Electronics Firm Raises Wages After Suicides in China

How soon before this affects import-export relationships?

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Foxconn Technology Group, which makes both Apple and Hewlett-Packard products in China, has announced an impressive wage-raise for its factory workers in the wake of a troubling rash of suicides. For those unfamiliar with the situation, the story of worker welfare at a single company in China might seem slightly arcane. The raise, though, is both an enormous one for the individuals affected, and a move towards higher labor costs in China, with potentially large effects for both China and the countries receiving its exports.

  • This Is a Heck of a Hike  Ernie Smith looks at the numbers at Shortformblog. The immediate increase in salaries is 33%, he reports, while he also highlights "the monthly amount [workers] could be making in three months": $300. That's "double their current salaries," he points out.
  • 'Tough' Decision, May See More of Them  "This is obviously a tough move for the company to have to take given the notoriously low margins facing Chinese manufacturers, plus the fact that the yuan has already been de facto revalued higher due to the collapsing euro," writes Business Insider's Joe Weisenthal. "But obviously the previous situation is untenable, and we wouldn't be surprised to see this move reverberate across the country, and then, by extension across the world, to consumers that enjoy the fruits of cheap Chinese labor."
  • No, We Will See More of Them  "China's wages will rise inexorably," predicts 24/7 Wall St.'s Douglas McIntyre. "There are too many factors to push it up for the Chinese government to push the trend down, even if it wanted to." He calls the country "the victim of its own success," having "created a huge middle class ... [that] expects a standard of living that relies on healthy wages, and in a nation prone to inflation, raises." The pressure from Western companies for better worker treatment is an issue, too, while China increasingly, given Western countries' economic circumstances, "needs its own consumers to buy its own manufactured goods"--that's only going to happen if its consumers are making enough money to buy things. All this, though, "leaves China in a bind," he says. "China is becoming a high-cost provider of labor in a world where low labor costs are more important than ever."
  • Foxconn, Wal-Mart, the Long-Suffering Laborer  Numerian at The Agonist switches gears and draws a comparison between American Wal-Mart workers and Chinese Foxconn workers, making a broader point about the plight of the middle class in both countries:
In this complex, symbiotic chain, you have Chinese workers promised a middle class lifestyle if only they put in their time at a place most of them describe as a "prison." The promise is illusory, which is becoming more and more apparent to the lowest of these workers. You also have American middle class workers promised the ability to maintain their lifestyle with everyday low prices at Wal-Mart, except this promise too is illusory since corporations all across America keep pressuring employees with salary freezes, benefit cuts, and ultimately the risk of unemployment, which has now reached 17% of the workforce if you count all disillusioned job seekers. Americans are now catching on to how this game works as well.
This article is from the archive of our partner The Wire.