Foxconn suicides: Why higher pay won’t work

Updated on
The World

BEIJING, China – With new reports of labor unrest emerging daily from Chinese factories, it seems increasingly likely that China’s place as a boundless source of low-wage labor to make the world’s consumer goods is changing.

What remains unknown is what the government and corporations will do to reform the system, beyond simply raising wages in factories where headline-grabbing unrest breaks out.

Taiwan’s Foxconn, a key supplier to Apple, Sony, Motorola and most other big tech companies, has agreed to raise basic salaries by 65 percent (to $293 a month) in its massive Shenzhen electronics plant where 10 employees have killed themselves this year.

Since the Foxconn situation drew an international spotlight to Chinese factory conditions, the focus has been on pay and the impact that higher wages might have on global manufacturing. The bigger picture goes beyond money. While factory pay has been a huge problem, labor experts say the entire system is riddled with troubling issues, many of them stemming from the lack of basic rights given the migrant workers who typically staff production lines, documented in last year's GlobalPost investigative series Silicon Sweatshops.

“Increasing salaries is an effective method to improve the workers material lives, but it is not enough,” said Dai Jianzhong, a labor relations expert at the Beijing Academy of Social Sciences.

Dai and others said wages are just one component of what’s needed in terms of labor reform in China. Other necessary measures would address living conditions and social welfare. Most migrant workers are ineligible for local health care and education, and living on-site at factory dorms means limited personal lives. Most groups say that democratically elected labor unions would go a long way in changing the system.

On the wage issue, labor-rights groups and scholars agree that Chinese factory workers are long overdue for significant pay raises. Factory pay has not kept pace with inflation over the past decade, helping in part to create an ongoing labor shortage in the Pearl River Delta.

Geoffrey Crothall of the Hong Kong-based China Labor Bulletin said wages “have been kept so low for so long that no one should be at all surprised that workers are demanding not just higher salaries but substantially higher salaries.”

Crothall was critical of Foxconn, saying that its sudden announcement indicates the company could have paid higher salaries earlier. Instead, the dramatic raise in salaries there will send a message to workers in other companies.

“Right now you have a lot of workers on very low wages, the economy is booming again, the boss is making money again but they are being forced to work even longer hours for no real increase in pay,” said Crothall. “So of course they are going to demand higher pay, and the only way they can do that is by strike action or other forms of protest that forces the local government to intercede in the dispute on their behalf.

“While this very often brings about the desired result — higher pay — it is clearly not an ideal situation,” he said.

Liu Kaiming, a former journalist who now runs an organization for migrant workers in Shenzhen, said raising salaries is far short of what workers need.

Basic increases in pay will help factory workers catch up in inflation, but won’t address underlying problems in the Chinese manufacturing model. Liu said in instances like Foxconn’s, companies need to change their management practices and listen to the concerns of workers. (See how one electronics company had success by listening to its employees). Liu said factories need to consider factors other than simply making goods for the lowest possible price to extract the highest profits.

“They should treat the workers as people, not money-making machines,” said Liu.

Sign up for our daily newsletter

Sign up for The Top of the World, delivered to your inbox every weekday morning.