The iEconomy: How Much Do Foxconn Workers Make?

Foxconn workers on the production line.Ym Yik/European Pressphoto Agency Foxconn workers on the production line.

Foxconn Technology, one of the world’s largest electronics manufacturers, and a major supplier for Apple, has announced that it will raise salaries and decrease overtime at its factories in China. The Times’s David Barboza wrote, “Foxconn said that salaries for many workers would immediately jump by 16 to 25 percent, to about $400 a month, before overtime.”

One eagle-eyed reader noted a potential for confusion when comparing that figure to an article from The Times’s iEconomy series. That article stated that at Foxconn, “many workers earn less than $17 a day” and that workers frequently worked six days a week. Figuring that a month’s wages should equal four weeks of work, the reader suggested that The Times’s math skills were deficient. (Multiplying $17/day by 6 days/week by 4 weeks/month would seem to yield an approximate monthly wage of $408. And a second article cited a worker who made $22 a day. How then, this reader asked, could Foxconn be raising monthly wages up to $400?)

The crucial distinction is overtime.

Mr. Barboza, The Times’s Shanghai bureau chief, offered an explanation:

The first article in the iEconomy Series did say that workers make less than $17 a day. I did that calculation for Charles Duhigg and Keith Bradsher, and it is accurate as of that date.

In the second part of the series, we mentioned the salary of Lai Xiaodong, the young man who was killed in the dust explosion, at close to $22 a day, but he was a higher level worker in maintenance. Any reader doing his or her own calculation is bound to be confused by this when comparing it to our recent story noting $400 a month. They probably would not be aware that the first two figures include typical overtime pay.

Wage calculations in China are incredibly complex. It took me a while to understand how factories do it, and why I was regularly getting perplexing answers from workers.

Let me make it simple: if you ever ask a factory worker in China how much they are paid, make sure to ask their basic salary. That is the salary based on 160 hours of work a month. And then ask them about overtime, which can range from 1.5 times their hourly wage during weekdays and to 2 times their hourly wage on weekends. If they give you their total monthly income, you might be confused as to how they could earn so much, not knowing they may have worked 36 hours of overtime — or more.

Now, let’s go to Foxconn. A typical Foxconn employee on the assembly line makes anywhere from 1,500 renminbi to 2,200 renminbi a month, based on 160 hours of work. At that salary, the wage ranges between $1.50 and $2.20 an hour, based on the exchange rate of 6.3 renminbi to the dollar.

When this paper recently wrote that most Foxconn assembly line workers get paid less than $17 an day, that was based on the average base pay of about 1,700 renminbi a month, plus the legal maximum of 36 hours of overtime. This is quite normal for most Foxconn workers.

Many even work more than the maximum allowed under the law. (Apple’s own code of conduct says that except in emergency or unusual situations, workers at its suppliers may work no more than 60 hours per week.)

Ask a Foxconn worker and a typical schedule is 10 working hours a day, plus one weekend day. It is common to violate the legal limit. But assuming they work the maximum, and none of those hours occur on Saturday or Sunday (which would make them eligible for double time hourly rates) the figures are 1,700 renminbi a month in basic salary (at 10.6 renminbi an hour, or about $1.70), 36 hours at time-and-a-half (at 15.9 renminbi, or roughly $2.55) and you get a total of 1,700 + 572.40 = 2,272.40 renminbi. At 6.3 renminbi per dollar, that is about $360 for a month.

In China, factories generally calculate that there are 22 working days a month, on average. So you can see the total is 2,272 divided by 22 working days and you come up with 103.27 renminbi in pay per day, or about $16.40, which was the basis for reference in the first iEconomy article.

Keep in mind that these figures translated into dollars change nearly every month as the renminbi appreciates against the dollar.

Last week, Foxconn said its basic salary would increase to as much as 2,500 renminbi a month — about 113 renminbi, or $18, a day, before overtime consideration. So with basic salary alone, Foxconn assembly-line workers will make as much as $400 a month, based on location and passing a probationary period. That’s for 160 working hours a month, so the hourly pay is about $2.50.

Foxconn also wants to significantly reduce overtime, and excessive amounts of overtime in particular. Apple is demanding they comply with Apple’s supplier code of conduct.

With basic hourly pay at $2.50, overtime will cost Foxconn $3.75 to $5 anhour. (You can see why many migrant workers want to work on Saturdays and Sundays rather than sit around in a crowded dorm in an area that is gated and has little more than factories for as far as the eye can see. They generally stay at a factory less than 2 years, so every day of weekend work is twice the rate of a weekday.)

As an additional point of reference, salaries for low-skilled jobs in Chinese factories range from about 80 cents an hour to $2.50 an hour. I don’t follow auto factories but those wages should be higher. And I haven’t mentioned dorm or food subsidies and social welfare, which can slightly alter those figures. China’s income tax is basically zero for workers in that salary range.

Keith Bradsher, The Times’s Hong Kong bureau chief, added this by e-mail:

Overtime pay does indeed make a big difference in the compensation of Chinese factory workers. Such workers tend to volunteer for considerable overtime, trying to save as much money as quickly as possible so as to go back to their home village, often to start a business. Companies also assign extra overtime during busy periods, sometimes violating regulatory caps on total overtime a month. Regulations to limit overtime have been partly successful.

A separate issue is that small factories sometimes violate labor regulations by taking advantage of the regulations and forcing workers to accept extra hours with little or no extra pay, or paying piece rates so as to disguise what is overtime and what is not. Chinese workers have become more assertive and bring a steady stream of complaints to labor tribunals when they feel that they have been cheated, demanding back pay.

Larger factories, like Foxconn, are generally viewed as less likely than smaller factories to take the risk of losing a labor tribunal decision.