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["I promise, I will never die."] --retracted by Foxconn  (Source: Paramount Pictures)
Turns to employee relocation, pay raises after yet another death

Taiwan's Hon Hai Precision Industry's Chinese Foxconn unit has been having some problems at its Shenzhen plant lately.  A string of suicides has compelled Apple, Dell, and HP to launch a string into the supplier.  Foxconn previously responded by playing Buddhist music, offering employee counseling, and most requiring employees sign a letter promising not to kill themselves.

Apparently that's not working out so well.  On late Thursday, an employee slit his wrists, and according to the 
AFP has since become the eleventh to die this year.

After receiving news of the latest attempt Sony, Nintendo, and Nokia joined a pending probe into the company's business that currently included Apple, HP, and Dell.  In response to criticism about the letter, Foxconn CEO Terry Gou retracted it, saying it was inappropriate.

Guo is also trying yet another tactic in hopes of convincing its employees not to jump off high buildings -- giving them a pay raise.  Foxconn does give occasional raises, and claims that it has been planning to do so for some time, but never got around to it.  Currently entry level workers are paid 900 yuan (about $131.80) per month and also have the chance to earn overtime or bonuses.

According to Vincent Chen, an analyst at Yuanta Securities in Taipei, says that Foxconn typically bumps wages by 20 percent to meet holiday demand for consumer electronics.  However, he says that a pay raise of 50 percent is not outside the realm of possibility.

The pay raises will reportedly raise Hon Hai's operating costs by T$2.7B ($84M USD) and cut the company's profits by 10 to 12 percent, according to analysts at Citi.  Other analysts disagreed, though.  Chen comments, "I don't think this will impact Hon Hai's profitability...Hon Hai has raised salaries by up to 50 percent in the past, and it's still doing well."

It is believed that at least some of the suicides were financially motivated.  According to various employee accounts families of suicide victims with the company are typically paid between 8.5 and 10 years of pay.  Faced with scant salaries, some depressed employees reportedly think they are doing their families a favor by killing themselves.

Foxconn is also planning a mass relocation of about one fifth of its 400,000 employee Shenzhen workforce in Southern China to a plant in Western China.  Workers often migrate to get jobs at Foxconn's plants.  By moving the workers closer to home, Foxconn believes it can decrease their discontent.



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RE: Wait a minute...
By gamerk2 on 5/28/2010 9:51:52 AM , Rating: -1
The less you pay the workers, the cheaper the goods. A high minimum wage is the very reason America can't compete economically anymore.

If workers were paid their actual worth (say, 1$ for working at WalMart), all prices would drop, giving us a much better lifestyle. After all, no way coorporations would just leave prices the same to increase their profit margins, leaving us poorer then we were to begin with...

[The sad part, is I just described the US' standard economic policy since Regan entered office...]


RE: Wait a minute...
By Seemonkeyscanfly on 5/28/2010 10:26:04 AM , Rating: 2
Raising the minimum wage will directly effect the cost of good sold (raising them). However, no it does not always effect lifestyle. Many more things are need to determine effects on lifestyle. Example, you could give a 20% increase to minimum wage and have a great increase in lifestyle because - employment is at 99.5%, average savings is up X%, consumer spending index shows an all time high, and people are feel great about their future. Of course you could have that 20% increase to minimum wage - an everything else the opposite of what I listed - then you will see a huge drop in lifestyle.
Though I agree, minimum wage should not be raised very often... I'm sorry but a kid's first job should not be paid $18. per hour. They need to learn how to be a good worker (earn the wage).
P.S. Regan gave us some of the greatest economic improvements the US has ever experienced. He pulled us out of one the worst economic times the US ever experienced. If you do not think so then you are not old enough to remember those times. The problem with what he created was he assumed other politicians that followed him would do what is best for the nation and not what is best for their own personal goals. So, politicians took a great and working plan and twisted it for their self needed goals and we are left with our current economic state.


RE: Wait a minute...
By ValorMorghulis on 5/28/2010 1:30:13 PM , Rating: 2
I have to dispute your take on Reagan's economic success. Sure the U.S. was very prosperous during his terms especially compared to his predecessors. However, I think you might overestimate the effect a president has on the economy. Reagan certainly didn't screw anything up, but perhaps more of the credit should be given to Paul Volcker the Fed Chairman. Which isn't to say we shouldn't give Reagan some credit, sometimes the best you can do as president is not screw it up.

(For a more in depth explanation of why the Fed Chairman is more important than the president do some research into Keynesian economics and the differences between fiscal and monetary policy.)


RE: Wait a minute...
By Seemonkeyscanfly on 5/28/2010 3:30:33 PM , Rating: 1
Errr... Do you forget Volcker was reappointed in 1983 by President Ronald Reagan. Paul Volcker only 4 months under Carter. Regan worked very, very closely with Volcker to snap us out of stagflation. At the time the people thought Volcker was nuts for his methods and they thought less of Regan because he allowed Volcker to continue on with his method.... This alone is big thing for any President... Standing behind his man and say, "I do not care about what others say or think, I'm letting my man do his job." He took a big chance, if he was wrong he would have never been re-elected.

Volcker's Fed is widely credited with ending the United States' stagflation crisis of the 1970s. Inflation, which peaked at 13.5% in 1981, was successfully lowered to 3.2% by 1983


RE: Wait a minute...
By C'DaleRider on 5/28/2010 7:39:27 PM , Rating: 3
In January 1981, when Reagan declared the federal budget to be "out of control," the deficit had reached almost $74 billion, the federal debt $930 billion. Within two years, the deficit was $208 billion. The debt by 1988 totaled $2.6 trillion. In those eight years, the United States moved from being the world's largest international creditor to the largest debtor nation.

Interest rates rose in the late 1980s and early 1990s, the economy slowed, then slipped into recession, and productivity barely advanced.


RE: Wait a minute...
By XZerg on 5/28/2010 10:46:59 AM , Rating: 2
The only problem with this equation is that people already have the inflated $$$ and you can't turn back time. And with the amount of money the countries/world have thrown in to stop/slowdown/prevent recession (well not all countries had one), the only expected outcome of this is people have more $$$ eventually compared to today. Hence the trend cannot be paused or turned back...


RE: Wait a minute...
By ValorMorghulis on 5/28/2010 1:11:28 PM , Rating: 3
The problem with economics is that its never that simple. In the short run, if wal-mart reduced its pay everything would be cheaper and the cost of living would decrease for everyone who doesn't work at wal-mart (i.e. you, me and most people). Basically we would seem richer because everything was cheaper. But in the medium term, most companies would start laying people off because the wal-mart employees would buy fewer products from them. The newly laid off employees would stop spending, mean more companies would have to have layoffs etc. Remember that the largest influence on the American economy is consumer spending (~70% of GDP).

This deflationary spiral occurs because there is a delay as markets adjust. In the very long term everything would return to equilibrium just with a different valuation of the dollar.


"I'd be pissed too, but you didn't have to go all Minority Report on his ass!" -- Jon Stewart on police raiding Gizmodo editor Jason Chen's home














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