Apple's vow could lead to China wage hikes

A pledge by the manufacturer of Apple's iPhones and iPads to limit work hours at its factories in China could force other global corporations to raise pay for Chinese workers who produce the world's consumer electronics, toys and other goods.

Foxconn Technology's promise comes as Beijing is pushing foreign companies to share more of their revenues with Chinese employees. It follows a report by a labor auditor hired by Apple Inc. that found Foxconn was regularly violating legal limits on overtime, with factory employees working more than 60 hours per week.

"I think whatever Foxconn did will have an impact, certainly, on all Chinese workers in all trades," said Willy Lin, managing director of Hong Kong-based Milo's Knitwear, which makes clothing in three factories in China for European clients.

Foxconn, owned by Taiwan's Hon Hai Precision Industry Co., promised to limit hours while keeping total pay the same, effectively paying more per hour. Foxconn is one of China's biggest employers, with 1.2 million workers who also assemble products for Microsoft Corp. and Hewlett-Packard Co.

Japan's Toshiba Group, which employs 32,000 workers in China to make goods such as refrigerators and TVs, said it, too, is taking measures to reduce overtime work and create safe working conditions at its factories.

China has long been a low-cost manufacturing center for goods sold under foreign brand names. But wages already were rising quickly as companies compete for workers and communist leaders try to push the country up the technology ladder to make more profitable products.

Foxconn responded to a spate of suicides by employees at one of its mainland factory campuses in 2010 by more than doubling its basic monthly salary to $290. The minimum wage in Shanghai, one of the world's most expensive cities, is about $200 a month.

Research firm IHS iSuppli estimates that Apple pays $8 for the assembly of a 16-gigabyte iPhone 4S and $188 for its components. iSuppli's figures suggest that if Apple were to absorb a Foxconn wage increase to keep pay level and cut the workweek from 60 hours to 49, it would pay less than $2 extra to have an iPhone made.