Foxconn to create workers' paradise?

Foxconn plans to double the minimum wage of its mainland China workers by 2013 as part of a renewed attempt to soften the image of the ultra-secretive company, says Taiwanese site Want Daily.

The outlet reports that Foxconn president and chairman Terry Gou said he wanted the firm’s Chinese workers paid at least 4,400 yuan (£441) each month, according to the paper’s English site WantChinaTimes.

This would be an increase on previous reports that Gou wanted to raise the minimum salary to 4,000 yuan (£401) – to put it in line with the wage structure at its Taiwan plants.

If true, the increase would represent the fourth wage increase at Foxconn since 2010 and a whopping 144 per cent increase on the current minimum wage of 1800 yuan (£180).

It isn’t clear, however, whether Gou was referring to the absolute entry-level pay or that of workers who have passed certain technical exams and currently get a slightly higher 2,200 yuan (£220).

Either way, Foxconn and parent company Hon Hai Precision Industry, would seem to be getting the message, after numerous reports criticising wages and working practices at its Chinese plans which make kit for Apple, Dell, HP, Nokia and others.

The world’s largest component maker has come under intense media scrutiny after reports of bullying by management, exploitation of under-aged workers and employee suicides and was exposed by a damning Fair Labor Association report.

Despite raising the wage of its workers several times, critics argue that after living costs including food and lodgings are deducted, staff barely have enough to live on and are forced to agree to excessive overtime just to make ends meet.

Gou’s reported remarks could be an attempt to head off any rises demanded by the FLA, which said that as part of the report it is conducting a cost of living study to make sure that workers’ salaries meet its requirements for basic needs.

It may also be in response to pressure from the Chinese government, which has made it its mission to improve the lot of workers over the next five to ten years.

The most recent five year plan, for example, says that firms must increase wages by at least 13 per cent every year, while in certain areas the local government may order much higher rises.

It will no doubt also spark fears that the increased labour costs, if passed onto Foxconn’s clients, could force them to put up the price of their products.

HP and Dell have already voiced their concerns, although despite the tight margins often involved, wage bills still comprise a small percentage of the final cost of an end product. ®