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Foxconn Workers Threaten Suicide in Pay Dispute

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Foxconn, the Chinese maker of parts for companies like Apple (AAPL), Amazon (AMZN), Sony (SNE), Dell (DELL) and Dow Jones (^DJI) components Microsoft (MSFT) and Hewlett-Packard (HPQ), is once again back in the news, and it's deja vu all over again.
Almost a year ago, Minyanville’s Justin Rohrlich took a look at the controversial working conditions at Foxconn’s mammoth factory in Shenzhen, a city in southern China. So bad were the conditions that 32 employees attempted suicide in 2010, with 14 of them succeeding. In response, Foxconn raised wages by one-third to 1,200 yuan and even established an in-house counseling service.
However, it seems like either things have not improved much at the electronics-making behemoth or workers at the firm have learnt that threatening suicide is a sure-fire way to get what they want because some 150 workers at Foxconn’s plant in Wuhan, southern China threatened to stage a mass suicide on Jan. 3 in protest over a plan to move workers from one unit to another in the Wuhan campus.
The latest in a series of long-running labor disputes arose after Foxconn announced last week that it would shut down the production line for Microsoft’s Xbox 360 consoles at the Wuhan campus and transfer workers affected to another job.
According to an Associated Press report, workers said that Foxconn had promised severance pay for those who chose to leave instead of getting transferred, but later reneged on its words, leaving them fuming. The company, however, said that they offered transfers, not severances, and to select workers only.

The workers climbed to the top of the six-story dormitory on January 3 and threatened to jump before Wuhan city officials persuaded them to desist and return to work, according to the workers and accounts online. The workers gave varying estimates of the numbers involved in the strike, from 80 to 200, and photos posted online showed dozens of people crowding the roof of the boxy concrete building.

“Actually none of them were going to jump. They were there for the compensation. But the government and the company officials were just as afraid, because if even one of them jumped, the consequences would be hard to imagine,” said Wang Jungang, an equipment engineer in the Xbox production line, who left the plant earlier this month.

A director at rights group China Labor Bulletin, Geoffrey Crothall, argued that the protests is an indication that the company, which is a subsidiary of Taiwan’s Hon Hai Precision Industy Co., had to work on improving communication with workers.

“The reason you see these protests is because the employees feel they have no other option,” Crithall told BusinessWeek, adding that “threatening suicide is a common way for Chinese workers to draw employers' attention to grievances.”

Foxconn said Thursday that it has resolved the pay dispute, with most of the protesting workers agreeing to go back to work after a round of talks with the company and local government officials. 45 employees, however, ultimately resigned.

“The welfare of our employees is our top priority,” Foxconn said in a public statement. “We are committed to ensuring that all employees are treated fairly and that their rights are fully protected.”

(See also: Apple's Foxconn Predicament & Apple's iPad Supply in Question After Foxconn Explosion)


POSITION:  No positions in stocks mentioned.