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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 Yawgm0th on 5/28/2010 11:19:57 AM , Rating: 3
$132 a month sounds low, but remember that the cost of living in China is much much lower than here. The average restaurant charges $1 per person for a full meal.
So people earn in one month one less than one fifth of what I earn in one week, but it's okay because their restaurants charge one fifth of what Subway wants for a foot-long? I mean, they can eat a full 90 times a month on that and still have $42 left for housing, clothes, and everything! Wow, China sounds great.

Don't try to rationalize low wages with cost-of-living nonsense. These workers live lives of unimaginable poverty. I would literally rather be homeless in any American city than work for Foxconn in China.

RE: Wait a minute...
By Solandri on 5/28/2010 1:47:34 PM , Rating: 2
Don't try to rationalize low wages with cost-of-living nonsense. These workers live lives of unimaginable poverty. I would literally rather be homeless in any American city than work for Foxconn in China.

He's not trying to rationalize it. It's the way economics works. The workers there live lives of relative luxury compared to most Chinese. Average wage for a farm worker there (where most of the factory workers worked before moving to the city) is something like $100/yr.

As the economy, manufacturing, finance, and services become more efficient, wages go up and cost of goods (cost of living) goes up in turn. You can't just take a wage in the U.S. and plop it in the middle of China and expect it to work, just like you can't take restaurant prices in the U.S. and plop it in the middle of China and expect it to work. The entire economy has to grow to where the wages and prices you see in developed nations becomes the norm.

If things didn't work like this, there would be no economic incentive to improve areas of low wages/prices. Because wages are lower in undeveloped nations, there is an economic incentive for factories to move their operations there. Which spreads wealth there, helping raise wages/prices there. If companies were required to pay the same wage regardless of location, they would stay right here in the U.S. And undeveloped nations would have a much harder time become developed, thus propagating the low standard of living there which you're trying to stamp out by arguing for U.S.-level wages.

RE: Wait a minute...
By Chadder007 on 5/30/2010 11:11:25 AM , Rating: 2
I wouldn't even call it relative luxury if they are all wanting to kill themselves.

"And boy have we patented it!" -- Steve Jobs, Macworld 2007

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