Nation of Beancounters

Excellent bit about the state of Foxconn

Posted in Uncategorized by Navin Kumar on February 3, 2012

Tim Worstall, that cranky Brit, has an excellent – if somewhat misleading – article about the threat to boycott Apple products. He deals with three issues in turn: that Foxconn is driving workers to commit suicides, that conditions are unsafe, and that wages are low.

On suicides:

 we are talking about some 18 suicides in 2010. What we actually want to know is whether that is a high or a low number. Suicide does happen in every society and country, so before we start blaming working conditions we’d like to know whether that rate is higher or lower than that in the surrounding society.

The general suicide rate in China is 22 per 100,000 people. That is a high rate by international standards but that is the one that we should be looking at to try and judge the suicide rate at Foxconn.

Foxconn employs some 1 million people in total so, if the Foxconn workforce were to have the same suicide rate as the general Chinese population (which, to be accurate, it won’t for suicide is not equally divided over age groups and the workforce is predominantly young) we would expect to see 220 suicides among such a number each year. We actually have an outcry therefore about a suicide rate which is under one tenth of the general suicide rate in the country under discussion.

On working conditions:

[The American workplace mortality rate is] 3.5 per 100,000: we would expect, if the Foxconn factories were no more dangerous than the average American workplace, 35 workplace deaths a year among those 1 million workers. Yes, each of those deaths, each of those injuries, in those aluminium dust explosions is a tragedy. But if we were being realistic rather than spouting nonsense over such matters we would not be using evidence of three or four deaths as evidence of how Apple, Foxconn or even China are ignoring worker safety in pursuit of filthy lucre. At a very minimum we would be looking at the total workplace death rate rather than cherry picking one specific incident.

On wages:

Wages paid to manufacturing workers in China are not determined by the productivity of those specific workers. They are not determined by US wages, by the profits that Apple makes nor even by the good intentions of the creative types that purchase Apple products. They are determined by the wages paid by other jobs in China and that is itself determined by the average level of productivity across the Chinese economy….

The question is not whether $17 a day is a low wage or not: it’s low relative to what? For a start, working those 6 day weeks that comes out to an annual income of $6,000 a year. No, not great riches by our standards but in China it’s a pretty fair whack. It’s around and about the per capita GDP for the whole country for example and thus obviously and by definition higher than average wages. Which is why those 1 million people have voluntarily signed up to work for those wages, many of them travelling hundreds of miles to do so.

Further, wages in China have been growing strongly recently. Since the late 1990s they have been growing at 14% per year (yes, after inflation is accounted for) and accelerating in the last couple of years. With compounding this means that manufacturing wages in China have risen four times since the turn of the century. The cause of this? Those vast factories built by the likes of Foxconn, the huge numbers of electronic toys and shiny gewgaws that we buy as they pour out of them.

Now, why is all of this a tad misleading? Because the number of suicides is probably more than 18 – 18 is just the number of suicides that happened at the Foxconn site (although given the dorms, I may be wrong). Furthermore, the workplace mortality is probably larger than 3 or 4 per million- those are just the number of people who died in that particular accident. And finally, one ought not extrapolate $17 a day to $6,000 per year – these are migrant workers who probably don’t work the full year.

Yet, Worstall makes a point: none of the stories being told to illuminate how bad things are are anywhere nearly as airtight as the story-tellers claim: there isn’t enough information to make claims about how dangerous and depressing the working conditions are especially relative to alternatives that these workers face. They’re citing these incidents because they’re easy to cite and easy to spin a story out of – not because they necessarily mean something.

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