Several days ago, I wrote about the findings released by the Fair Labor Association, which audited several China facilities of Foxconn, Apple’s (AAPL) largest manufacturer in the PRC. The FLA report included the following:
During peak production, the average number of hours worked per week at Foxconn factories exceeded both the FLA Code standard and Chinese legal limits. This was true in all three factories. Further, there were periods during which some employees worked more than seven days in a row without the required minimum 24-hour break.Law on overtime in China can be complicated, but there are basically three categories:
1. Standard overtime: The normal work week is limited to 44 hours plus 36 overtime hours over the course of a month. Workers are to be compensated for overtime at a rate of 1.5 times regular pay.
2. Working on days off: the normal work week is usually five days, with two rest days. However, if the worker puts in less than eight hours per day during that period, the five-day limit does not necessarily apply. If the worker is on duty on a rest day, compensation will be paid at a rate of two times regular pay.
3. Statutory holidays: these shall be paid at a rate of three times regular pay.
There has been a great deal of discussion of the overtime violations by Foxconn relating to excessive hours worked in a day, a week, and a month. There are also questions about whether workers have been properly compensated for these additional hours.
Among the promises made by Foxconn in connection with the FLA report was a limit on monthly overtime, to be set at the statutory maximum of 36 hours, along with a standard work week of 49 hours (I don’t know why this isn’t 44). At the same time, knowing that this would translate into a wage cut for current workers, Foxconn also promised that the limits on overtime would not simply mean a reduction of worker pay.
The workers themselves are skeptical and nervous. One of the reasons why they flock to companies like Foxconn is the overtime work and the amount of extra income it brings in. Here is the reaction of one worker interviewed by Reuters:
“We are here to work and not to play, so our income is very important,” said Chen Yamei, 25, a Foxconn worker from Hunan who said she had worked at the factory for four years.
“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. We think that 60 hours of overtime a month would be reasonable and that 36 hours would be too little,” she added. Chen said she now earned a bit over 4,000 yuan a month ($634).
This raises some difficult questions about the relationship between the state and labor, and how best to use the law and minimum standards to protect workers, while at the same time allowing them to decide for themselves what kinds of job requirements are acceptable.
Henry Blodget took a look at this last week, commenting that since so many workers, when asked, were happy with the amount of overtime they were given at Foxconn, the focus on this issue by the FLA and others was ridiculous and unnecessary.
Foxconn’s workers actually don’t work ridiculously long hours, especially by the standards of most successful, ambitious people. More importantly, by and large, Foxconn’s workers want to work more, not less.
Why do Foxconn’s workers want to work more?
Because they want to make more money.
And working more, not less, is something that many workers the world over voluntarily choose to do, for the same perfectly reasonable reason: They want to earn more money and get ahead. This hard work, moreover, is especially common in short bursts, when teams are trying to finish important projects, just the way it is at Foxconn.
And, in most places, this ambition and gumption is admired, not scorned.
Is Blodget right? Certainly if workers are happy with this amount of overtime, why should the rest of us (and the state) wedge ourselves between labor and management? It’s a good question, and honestly I have mixed feelings about the issue.
But let me ask a couple questions. First, why do we have overtime laws and working hour restrictions? Slavery is illegal, so if workers did not wish to work long hours, they can simply go elsewhere, right? Well, we all know that it doesn’t work that way, and that in many cases workers do not have the kind of leverage or options that proponents of a mythical free labor market would have you believe.
For example, I could refuse to work for any law firm that required me to work more than 44 hours per week, but is there any firm out there that would accept these terms? I’ve never seen one. Why not? Because working long hours is an industry standard. These are simply the expectations in the legal services industry (and many others), arbitrary though they may be.
To be fair, Foxconn is not forcing overtime on its workers, who by all accounts want the extra hours. On the one hand, I’d say that’s fine. Foxconn needed the labor, and these workers wanted the hours. But I think this is a very narrow view of how labor works. It’s a market, and Foxconn is one of the largest employers in that market. What they do matters, and their labor practices are emulated by others.
That’s one of the reasons why we have statutory limits. Companies compete with each other, and if one factory decides not to run long shifts and use a lot of overtime, then it’s possible it will become less competitive. This is the race to the bottom. And if Foxconn and other factories all routinely use overtime in their staffing, then this becomes standard practice (it also has an effect on wages).
Second question. Blodget says that Foxconn workers’ hours are not excessive when compared to that of “successful, ambitious people.” Demeaning, much? Anyway, is this a fair comparison? Sure, Foxconn workers are not standing out in the sun breaking rocks with a pickax, but I certainly wouldn’t want to be stuck on one of those assembly lines for a 12-hour shift. I don’t think my back could take it. And let’s face it, those 14 or 16 hours you may spend at the office in your white-collar job, sitting at your desk and typing or speaking on the phone, is not exactly physically demanding. Moreover, we waste an ungodly amount of time at the office over the course of the day playing Angry Birds or watching porn. Factory work is controlled to such an extent that this kind of slacking is impossible. So I think the argument that if it’s okay for us (white-collar folks), then it should be okay for them (factory drones) is a bit suspect.
Third question. For the sake of argument, let’s assume that factory work and office work is more or less the same, and that therefore the same labor standards should apply with respect to overtime. Why is it, therefore, that working like a beast of burden 80+ hours a week is something that should be admired, and people who do so should be recognized for their “gumption”?
I’m not a big fan of the Protestant work ethic. Unless you are an artist/artisan or something similar, work is simply a means to an end (i.e. acquiring the means to buy stuff), not a calling. I think that with the productivity gains the human race has managed to achieve over the last few hundred years, the idea that people are locked away in cubicles pushing paper for so many hours on end is almost criminal. What ever happened to the 9 to 5 day? With everyone now working service jobs, even the idea of a 40-hour week is fading away for most of us. And because of mobile devices, we have gained a small measure of flexibility and freedom for being “on call” 24/7. I have friends who routinely brag about those 3am telephone conferences in which they participate; why is this a good thing, and is it really necessary?
For many people, apparently including Blodget, this is fine and dandy. People who work more hours are to be admired because they are trying to “get ahead.” Yes, that’s one way to look at it. But there is another perspective to consider. That factory worker quoted above makes RMB 4,000 per month. I know some professors who make only a little more than that. We can celebrate the “gumption” of these people when they work overtime or get second and third jobs (“How industrious!”) or we can admit that wages are too low, inflation is a problem, and the social insurance system needs a lot more work. This is not merely a China problem, of course. Sorry to bring this up yet again, but to really address this issue, we would once again have to talk about income inequality.
So am I worried about Foxconn’s overtime problems? Not that much, it’s true. And yes, the fact that workers generally want those hours does make a difference. At the same time, I sincerely hope that their wages are not cut when overtime is scaled back. It ultimately doesn’t matter what these specific workers want in terms of overtime. A lot of folks need extra money. I’d prefer to work towards a system where the law requires a reasonable living wage, housing prices aren’t crazy high, and education and health care expenses won’t ruin a family’s finances. If those things come to pass, and we really had a free labor market, I wonder how many of those workers would continue clamoring for so much overtime?
As usual, my conclusion would be: let’s enforce the law, maintain reasonable standards, and not engage in a race to the bottom.
About The Author - Stan Abrams is a Beijing-based IP/IT lawyer and law professor with an M.A. from Johns Hopkins in International Relations, a J.D. from Boston College Law School, a B.A. from Pomona College, and writes at China Hearsay. H/T to EconMatters.