Chinese Apple staff's hours cut
The Fair Labour Association (FLA) said Hon Hai Precision Industry, the Taiwanese company that runs the factories in China, is committing to a reduction of weekly work time to 49 hours, the legal Chinese maximum.
That limit is routinely ignored in factories throughout China. Auret van Heerden, the CEO of the FLA, said Hon Hai, also known as Foxconn, is the first company to commit to following the legal standard.
Apple's and the FLA's own guidelines call for working weeks of 60 hours or less.
Foxconn's factories are the last step in the process of manufacturing iPhones and other Apple devices, most of which have hundreds of components. Research firm IHS iSuppli estimates that Apple pays eight dollars (£5) for the assembly of a 16-gigabyte iPhone 4S and 188 dollars (£117) for its components.
It sells the phone wholesale for about 600 dollars (£376) to phone companies, which then subsidise it to be able to sell it for 200 dollars (£125) with a two-year service contract.
Ricardo Ernst, a professor at Georgetown University's McDonough School of Business, said companies play a risky game when they raise their manufacturing costs. US consumers have shown little inclination to pay more for products that are made in the US as opposed to China.
But iSuppli's figures suggest that if Apple were to absorb a Foxconn wage increase that keeps salaries level while cutting average working hours from 60 to 49 per week, it would pay less than two dollars extra to have an iPhone made.
Other electronics companies, particularly PC makers such as Dell and HP, earn less profit on what they sell and could see a deeper impact.
© 2012 Press Association