Foxconn hikes workers' pay by 20%

31 May 2010

Foxconn Technologies has hiked the pay of its 800,000 China employees by an average of 20% following a spate of worker suicides.

The electronics firm denies it is because of the deaths, claiming that it has been under review for some time.

This sounds plausible – you don’t hike the wages of a low-cost production facility overnight. Yet clearly the move is aimed at boosting the flagging morale at the plant, where four workers have died in the past two weeks.

To the extent that suicides are economically-motivated, the payrise may also be a deterrent.

As some bloggers have noted, Foxconn’s seemingly callous contract asking workers not to harm themselves contained some economic logic; young workers might feel encouraged to take their lives by the compensation that will be paid to their families.

However, the issue is bigger than just Foxconn and its massive factory-cities on the edge of Shenzhen.

With workers at Honda’s China factories going on what appears to be an officially-approved strike, it seems that after three decades, China’s industrial-export growth model appears to be stretched to the limit.

It is a hot-button issue for the country’s leadership. In the first public statement by a senior official, Wang Yang, the Guangdong Communist Party boss, called for companies to improve management and care more for employees.

As is usual, he didn’t offer specific remedies but he said labor unions in private firms “should be improved to facilitate better working conditions and more harmonious relations between workers and employers.”

“Economic development should be people-oriented,” the China Daily reported him saying. If the government really means it, that is a change.

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