are reportedly working to “hire tens of thousands of new workers, eliminate illegal overtime, improve safety protocols and upgrade workers’ accommodation and other amenities.”

Simply put, as an article from Reuters explains, “after years of squeezing the profit margins of contract manufacturers making the gadgets beloved by consumers worldwide, the time is drawing nearer when big brand names may have to forego some of their profits to overcome criticism their products are built off the back of mistreated Chinese workers.”

As a perpetual sceptic, however, I view this sort of change with a snort of derision and a roll of the eyes, not because I don’t want more ethical treatment of workers around the world, but because I know to well the power of the almighty dollar.

Take for example the violations discovered by the FLA’s audit, violations that have been well known by companies, governments, and even bloggers like me for years now. Why didn’t anyone cry foul when Foxconn workers were throwing themselves off buildings or dying in chemical spills? Add to that the fact that companies like Apple, who have the money and power to effect change but who won’t spend one red cent more than they have to in order to make this all go away, and the result is that I’m less than optimistic.

Of course I won’t deny that working conditions in China will likely improve, a paradigm shift that means, in the words of Jay Huang, CFO of Taiwan’s Wintek, a maker of touch panels for Apple and other brands, “The time of low costs and cheap labour in China has come to an end,” which for me just means that unfortunate workers in some other country are being primed for exploitation to maintain the bottom line of wealthy American technology companies.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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