– The Associated Press

BEIJING – This week’s pledge to trim work hours and effectively raise wages for the hardscrabble Chinese employees who assemble Apple’s iPads and iPhones isn’t likely to drive up the prices that consumers pay.

Labor expenses remain such a small portion of the total bill for most gadgets made in China, and wages have already been steadily growing.

The cumulative wage increases, however, could crimp the profits of major technology companies unless they can save money on the parts that power the devices.

“The cost of assembly is going to go up for most electronics,” IHS iSuppli analyst Thomas Dinges predicted.

The pledge involves Foxconn Technology, which assembles an estimated 40 percent of the world’s electronics, including the hot-selling iPhone and iPad.

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Foxconn, owned by Taiwan’s Hon Hai Precision Industry Co., promised to limit hours while keeping total pay the same. That commitment will translate into higher hourly wages.

The pledge came after Apple Inc., the world’s most valuable company, hired a labor auditor to review the practices and conditions in Chinese factories run by Foxconn.

The audit resulted in a report released Thursday that evoked images of a sweatshop. Among other things, the report said Foxconn routinely violated overtime laws by assigning its assembly-line workers to toil for more than 60 hours per week.

Foxconn’s concession is expected to have ripple effects not only because it involves Apple, one of the world’s most scrutinized companies, but also a major Chinese employer that cuts a broad swath.

Foxconn has about 1.2 million workers and either currently or has assembled products for a long list of technology companies including Microsoft Corp., Hewlett-Packard Co. and Dell Inc.

Those companies’ smartphones, computers, video game consoles and other devices have become household staples around the world.

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“I think whatever Foxconn did will have an impact, certainly, on all Chinese workers in all trades,” said Willy Lin, managing director of Hong Kong-based Milo’s Knitwear, which makes clothing in three factories in China for European clients

Japan’s Toshiba Group, which employs 32,000 workers in China to make goods such as refrigerators and TVs, said it already is planning to adopt similar changes that will reduce overtime work and improve working conditions at its factories.

China has long been a low-cost manufacturing center for goods stamped with some of the world’s best-known brands.

But wages have been steadily rising for years as companies compete for workers and China’s communist leaders try to push the country up the technology ladder to make more profitable products.

Dinges believes the leadership also realizes the country’s economic evolution requires raising the standards of living so more factory workers assembling the devices will eventually be able to buy them.

 


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