Tension has been pilling up for a while (circa 2008), a generation of young Chinese workers have seen little or no increase in their salaries while prices all around them have soared, inflation for the month of May surpassed the Chinese government’s 3% target, higher food and housing prices were mainly to blame for the acceleration in inflation.
It would seem like Foxconn suicides were the catalyzer for a wave of labor unrest around China, the common theme was increase in wages and better labor conditions.
The Chinese government has so far responded by encouraging local governments to increases the minimum wage in their areas, it’s reported that at least 20 provinces and cities have raised minimum wages close to 20%.
The Shenzhen government issued a statement this month that the minimum monthly wage will rise to 1,100 yuan ($161) for full-time workers, while hourly pay for part-time employees will climb to 9.8 yuan ($1.44).
Beijing, the capital city, will increase its minimum wage by 20 percent to 960 yuan($140.5) per month from 800 yuan ($117) from July 1.
So, if you are assembling (or selling) high tech gadgets such as iPhones or iPads the recent increases might be somehow manageable however for companies producing low priced commodities, such as frozen/canned fruits and vegetables, this might be a harder pill to swallow.
So who is going to pick up the bill? Not sure yet, customer worldwide are demanding lower prices to accommodate consumers frugal spending habits. On the other hand suppliers are struggling with, well… higher wages, increased freight rates and surging energy cost.
So is this the end for cheap commodities coming out of China, I don’t think so (at least not yet) while some firms might move to other countries such as Bangladesh or Vietnam I believe majority will move inland China where wages are still low.
Plus for us in the vegetable industry the variables of longitude and latitude have a definitely impact on what we can grow and how well it grows.
Technorati Tags: Foxconn, China Workers, China Minimum Wage, iPhone
