Foxconn apologizes for pay slip at China iPhone plant after worker unrest

  • Foxconn says it is working with staff to resolve disputes
  • Major iPhone factory rocked by protests over wages and conditions
  • Apple says it has a field team in Zhengzhou

TAIPEI/SHANGHAI, Nov 24 (Reuters) – Foxconn (2317.TW) said on Thursday that a “technical error” related to pay occurred while hiring new recruits at a COVID-hit iPhone factory in China and said it apologized to workers after the company was rocked by new labor unrest.

The men smashed surveillance cameras and clashed with security personnel as hundreds of workers protested at the world’s largest iPhone plant in the city of Zhengzhou on Wednesday, in rare scenes of open dissent in China sparked by allegations of non-payment and frustration with severe COVID-19 restrictions.

Workers said in videos circulated on social media that they were informed that Apple Inc’s supplier (AAPL.O) intended to delay bonus payments. Some workers also complained that they were forced to share dormitories with colleagues who tested positive for COVID.

“Our team investigated this matter and discovered that a technical error occurred during the onboarding process,” Foxconn said in a statement, referring to the hiring of new workers.

“We apologize for an input error in the computer system and guarantee that the actual salary is the same as agreed and the official recruitment posters.” He did not elaborate on the error.

The apology was a about-face from a day earlier, when Foxconn said it had fulfilled its payment agreements.

The unrest comes as China is posting record numbers of COVID-19 infections and grappling with more and more lockdowns that have fueled frustration among citizens across the country. But it also exposed miscommunication and a distrust of Foxconn’s management by some staff.

The larger protests had subsided and the company was communicating with employees engaged in smaller protests, a Foxconn source familiar with the matter told Reuters on Thursday.

The person said the company has reached “initial agreements” with employees to resolve the dispute and production at the plant continues.

Growing worker discontent over the COVID outbreak, strict quarantine rules and food shortages have seen many employees flee the closed factory campus since October, after management implemented a so-called closed-loop system that isolated the plant from the rest of the world.

Many of the new recruits had been hired to replace workers who had fled, estimated by some former employees to be in the thousands.

The Taiwanese company said it would respect the wishes of new hires who want to resign and leave the factory campus, and offer them “care subsidies.” The Foxconn source said the subsidies amount to 10,000 yuan ($1,400) per worker.

RISKS OF APPLE

Home to more than 200,000 workers, the Foxconn Zhengzhou plant has dormitories, restaurants, basketball courts and a soccer field throughout its sprawling 1.4 million square meter facility.

The factory produces Apple devices including the iPhone 14 Pro and Pro Max and accounts for 70% of iPhone shipments globally.

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Apple said it is staffed at the factory and is “working closely with Foxconn to ensure the concerns of its employees are addressed.”

Several shareholder activists told Reuters the protests showed the risks Apple faces due to its reliance on manufacturing in China.

“Apple’s extreme dependence on China, both as a (consumer) market and as a primary manufacturing location, makes us realize that this is a very risky situation,” said Christina O’Connell, senior manager of SumOfUs, a non-profit corporate responsibility group. .

Reuters reported last month that iPhone production at its Zhengzhou plant could slump by as much as 30% in November and that Foxconn aims to resume full production by the second half of the month.

The Foxconn source familiar with the matter said it wasn’t immediately clear what impact the workers’ protests could have on November’s production and it could take a few days to resolve, citing the large size of the factory.

A separate source said the unrest had ensured they would not be able to resume full production by the end of the month.

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Apple has warned it expects lower shipments of premium iPhone 14 models than previously expected.

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($1 = 7.1353 Chinese Yuan)

Reporting by Yimou Lee in Taipei and Brenda Goh in Shanghai; Additional reporting by Ross Kerber in Boston, Beijing Newsroom and Yew Lun Tian; Editing by Anne Marie Roantree, Stephen Coates and Edwina Gibbs

Our standards: the Thomson Reuters Trust Principles.

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