Foxconn Retracts Letter Asking Employees Not to Kill Themselves

By Ian Bell Published May 28, 2010

Taiwan’s Hon Hai Precision Industry’s Chinese Foxconn unit has been having some problems at its Shenzhen plant lately. A string of suicides has compelled Apple, Dell, and HP to launch a string into the supplier. Foxconn previously responded by playing Buddhist music, offering employee counseling, and requiring most employees to sign a letter promising not to kill themselves.

Apparently that’s not working out so well. On late Thursday, an employee slit his wrists, and according to the AFP has since become the eleventh to die this year.

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After receiving news of the latest attempt Sony, Nintendo, and Nokia joined a pending probe into the company’s business that currently included Apple, HP, and Dell. In response to criticism about the letter, Foxconn CEO Terry Gou retracted it, saying it was inappropriate.

Guo is also trying yet another tactic in hopes of convincing its employees not to jump off high buildings — giving them a pay raise. Foxconn does give occasional raises, and claims that it has been planning to do so for some time, but never got around to it. Currently entry level workers are paid 900 yuan (about $131.80) per month and also have the chance to earn overtime or bonuses.

According to Vincent Chen, an analyst at Yuanta Securities in Taipei, says that Foxconn typically bumps wages by 20 percent to meet holiday demand for consumer electronics. However, he says that a pay raise of 50 percent is not outside the realm of possibility.

The pay raises will reportedly raise Hon Hai’s operating costs by T$2.7B ($84M USD) and cut the company’s profits by 10 to 12 percent, according to analysts at Citi. Other analysts disagreed, though. Chen comments, “I don’t think this will impact Hon Hai’s profitability…Hon Hai has raised salaries by up to 50 percent in the past, and it’s still doing well.”

It is believed that at least some of the suicides were financially motivated. According to various employee accounts families of suicide victims with the company are typically paid between 8.5 and 10 years of pay. Faced with scant salaries, some depressed employees reportedly think they are doing their families a favor by killing themselves.

Foxconn is also planning a mass relocation of about one fifth of its 400,000 employee Shenzhen workforce in Southern China to a plant in Western China. Workers often migrate to get jobs at Foxconn’s plants. By moving the workers closer to home, Foxconn believes it can decrease their discontent.

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