Foxconn to Double Worker’s Wages; Could Have Global Implications

The scrutiny continues to mount at Foxconn, causing the manufacturer to raise its wages for the third time in 10 days. The Taiwanese corporation Hon Hai, owners of the embattled Foxconn production plant that has seen 10 suicides (5 in May alone), and multiple attempts this year, has announced that it will raise wages to nearly double the current pay. On average, that translates to $291 per month, an increase from $131. Floor managers and supervisors will see an increase from 1,200 yen to 2,000 yen, or roughly $175 a month to $292, according to a report from the Wall Street Journal. And the repercussions could be felt around the world.

The recent string of suicides have focused media attention on Foxconn, the world’s largest contract manufacturer of electronics. Foxconn currently produces material for several American electronics makers, including Apple, HP, and Dell, all of whom have claimed that they are investigating working conditions following the ninth death at the plant that Chinese Labor groups have labeled as a “sweatshop”.

Hon Hai then announced that it would be raising wages 20 percent, but claimed that it was a scheduled, and long planned raise, and not a result of the deaths. A tenth suicide soon followed, prompting the Chinese government to intercede and tell Hon Hai to stop the suicides, going so far as to recommend better unions. Soon after, another employee died, this time as a result from exhaustion after allegedly working a 34-hour shift, something the employee’s widow claimed was standard.

The civil rights watchdog group China Labor Watch points out that the salary boost will be nice, but it does it would only help workers to accept the working conditions, rather than doing anything to improve them.

“The company remains a typical sweatshop, as are all factories that overlook the basic needs of their workers for the sake of profit,” the labor advocates said in a statement.

The move to increase wages comes with complications. Bloomberg is reporting that the announcement immediately caused Hon Hai stocks to fall 5.6 percent in Taiwan, its biggest drop in over a year, while the stock in Hong Kong fell 5.5 percent. There is also the question of whether or not the wage increase will simply cut into Hon Hai’s profits, or be passed on, which would significantly increase the costs of electronic around the world.

The move by Foxconn might also have significant implications for the Chinese economy, which would cause global ripples. Salaries across China are extremely low by US standards. If the Foxconn salary increase is seen as a success, it might force other companies in China to follow suit, which would lead to a global price shift as manufacturers either lower their profit margins, or increase their costs. The world-wide implications might be profound, to say the least.

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