Foxconn hikes salary by 66%
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Foxconn, a world's leading IT contract manufacturer, announced Sunday night in a statement that it will raise salaries for assembly workers at its production base in the southern Chinese city of Shenzhen by 66 percent to 2,000 yuan (293.3 U.S. dollars) per month as of Oct. 1.
Foxconn last Wednesday announced a 30-percent pay increase for workers at its Shenzhen plants starting June for what it claimed were "rising consumer prices and living costs and its corporate performance."
The pay rises came after 10 workers killed themselves and three attempted suicide at Foxconn's Shenzhen base this year.
Foxconn hoped the pay hikes would help employees increase incomes while reducing overtime, and have enough time for leisure activities.
But it is not immediately clear how many of the company's 400,000 Chinese mainland workforce would benefit from the wage hike.
"The criteria for carrying out the work performance assessment referred to above (the wage hike) are still to be decided by the company," according to a statement posted on the Hong Kong Stocks Exchange by the Foxconn International Holdings Limited (FIH HK2038), the company's listing arm.
Trading in Foxconn stock was halted immediately after the Hong Kong exchange opened Monday morning. Its shares ended at 5.66 HK dollars before the trading suspension, down 5.5 percent from the previous closing.
Foxconn also announced that its stock would resume trading on Tuesday.
Foxconn said it could not immediately determine the impact of the wage adjustment on the group's financial earnings for the year ending Dec. 31, 2010, according to the statement.
"There are other factors which may help mitigate or offset such an increase in operating costs, such as an increase in revenue or a reduction
in other operating costs," the statement noted.
Of course the workers are happy to see the raise. "I am very happy about the news. Now I am more content about working at Foxconn," said an employee with the pseudonym Han Wei.
"The salary rise is definitely good news for the workers and will be effective in relieving their work pressures," said Wu Yixin at the Shenzhen Municipal Academy of Social Sciences.
The rise will squeeze Foxconn's profit margin given its huge roster of employees. But if Foxconn can make it through this rough patch, increased employee loyalty will eventually be transferred into its competitiveness, Wu said.
"The salary raise came as a surprise to me since salaries usually only increase slowly and, once up, a salary seldom goes down," said Chen Xinmin, a professor at the South China Normal University.
Foxconn's move might trigger a new round of wage rises in the industrial base in the Pearl River Delta region since companies offering less attractive salaries may find it harder to hire people, Chen said.
A manager surnamed Wu at Grand Sun Electronic Co. Ltd., an export-oriented electronic cable producer, told Xinhua he was "concerned about Foxconn's salary jump and was afraid that some companies might have to move their factories to regions with cheaper labor."
The manager also said Foxconn's pay rise comes at a time when raw materials, water, electricity are all more expensive than before and as Shenzhen's minimum wage standard is about to rise.
But Chen said that the rising costs would push companies to innovate and increase the technological content of their products which in turn will help the delta's industrial upgrading.
Foxconn, whose parent company is the Taiwan-based Hon Hai Group, makes computers, game consoles and mobile phones for companies including Apple, Hewlett-Packard, Sony and Nokia.
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