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News : International Last Updated: May 28, 2010 - 9:08:20 AM


Foxconn - - world’s largest electronics contract manufacturer - - to raise wages in China by 20% after suicide spike
By Finfacts Team
May 28, 2010 - 7:55:43 AM

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President of Foxconn Terry Gou speaks to the media at the company's plant in Shenzhen, a city in South China's Guangdong Province, May 26, 2010. Gou initiated a media tour at the 300,000 worker plant of Foxconn Technology Group as in the past five months, 12 employees of Foxconn's Shenzhen factory have jumped from high buildings and ten died. The migrant workers live at the plant complex. Photo: Xinhua

Foxconn, the world’s largest electronics contract manufacturer, which is owned by Taiwan's Hon Hai Group, said on Thursday that it is planning to raise wages for its workers in China by about 20 per cent after at least 10 workers have died this year from apparent suicides -- half of them in May.

Xinhua, the State news agency has reported that ten workers have died at the Longhua plant in the southern city of Shenzhen, since the beginning of the year and another employee tried to kill himself on Thursday but survived. There are about 300,000 migrant workers employed by Foxconn in the city and another 500,000 work at other locations in China.

Foxconn  produces the products of tech companies such as Apple, Intel, Dell, and HP and Apple said this week that it is “saddened and upset” by the suicides and has a team evaluating Hon Hai’s countermeasures. In the media glare because of the association with some of the leading consumer products in the world, the company has allowed in the media in to view what is normally a centre with military style security to prevent the theft of prototype products for onward sale to pirate producers.

The minimum monthly wage is as low as 900 yuan (US$131) and by working 12 hours per day, sometimes for the full week, higher earnings are achievable.

“The raise will be different depending on the location, but it will be around 20 per cent on average,” said Edmund Ding, vice president and spokesman at Hon Hai Precision Industry, the group’s parent company.

The official China Daily newspaper said in an editorial that declining share of wages as a proportion of China's gross domestic product has necessitated the need for fresh regulation, especially in a country that is trying hard to embrace consumer-led growth.

It said the Ministry of Human Resources and Social Security has, however, achieved little progress so far in drafting an amendment to the current wage regulation due to strong opposition from employers. Reportedly, the amendment, designed to help tilt income distribution in favour of workers, is unlikely to come into effect by year-end as had been expected.

The newspaper said any delay in government efforts to arrest the downward spiral of wages as a proportion of the national GDP will certainly be disappointing.

It said"sustained inaction may actually fuel already rising tensions between labourers and employers, as evidenced by the recent case of workers at a Honda plant in Guangzhou who struck work citing pay-related issues. The shocking string of suicides at Foxconn Technology Group's plant in Shenzhen has also highlighted, among other things, the bitter conditions that industrial workers toil under in this country.

Under such circumstances, the government is obligated to giving workers the much-needed succor to defend their rights and interests.

The proposed wage regulation is expected to include much-awaited rules on equal pay and collective negotiations for wages. The concern by employers in face of competition, especially during the economic recovery, may be understandable, but should surely not prevent the authorities from setting in motion legislation aimed at bettering workers' wages.

On the one hand, the widening wealth gap demands immediate effort to significantly increase the work reward for the many poor compared with the rich returns on capital enjoyed by entrepreneurs. On the other, the shift in growth model means it has to foster a large group of affluent consumers as quickly as possible. Sustainable growth in consumption will simply be meaningless if employee wages are choked down."

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