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Print Edition> Business
UPDATED: July 19, 2010 NO. 29, JULY 22, 2010
The Power of Rage
Chinese workers get better wages, hastening the end of a cheap-labor era


Foxconn's salary hike for its Shenzhen workers has caused a domino effect among manufacturers across the country 

Since July 5, workers at two textile companies in Xianyang, Shaanxi Province have been on strike asking for a 140-yuan ($21) monthly salary increase. The strikes are in the process of being resolved.

A slew of strikes followed electronic manufacturer Foxconn Technology Group's dramatic salary hike for its Shenzhen workers in early June. After a string of employee suicides earlier this year and accusations the company was maintaining sweatshop-like conditions, Foxconn alleviated the problem by giving workers' wages a boost—a 122-percent boost.

Later in June, workers in automobile parts manufacturer Denso Corp.'s Guangdong plant left their facilities idle for several days until they received a 800-yuan ($117) raise.

And workers striking at a Honda Motor Co. plant in early July even went so far as to hire a lawyer to help them with paycheck negotiations.

News of strike spreads quickly, and already workers at other companies are considering the strike option to improve their working conditions and benefits.

But managers see the salary increases differently—higher wages are a growing pain for industrial structure upgrading. And the rise of labor costs will eventually trickle down to the price of finished manufactured products.

Some cautioned about the possibility of inflation. But higher wages and salaries among China's 230 million migrant workers could help China reduce its reliance on exports and investment for economic growth since higher wages can provide for a consumption boom and boost GDP, said Lu Ming, professor of economics at Fudan University.

Better pay

China is known for its cheap labor and exports. But few know the inexpensive products they have enjoyed are made by Chinese workers who earn less than $1 an hour.

Young workers in south China involved in recent strikes for better pay and conditions resent the term "cheap labor" and their demonstrations prove today's workforce will not accept what their forebears endured in the past.

After China adopted the reform and opening up policy in 1978, overseas-invested or controlled factories sprouted up along the southern coastal areas, attracting hundreds of millions of rural laborers.

The first generation of migrant workers put up with long hours in poor working conditions since working in factories paid better than working in the crop fields of their hometowns. Many of those workers were completely uneducated or had only attended elementary school.

However, the younger generation of migrant workers who were born in the 1980s or early 1990s are less willing to tolerate harsh working conditions for low pay. Some workers hold college degrees, and most have at least a high school education. They demand higher pay and good working condition.

And governments are answering workers' appeals. Starting on July 1, Beijing Municipal Government increased the minimum monthly salary from 800 yuan ($117) to 960 yuan ($142), and Central China's Henan Province, the nation's most populous province with almost 100 million residents, raised its minimum monthly wage by 33 percent to 600 yuan ($88). Many provinces have since followed suit.

In spite of the widely reported pay raises across the country, many workers complained of wage decreases.

In an interview with CCTV, China's central television network, Tian Dan, salary manager of Neo-Neon Holdings Ltd., admitted the company had raised the basic salary for its workers but had cut overtime work, payment of which was previously the bulk of the workers' wages.

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