Worker unrest puts focus on ‘cheap labour’ concept in China

Worker unrest puts focus on ‘cheap labour’ concept in China

Beijing: A spate of suicides at Foxconn and a flash strike in China’s Honda plants have brought the focus on worker unrest in China, raising a question mark on the ‘cheap labour cheap goods´ concept that catapulted Chinese exports and brought in large foreign investment.

Labour unrest -- regarded for over two decades as a non-issue by foreign investors because of tight controls wielded by the government -- suddenly flared up highlighting poor conditions the workers faced across the country.

Taiwanese electronics firm Foxconn, where 12 workers committed suicide, announced a 20% raise for its eight lakh employees while Honda for the time-being managed to convince its employees to agree for a 24% raise.

Meanwhile, the provincial governments in a bid to prevent the unrest from spreading announced increase in minimum wages.

Beijing municipal government announced a 20% raise in minimum wage raising it from $117 to 141.

Before that, the industrially active provinces like Guangdong, Shandong, Ningxia and Hubei too announced increases in minimum wages and indications are that an income distribution reform is being considered by the government.

The increases understandably were attributed to raise in inflation and not the labour unrest.

“The nation-wide wage adjustment is aimed at helping to offset inflation and rising food, energy and housing costs. It’s also hoped it will spur more domestic consumption among low-income groups," state-run CCTV said in its report.

While the labour troubles raised concerns among the Chinese and foreign investors as cheap Chinese labour was regarded as the main force for capturing overseas markets with cheap prices, they also highlighted a poor pay record in a country that swears by workers rights.

Studies published in the official media showed that while China’s GDP skyrocketed crossing the double digit, workers’ wages dropped 22 years in a row in proportion to its national gross domestic product.

While wages’ share was more than 56% of the GDP in 1983, it fell to 36% in 2005.

A recent survey showed more than 23% of workers have not got a wage increase in the past five years.

More than 75% of those surveyed say the current income distribution ystem is unfair.

Earlier plans to amend the wage problem were thwarted by strong opposition from employers and inaction fuelled rising tensions, as evident by recent cases.

Workers took strike action at a Honda plant and a string of shocking suicides have taken place at Foxconn group.

All these are imperative for Chinese policymakers to pull out all the stops to increase workers’ payment quickly, a CCTV report said.