BEIJING - Foreign and domestic enterprises should brace themselves for hefty wage rises in the coming years after labor discontent at Foxconn and Honda units in the Pearl River Delta area, experts have said.
"They (such disputes) send a clear signal of tighter labor supply," Cai Fang, director of the Institute of Population and Labor Economics at the Chinese Academy of Social Sciences, told China Daily.
Wages for 150 million migrant workers increased 19 percent in 2008 and 16 percent in 2009, according to Cai, who said labor costs will continue to rise.
On Sunday, Taiwanese-owned Foxconn Technology Group announced a second rise that would increase pay by up to 65 percent at its factories in the southern city of Shenzhen.
Earlier, Honda offered a 24 percent pay hike to its auto parts workers in Foshan, Guangdong, to bring an unprecedented strike to an end.
In addition, 14 provinces and regions raised minimum wage levels this year, with the highest at more than 20 percent.
Shenzhen, a southern manufacturing hub where Foxconn is based, plans to raise the minimum wage by an average of 15.8 percent from next month, the city government said on Wednesday.
A worker at Foxconn's Shenzhen factory. [China Daily]
The minimum wage will be 1,100 yuan per month to improve the living quality of the city's 8 million migrant laborers. By doing so, the government aims to nudge companies to upgrade technologies and management, said Wang Min, director of Shenzhen's bureau of human resources and social security.
"Companies that cannot adapt to the city's development will have to move out as a result," he told reporters.
The rising cost of labor has prompted speculation that global consumer electronics makers may consider moving their factories to neighboring countries such as Vietnam, India and Indonesia, where wages are lower.
Industry experts, however, said the recent pay rises in such companies as Foxconn are not a prelude to an end to China's role as the "world's factory".
Neither do they expect an exodus of foreign companies from China, citing an unfavorable investment environment in alternative countries and high corporate relocation costs.
