Foxconn 'suicide Factory' Raises Pay 70Pc

[interestrateripoff]

http://www.telegraph.co.uk/finance/china-business/7807903/Foxconn-suicide-factory-raises-pay-70pc.html

The move, which follows a spate of worker suicides this year at Foxconn’s factory in Shenzhen, southern China, could also increase industry-wide pressure for higher wages among China’s factory workers, analysts said.

The latest wage increase comes just a week after Foxconn, which is the world’s biggest manufacturer of computer products – including iPhones, iPods and iPads for Apple, as well as goods for HP, Dell, Sony, Nokia and Nintendo – and employs 800,000 workers in China, increased pay for its Chinese assembly line staff by 30pc with immediate effect.

Following the latest rise, which will take full effect from October 1, the basic salary for production-line workers at Foxconn’s will have risen from 900 renminbi (£91.30) per month two weeks ago to 2,000 renminbi (£203).

“This wage increase has been instituted to safeguard the dignity of workers, accelerate economic transformation…and to rally and sustain the best of our workforce,” Foxconn’s founder and Chairman Terry Gou said in a statement.

“We are working diligently to ensure that our workplace standards and remuneration not only continue to meet the rapidly changing needs of our employees, but that they are best in class.”

Foxconn’s wage increases fit a growing trend in China where the country’s coastal manufacturing zone are being hit by labour shortages as more factories move inland, spurred by government policies aimed at driving Chinese factories up the value-chain.

This year local governments across southern China have announced minimum wage increases averaging 20pc in a bid to retain workers and mitigate the impact of inflation on food and house prices caused by China’s massive monetary stimulus in the last 18 months.

Last week, Honda, the Japanese car maker settled a two-week strike at its transmission plant in southern China by agreeing to inflation-busting wage increases of 24-34pc.

Demographic expert say China’s vast pool of labour which has allowed it to grow at double-digit rates over the past two decades, with low-inflation, is starting to dry up, and will start to contract from 2015 as the working-age population feels the impact of the one-child policy.

“The [Foxconn] pay raise will put pressure on other companies that are currently cashing in on the cheap labour of China. The era of cheap Chinese labour is over,” said Mars Hsu, a Taipei-based analyst with Grand Cathay Securities.

70% wage increases in 2 weeks....

Honda also have increase wages significantly, the start of hyperinflation looming in China? Or will productivity increase to justify the wages?

[pyracantha]

http://www.telegraph.co.uk/finance/china-business/7807903/Foxconn-suicide-factory-raises-pay-70pc.html

70% wage increases in 2 weeks....

Honda also have increase wages significantly, the start of hyperinflation looming in China? Or will productivity increase to justify the wages?

I'm not sure more money is necessarily going to stop the suicides. I thought the problem was more to do with the working and living conditions?

[opt_out]

Maths FAIL?

(OK I realise what they've done, but shoddy writing anyway)

[alexw]

http://www.telegraph.co.uk/finance/china-business/7807903/Foxconn-suicide-factory-raises-pay-70pc.html

70% wage increases in 2 weeks....

Honda also have increase wages significantly, the start of hyperinflation looming in China? Or will productivity increase to justify the wages?

They don't need to increase productivity to increase wages. Rather the money thats going to capital to build bridges to nowhere, ghost cities, and increase housing costs 33% YoY needs to be reallocated to workers wages. That massive missallocation needs to be reallocated.

[bendy]

Oh dear, the decline of the Western Empire is in full flow. Chinese goods for Chinamen. Sounds fair game.

[Ruffneck]

Oh dear, the decline of the Western Empire is in full flow. Chinese goods for Chinamen. Sounds fair game.

Chinas time at the top will be very very brief.

There isn't enough resources in the world to sustain them for another 15 years , not to mention their own aging population issue , maybe they can fix that one through lung cancer though we'll see.

[Mikhail Liebenstein]

China will be running at 30% inflation in a year or 2 and if they undergo currency appreciation as well, it won't take long or the cost of building a car in China to exceed the cost of building a car in Tyneside.

So Chinese workers get £200 per month, or £2400 per year.  

Next step,   30% inflation compounded over 5 years =>   (1.3)^5 = 3.7  times

So   £2400 per year, becomes £8800 per annum.   Now build in a 40% strengthening in the currency and that is £12,320

Essentially any western firm that has relied on China for low cost manufacture is going to be total screwed. So they'll go to Vietnam which won't take long to similarly inflate and then they have to contend with sharply rising wages globally.

[interestrateripoff]

http://www.nytimes.com/2010/06/08/business/global/08wages.html?ref=business

The cost of doing business in China is going up.

Coastal factories are raising salaries, local governments are hiking minimum wage standards and if China allows its currency, the renminbi, to appreciate against the U.S. dollar later this year, as many economists are predicting, the cost of manufacturing in China will almost certainly rise.

Although the salaries of factory workers in China are still low compared to those in the United States and Europe (the minimum wage in southern China is close to $125 a month), economists say the changes will eventually ripple through the global economy, driving up the prices of everything from T-shirts and sneakers to computer servers and smart phones.

“For a long time, China has been the anchor of global disinflation,” said Dong Tao, an economist at Credit Suisse, referring to how the two decade-long shift to manufacturing in China helped many global companies lower costs and prices. “But this may be the beginning of the end of an era.”

The shift was dramatized Sunday, when Foxconn Technology, one of the world’s largest contract electronics manufacturers and the maker of everything from the Apple iPhone to Dell computer parts, said that within three months it would double the salaries of many of its assembly line workers.

The announcement follows a spate of suicides at two Foxconn campuses in southern China and criticism of the company’s labor practices.

Taiwan-based Foxconn, which has more than 800,000 workers in China, said the salary increases are meant to improve the lives of its workers.

Last week, the Japanese auto maker Honda said it had agreed to give about 1,900 workers at one of its plants in southern China raises of between 24 percent and 32 percent in the hopes of ending a two week-long strike, according to people briefed on the agreement.

The changes are coming about because of the growing clout of workers in China’s sizzling economy, analysts say, and because soaring food and housing prices are eroding the spending power of migrant workers.

But there are other reasons. Analysts say Beijing is backing wage increases as a way to spur domestic consumption and make the country less dependent on low-priced exports. The government hopes the move will force some export-oriented companies to invest in more innovative or higher-value goods.

But Chinese policymakers also favor higher wages because they could help ease a widening income gap between the rich and the poor.

Soaring food and house prices....

Still it's contained and world leaders know what they are doing.

My feeling is China is going to have a spectacular communist led implosion.

[aussieboy]

http://www.nytimes.com/2010/06/08/business/global/08wages.html?ref=business

Soaring food and house prices....

Still it's contained and world leaders know what they are doing.

My feeling is China is going to have a spectacular communist led implosion.

This story is the same as the French civil service non story - huge employer with actually a lower rate of suicide than the general population.

[aa3]

They might finally be running out of new migrant workers from the farming villages coming in and accepting very low wages. Without that Chinese companies will have to compete against each other for the available workforce.

[Ruffneck]

http://www.nytimes.com/2010/06/08/business/global/08wages.html?ref=business

Soaring food and house prices....

Still it's contained and world leaders know what they are doing.

My feeling is China is going to have a spectacular communist led implosion.

Rofl what a joke

How much of the value of a 100 pound pair of nike sneakers is the wage paid to a chinese worker? it would be less than $1.

The increase in cost should be neglible if any , get nike to cut their profit margin instead of just hiking up the prices for western consumers ; bunch of parasites these companies.

Edited June 8, 2010 by Ruffneck