Foreign Companies’ Employees to Have Higher Salaries

 Foxconn and Honda, which were haunted by their employees’ committing suicides and strike, have decided to increase their employees’ salaries.

Foxconn and Honda have seemed to find suitable solutions to their current problems by increasing their employees’ salaries. The companies recovered their normal production as their employees were guaranteed with higher salaries and better welfare.

Their solutions may set a good example for foreign enterprises that have the same problem. However, it is hard to say increasing employees’ salaries is a cure-all because the companies’ strength is the primal consideration.

“Raising the employees’ salaries by Foxconn and Honda broke the salary limitations and this will influence the other enterprises gradually,” said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University. This may be a signal for the advent of new age of labor force.

Two Companies’ Lead in Salary Increase

Presently, the strike of Honda’s employees was ended in a way satisfactory to both employer and employees. On June 4, both sides reached an agreement that 500 yuan (USD 73.2) will be added to one employee’s monthly salary of 1,544 yuan (USD 226.1). Compared with the initial agreement made on May 31, the increase rate was up 33% from 24%.

It is known that the 400-yuan increased salary includes 30-yuan basic salary, 66-yuan subsidies and 134-yuan special reward. The special reward will be given to the employees in sum at the end of each year. Meanwhile, it is specially made clear that the special reward is not the annual bonus, which equals two months’ salaries. In Honda’s initial agreement, there is no special reward included.

Compared to Honda, Foxconn, who suffered employees’ straight suicides, is more generous.

In addition to 30% increase of each employee’s salary, Xinhua News Agency reports that Foxconn will implement the system of “one-day rest per week”, which means that each employee is required to have at least one day’s rest each week. According to another report, The Taiwan-based company paid the housing fund for the 80,000 employees in its plant in Yantai, Shandong.

The Advent Wave of Increasing Salary

“Though Honda and Foxconn were forced to increase their employees’ salaries, it still demonstrates that the present employee-employer relationship needs betterment,” said Prof. Zhang Malin from the Law School of Southeastern University. The strike in Honda shows that most of the new-generation laborers are equipped with the knowledge of laws and the consciousness to argue with their employers to protect their own legal benefits.

Prof. Zhang said that employees of foreign companies in China have seen their salaries increase since the reform and opening. However, the growth rate is much less than the one of the foreign companies’ profits in China. The new-generation laborers in China are craving for better working conditions, improved welfare and higher salaries.

Lin Boqiang said that the influence from Foxconn and Honda’s increasing employees’ salaries may spread to the other large-sized foreign enterprises in China and then to the small- and medium-sized enterprises. It will be temporarily hard for these labor-intensive enterprises to afford the increasing cost from the increasing employees’ salaries. It is known that Foxconn has to endure an increase in human resource cost of 2.281 billion yuan (USD 333.9 million).

“Foxconn’s increasing the employees’ salaries brought about great stress upon the other Taiwan-based enterprises. However, they may not follow suit immediately,” said a source surnamed Wang who knows the Taiwanese companies well. The Taiwanese businessmen have their chambers of commerce in different places and they have their own uniformed standards. If a company chooses to increase the employees’ salaries, the other companies will cast stress upon it. However, Mr. Wang said that the Taiwanese companies usually fail to recruit employees due to their unattractive salaries and then fail to fulfill the orders. Presently, the problem of recruitment has become the headache of many Taiwan-based companies.

It is known that the Ministry of Human Resources and Social Security is working on the “Remuneration Act”. Some experts said that it is time to double the citizen’s income.

Greater Stress of Industrial Transfer

“Increasing salaries means increasing cost for the companies, which will bring about greater stress of industrial transfer for China,” said Lin Boqiang. China is a country gathering a large number of manufacturing enterprises. This is attributed to the abundant and cheap labor force in this country. However, with the improving consciousness of self-protection of the Chinese employees, increasing the salaries will be a long-term trend. This will weaken the advantages of China in international competition. These foreign countries may move their investment fro, China to its neighboring countries with lower labor cost.

However, Lin Boqiang said that the increasing salaries will bring stronger consumption ability, which is good for the industrial structure change and the improvement of corporate efficiency.