Print 46 comment(s) - last by Seemonkeyscanf.. on Jun 1 at 12:10 PM

["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 Solandri on 5/28/2010 9:40:22 PM , Rating: 3
I guess you do not know much about upper management, owner executive positions. 100% is base on merit... If you fail to do a good job and lead the company to greater success the company will fail and go out of business.

You're honestly saying that after the near global financial meltdown we just had? No, it's not 100% based on merit. At best I'd say it's about 70% based on merit. The rest is based on who you know, I scratch your back you scratch mine, and negotiation based on unrealistic or incomprehensible value estimates.

Think of the CEO as the Captain of the ship and the workers the rowers. The workers can bust their butt off, but if the captain leads them into a sharp, rocky, rough coast front... the workers hard work will be in vain as the ship will sink because of the captain bad leadership.

Funny you should use a ship captain as an example. Ship captains typically only makes about 5x more than the lowest mate.

I don't judge the value of a position based on the job's potential to improve or reduce the bottom line. By that measure, the lowly engineer or scientist who comes up with a new invention worth millions or billions should receive that much. But for some reason that's considered ridiculous, while the owner of the company who hired the guy getting the millions or billions is considered "right".

I judge the value of a job based on how easily the market can replace you. Joe the sanitation worker can easily be replaced. A CEO is harder to replace. But if he can be, he wouldn't be able to negotiate a multi-million dollar severance parachute. Right now top executive pay seems to value many of them as irreplaceable.

You should never have a maximum wage... nor any tie between top wages and bottom guy. That is just silly.

Why not? Why is it silly? Look, I'm pretty much as pro-business as they come. But you seem to be basing your opinion on what you see in the U.S. The U.S. is pretty mild in terms of CEO/worker pay ratio (though it has been getting worse). Some of the ratios I've seen in Asia and Central/South America are just insane. In some places basically less than 1% of the population controls over 95% of the wealth. There is no way that can be right. Everything I know about economics and running a business tells me that's not natural, and is detrimental to the country's economy as a whole.

Owners and upper management pay themselves as much as they can while trying to pay line workers as little as they can. That's what I see a tie between min/max wage preventing. Either you try to pay everyone (including yourself) as little as possible. Or you try to pay everyone a lot (including Bob the janitor). Or something in between. Just take the same standard for determining a wage, and applies it to everyone. As I said, the intrinsic problem is that owners and top executives typically set their own salaries (or have it set by close friends and co-workers), while being hostile to raising the wages of average and lower workers.

Believe it or not people like: Bill Gate, Steve Jobs, Richard Branson, Henry Ford, and so on earned the wage they are or were paid.

Need I point out that Ford paid his workers the highest wages at the time? He understood that companies during his time were (either through collusion or unfair labor practices) paying workers below fair market wages. That represents a market inefficiency. The owners and executives made more money for themselves that way, but the cost was that the economic growth of the middle and lower class (and thus the country overall) was stunted.

Ford realized that he could do better by paying something closer to fair market wages, and proceeded to wipe the floor with the competition. He got happier, more productive workers who could afford to buy more things - including the very cars he was producing. He saw the bigger picture - that a wealthy, thriving middle class was better for business than having only an elite upper class able to afford his cars.

RE: Wait a minute...
By Seemonkeyscanfly on 6/1/2010 12:10:50 PM , Rating: 2
TextNeed I point out that Ford paid his workers the highest wages at the time?

No you do not need to point it out, you need to understand I listed him there because he a good example.

I know I will be marked down here because like most people out there, they do not know what it takes or is to be on top or own a business. No, Bob the janitor that's been on the job for a few days does not have financial ties into the company at all. If the company he works for goes BK or fires him he just finds another job. If an owner of a company has his company go BK, not only does he lose his job, he many time loses his house, car, any sort of retirement, then when all is said and done that owner is usually in court to settle any unpaid bills/pay that the business had/has. Years later Bob barely remembers the company name... The owner however, is still paying for the BK settlement fees. There is no tie not even close to a tie between minimum wage and maximum wage (to have a tie you would need at least equal risk factor).
I of course do not know about wages in other countries. So, I will not speak about them... but I stated we (meaning in the US) have lost the good leaders. The wage is not the problem. The quality of work out of the the upper management is not at the level it was in the past... but they think they still deserve a very high wage.... You will not see this behavior out of founders or true owner (they have to much to lose).
Your example of the scientist or lab guy(s) discovering something then not receiving to share the wealth. That a perfect example of something done correctly. Of course he does not get to share the wealth... Why should he? First of he receives a pay check once or twice a month - a wage he agreed to (owners do not always receive a pay check). If he wants his share of the wealth he should have bought his own lab, his own material, supported himself, paid for the other staff, paid for the electricity he used, the heating bill, water, the accountant and every other expense (including his own pay which let him live a nice lifestyle, while he had failure after failure after failure, ring up expenses with no worries until he finally had the successful results.) How simple and shall your thinking on this subject must be to think this is not coming out of someone pocket book. To add you think this person who paid for everything - including paid the scientist to do the research, does not deserve to collect on his investment? How many of these research guys fail over and over again and still collect a pay check? So, all the profits that come from you one success results ends up covering a lot of failures... but you just expect the money to magically appear for your next project.

TextI don't judge the value of a position based on the job's potential to improve or reduce the bottom line.

And as long as you think that way you will never be able to run a successful business. Of course, you must remember, these people need to be paid on their success, not on the future of their success... Other words if they have a really bad year, and business is down 60%, well then they should be seeing a 60% lower wage. This is they way of the old leaders in the USA.
I will agree with you that some of todays leaders think or act like they are irreplaceable... Truth, no one on this planet is irreplaceable.

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

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