Foxconn apologizes for a wage error at its iPhone factory in China after worker unrest

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

Men smashed security cameras and clashed with security personnel as hundreds of workers protested at the world’s largest iPhone factory in the city of Zhengzhou on Wednesday, in rare scenes of open dissent in China sparked by allegations of delayed pay and frustration with tough coronavirus restrictions.

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

“Our team was looking into the matter and discovered a technical error that occurred during the setup process,” Foxconn said in a statement, referring to hiring new workers.

“We apologize for an input error in the computer system and we guarantee that the actual pay is the same as agreed and on the official recruitment posters.” The error was not explained.

The apology was a change of face from a day earlier when Foxconn said it had fulfilled its payment contracts.

The unrest comes as China is recording record numbers of COVID-19 infections and facing more and more lockdowns that have fueled frustration among citizens across the country. But it also exposed communication problems and a lack of trust in Foxconn management among some employees.

A source familiar with Foxconn told Reuters on Thursday that the largest protests had subsided and that the company was communicating with employees who participated in smaller protests.

The person said the company had reached “preliminary agreements” with employees to resolve the dispute and that production at the factory was continuing.

Growing worker discontent with the coronavirus outbreak, strict quarantine rules and food shortages has led many employees to flee the closed factory campus since October after management implemented a so-called closed-loop system that cut off the factory from the wider world.

Many of the new recruits were hired to replace workers who had deserted—estimated in the thousands by some former employees.

The Taiwanese company said it will respect the wishes of new recruits who want to resign and leave the factory campus, and will provide them with “sponsorship subsidies”. A Foxconn source said the benefits amounted to 10,000 yuan ($1,400) per worker.

Apple dangers

Home to more than 200,000 workers, Foxconn’s Zhengzhou factory houses dormitories, restaurants, basketball courts and a soccer field across its sprawling 1.4 million square meter facility.

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

Apple said it had employees at the factory and was “working closely with Foxconn to ensure that its employees’ concerns are addressed.”

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

said Christina O’Connell, senior director of SumOfUs, a nonprofit corporate accountability group.

Reuters reported last month that iPhone production at the Zhengzhou factory could drop by as much as 30% in November and that Foxconn aimed to resume full production there by the second half of the month.

The Foxconn source familiar with the matter said it was not immediately clear how much the workers’ protests would affect production for November, and that it could take a few days to get that done, pointing to the large size of the plant.

A separate source said the unrest made sure they could not fully resume production by the end of the month.

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

($1 = 7.1353 CNY)

Additional reporting by Yimo Li in Taipei and Brenda Goh in Shanghai; Additional reporting by Ross Kerber in Boston, the Beijing Newsroom and Yu Luntian. Editing by Anne Marie Rountree, Stephen Coates and Edwina Gibbs

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