Apple, Foxconn: We overly relied on temporary workers in China

Above, a recruitment point of Foxconn — an Apple manufacturing partner — in Shenzhen, south China’s Guangdong province in this February 22, 2013 file photo. (AFP)
Updated 09 September 2019

Apple, Foxconn: We overly relied on temporary workers in China

  • Apple said it investigated the percentage of temporary workers among the overall workforce and found it ‘exceeded our standards’
  • Earllier media reports said Apple was considering moving some operations out of China to avoid new US tariffs

SHANGHAI: Apple and manufacturing partner Foxconn Technology on Monday rebutted allegations of lapses in people management levelled by a non-profit monitor of worker rights, though confirmed they employed too many temporary workers.
The response comes after China Labor Watch on Monday issued a lengthy report accusing the two companies of breaching numerous Chinese labor laws, including one barring temporary staff from exceeding 10 percent of the total workforce.
US tech firm Apple relies heavily on Taiwan’s Foxconn and its Chinese manufacturing facilities to produce devices such as the iPhone, the next line of which will be unveiled on Tuesday.
In a statement, Apple said it investigated the percentage of temporary workers among the overall workforce and found it “exceeded our standards.” It said it was working with Foxconn to “immediately resolve the issue.”
Apple did not state whether the excess amounted to a breach of Chinese law. It declined to comment when asked directly by Reuters.
China’s Ministry of Human Resources and Security did not respond to a Reuters fax seeking comment. Reuters could not immediately determine any penalty for temporary employees exceeding 10 percent of the workforce.
Apple also said it discovered interns at a supplier facility had worked overtime at night, violating company policy, and that “this issue has been corrected.” It said the interns worked overtime voluntarily and were properly compensated.
Foxconn separately confirmed over-reliance on temporary workers, known internally dispatch workers.
“We did find evidence that the use of dispatch workers and the number of hours of overtime work carried out by employees, which we have confirmed was always voluntary, was not consistent with company guidelines,” Foxconn said.
It said it “immediately began a detailed process to ensure that all issues were addressed.”
The labor report comes at a time of trade tension between the United States and China that has threatened to upend supply chains across the technology industry with tit-for-tat import tariffs.
Earlier this year, media reports said Apple was considering moving some operations out of China to avoid new US tariffs, with Japan’s Nikkei Asian Review in June putting the figure at 15 percent to 30 percent of production.
In an earnings call in July, Apple Chief Executive Tim Cook downplayed such speculation, stating the vast majority of Apple’s products “are kind of made everywhere.”
“There’s a significant level of content from the United States and a lot from Japan to Korea to China, and the European Union also contributes a fair amount. And so, that’s the nature of a global supply chain. Largely, I think that will carry the day in the future as well.”


IMF downgrades outlook for world economy, citing trade wars

Updated 15 October 2019

IMF downgrades outlook for world economy, citing trade wars

  • Growth this year will be ‘weakest since the 2008 financial crisis,’ according to 2020 forecast

WASHINGTON: The International Monetary Fund is further downgrading its outlook for the world economy, predicting that growth this year will be the weakest since the 2008 financial crisis primarily because of widening global conflicts.

The IMF’s latest World Economic Outlook foresees a slight rebound in 2020 but warns of threats ranging from heightened political tensions in the Middle East to the threat that the US and China will fail to prevent their trade war from escalating.

The updated forecast released on Tuesday was prepared for the autumn meetings this week of the 189-nation IMF and its sister lending organization, the World Bank. Those meetings and a gathering on Friday of finance ministers and central bankers of the world’s 20 biggest economies are expected to be dominated by efforts to de-escalate trade wars.

The new forecast predicts global growth of 3 percent this year, down a 0.2 percentage point from its previous forecast in July and sharply below the 3.6 percent growth of 2018. For the US this year, the IMF projects a modest 2.4 percent gain, down from 2.9 percent in 2018.

Next year, the fund foresees a rebound for the world economy to 3.4 percent growth but a further slowdown in the US to 2.1 percent, far below the 3 percent growth the Trump administration projects.

IMF economists cautioned that that even its projected modest gains might not be realized.

“With a synchronized slowdown and uncertain recovery, there is no room for policy mistakes, and an urgent need for policymakers to cooperatively de-escalate trade and geopolitical tensions,” Gita Gopinath, the IMF’s chief economist, said in the report.

Last week, the US and China reached a temporary cease-fire in their trade fight when President Trump agreed to suspend a tariff rise on $250 billion of Chinese products that was to take effect this week. But with no formal agreement reached and many issues to be resolved, further talks will be needed to achieve any breakthrough. The Trump administration’s threat to raise tariffs on an additional $160 billion in Chinese imports on Dec. 15 remains in effect.

The IMF’s forecast predicted that about half the increase in growth expected next year will result from recoveries in countries where economies slowed significantly this year, as in Mexico, India, Russia and Saudi Arabia.

This year’s slowdown, the IMF said, was caused largely by trade disputes, which resulted in higher tariffs being imposed on many goods. Growth in trade in the first half of this year slowed to 1 percent, the weakest annual pace since 2012.

Kristalina Georgieva, who will preside over her first IMF meetings after succeeding Christine Lagarde this month as the fund’s managing director, said last week that various trade disputes could produce a loss of about $700 billion in output by the end of next year or about 0.8 percent of world output.

IMF economists said that one worrying development is that the slowdown this year has occurred even as the Federal Reserve and other central banks have been cutting interest rates and deploying other means to bolster economies.

The IMF estimated that global growth would have been about one-half percentage point lower this year and in 2020 without the central banks’ efforts to ease borrowing rates. “With central banks having to spend limited ammunition to offset policy mistakes, they may have little left when the economy is in a tougher spot,” Gopinath said.

In addition to trade and geopolitical risks, the IMF envisions
threats arising from a potentially disruptive exit by Britain from the EU on Oct. 31. The IMF urged policymakers to intensify their efforts to avoid economically damaging mistakes.

“As policy priorities go, undoing the trade barriers put in place with durable agreements and reining in geopolitical tensions top the list,” Gopinath said. “Such actions can significantly boost confidence, rejuvenate investment, halt the slide in trade and manufacturing and raise world growth.”

The IMF projected that growth in the 19-nation euro area will
slow to 1.2 percent this year, after a 1.9 percent gain in 2018. It expects the pace to recover only slightly to 1.4 percent next year.

Growth in Germany, Europe’s biggest economy, is expected to be a modest 0.5 percent this
year before rising to 1.2 percent next year.

China’s growth is projected to dip to 6.1 percent this year and 5.8 percent next year. These would be the slowest rates since 1990, when China was hit by sanctions after the brutal crackdown on pro-democracy demonstrators in Beijing’s Tiananmen Square.