Realist, not conformist analysis of the latest financial, business and political news

Amazon, Apple, Foxconn, They’re Exploiting Workers In China – Huzzah!

The latest whine from the snowflakes over on the left is that workers in one of Foxconn’s factories are making not very much money. Well, boo hoo, eh? Or even, well, yes that’s what happens to poor people in poor places, they don’t earn much money. The important question we’d like the answer to being, well, how do we go about their making more? The answer is to exploit them. Which is what the snowflakes are missing.

Amazon has admitted that thousands of agency workers who make its Echo smart speakers and Kindles in China were hired and paid illegally.

The US giant issued a statement regretting “issues of concern” following an investigation by the Observer and the US-based China Labor Watch into the “unethical and illegal” working conditions at its supplier factory in Hengyang.

Amazon disclosed that its own auditors visited the Foxconn factory in March and found that it had hired an illegally high number of agency workers and was not paying them properly for working overtime.

Agency staff – known as dispatch workers in China – do not get sick pay or holiday pay and can be laid off without wages during lulls in production. China changed its labour laws in 2014 to limit their use to 10% of any workforce in an attempt to stop companies exploiting them to cut costs.

The China Labor Watch investigation – published on Sunday in association with the Observer – found that more than 40% of the staff in the Foxconn factory were agency workers. Those working overtime were being paid at the normal hourly rate instead of the time-and-a-half required by Chinese law and by Amazon’s own supplier code of conduct.

In terms of illegality that is what they found. Too many agency workers, no time and a half for overtime. And yes, that really is it. But they go on to complain that:

Foxconn promises agency workers a minimum of 3,700 yuan a month (£431.64), but pay slips and workers’ own accounts suggest real wages rarely get close to that figure. Most earn between 2,000 and 3,000 yuan, with permanent staff earning between 2,000 and 2,500 yuan. In 2017, the average wage for a worker in Hengyang was 4,647 yuan a month.

Pay rates have rocketed in China in recent years, but Hunan remains one of the provinces with the lowest wages, and the minimum in Hengyang – 1,280 yuan a month – is barely half that in Shenzhen, where Foxconn’s Apple factory is based.

China’s poorer than many (but not all, not any more) parts of Europe and North America. Hunan’s poorer than many parts of China. Poor people, in poor places, get s**tty wages. That’s how reality works. Yet it is this reality that they are complaining about.

As above, the interesting question is how does this change? Paul Krugman:

But matters are not that simple, and the moral lines are not that clear. In fact, let me make a counter-accusation: The lofty moral tone of the opponents of globalization is possible only because they have chosen not to think their position through. While fat-cat capitalists might benefit from globalization, the biggest beneficiaries are, yes, Third World workers.

Workers in those shirt and sneaker factories are, inevitably, paid very little and expected to endure terrible working conditions. I say “inevitably” because their employers are not in business for their (or their workers’) health; they pay as little as possible, and that minimum is determined by the other opportunities available to workers. And these are still extremely poor countries, where living on a garbage heap is attractive compared with the alternatives.

And yet, wherever the new export industries have grown, there has been measurable improvement in the lives of ordinary people. Partly this is because a growing industry must offer a somewhat higher wage than workers could get elsewhere in order to get them to move. More importantly, however, the growth of manufacturing–and of the penumbra of other jobs that the new export sector creates–has a ripple effect throughout the economy. The pressure on the land becomes less intense, so rural wages rise; the pool of unemployed urban dwellers always anxious for work shrinks, so factories start to compete with each other for workers, and urban wages also begin to rise.

Well, this is how it changes. Those dark satanic mills are built and staffed and then, some decades later, everyone stops working in them as they’ve now better things to do. That’s what happened to our forbears and that’s why we can all work as diversity officers. China is doing this at warp speed. Back in 1978 China was about as rich as, with real wages about the same as, England in 1600 AD. Today it’s around England in 1960.

This rise of China up out of peasant destitution is the biggest reduction in poverty in the history of our species. The largest number of people getting rich the fastest since this Third Rock from the Sun first cooled down into a solid surface. And people are sodding complaining?

And yes, they are, they’re complaining about the very method which actually lifts people up out of that destitution and poverty.


As Joan Robinson said, this system really does work:

The misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all.

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6 years ago

We’ve been through this before, when American gadflies closed down “sweatshops” in Vietnam and the best options remaining for the women who worked inside were the rice paddy and prostitution. We have an incorrigible tendency to manufacture foreign crises by projecting our standards onto them.

Amazing to read Paul Krugman take time out from bashing capitalism to note that it has unexpected beneficiaries. But he does so only to boost globalism. If a Trump deregulation scheme were on the table, he would find a reason to be on the other side, such as “exploitation.”

chap in chelsea
chap in chelsea
6 years ago

“The misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all.”

Indeed, an amusing quip by someone who was at one point a vile apologists for Mao & the ‘Cultural Revolution’ 😉

6 years ago

Whodathunk. Trickle down economics does work after all. You create a more prosperous class (i.e. inequality) and that strange phenomenon of economic growth means that there is a VERY measurable improvement in the lives of all.

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