Understanding China, One Blog at a Time

An American in China

Death Knell in China- Labor Prices to Increase

Posted by w_thames_the_d on June 9, 2010

Interesting, a country with about 23% of the worlds population has a “tight” labor market and will increase wages. The problem in China is that the bosses spend an inordinate amount of money on expenses like KTV, restaurant, massages ( I have this report that corroborates this fact). Such that now, it is hard to make a profit for them in China, they will not skimp on their overspending. The result is that if they dont cut down on the amount of their overspending, and pay the workers from that, then they must allow direct increases in the wages in China. The problem is that if wages increase, the cache of producing in China plumets, causing problems for China.

“BEIJING – Foreign and domestic enterprises should brace themselves for hefty wage rises in the coming years after labor discontent at Foxconn and Honda units in the Pearl River Delta area, experts have said.
“They (such disputes) send a clear signal of tighter labor supply,” Cai Fang, director of the Institute of Population and Labor Economics at the Chinese Academy of Social Sciences, told China Daily. Wages for 150 million migrant workers increased 19 percent in 2008 and 16 percent in 2009, according to Cai, who said labor costs will continue to rise.

On Sunday, Taiwanese-owned Foxconn Technology Group announced a second rise that would increase pay by up to 65 percent at its factories in the southern city of Shenzhen.

Earlier, Honda offered a 24 percent pay hike to its auto parts workers in Foshan, Guangdong, to bring an unprecedented strike to an end.

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