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Belated raise

(China Daily)
Updated: 2010-05-31 07:50
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A 20-percent salary jump that Shenzhen-based Foxconn promised workers last Friday has clearly come too late; of the 13 employees who attempted suicide this year, 10 have died.

Yet, the wage hike move will, hopefully, speed efforts by Chinese policymakers to arrest the dangerous decline in workers' wages as a proportion of the nation's gross domestic product.

Moreover, this may serve as a painful lesson to all other enterprises that have become competitive by trimming labor costs.

Low wages are certainly not the only reason behind the string of suicides at Foxconn. Endless overtime duties, unhealthy corporate culture, dreary work conditions as well as psychological factors may all have contributed to the spate of suicides.

Undeniably, inadequate wage hikes have severed the key link between rapid economic growth and improved living standards, a lack of which lies at the crux of the matter.

Ample supply of cheap labor has indeed played an important role in China's rise as a global manufacturing hub in the past three decades. But it is unthinkable that the economy can still rely on low labor cost for expansion as it chugs onward to becoming the world's second largest economy.

Though opinion is divided on the exact percentage of decline of workers' income as a proportion of the GDP in the past three decades, the much faster growth of corporate profits and government revenues compared to urban and rural income levels in recent years is a sure indicator that national wealth distribution has come at the expense of most wage-earners.

The authorities are set to raise minimum wage standards in the teeth of fierce competition from other low-wage paying economies.

Yet, the latest move by Foxconn shows just why government-led wage hikes will neither be quick nor aggressive enough.

(China Daily 05/31/2010 page8)