Labour unrest… in China

A couple of news items struck me as note-worthy over the past couple of days. One was the rash of suicides at the Foxcomm plant in China (where they make iPhones for Apple), and the other was the recent strike by Honda workers in China over their wages. Here is a short article from FT.com that provides some context for it, in terms of the historic amount of labour as a percentage of GDP in China’s economy, and whether these actions were isolated incidents or harbingers of a broader set of actions in the near future.

It was interesting to me to see that in both cases, some pretty substantial wage increases were arrived at (30% and 24% respectively) and that frankly, the companies and the Chinese government “blinked first”, as it were. In my mind there are two possible reasons for this — the first is that the people on strike represented highly skilled workers who were not easily replaceable, even in a labour market the size of China. If that is the case, it suggests that we will see a lot of upward wage and benefit pressures over the next several years, especially on high end products.

The second reason is that some big name companies were involved (Apple and Honda) who have excellent reputations to maintain and they didn’t want to be seen to be overly heavy-handed or miserly in their global operations.

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