Foxconn and Honda examples of a new philosophy on wages

PUBLISHED : Saturday, 05 June, 2010, 12:00am
UPDATED : Saturday, 05 June, 2010, 12:00am

Workers on the mainland are gaining new bargaining power, so the media say.

'Foxconn International gives its workers a 30 per cent pay rise after a spate of suicides' ... 'Honda offers a 24 per cent increase to plant workers after a 10-day strike'. Well, I'm not so sure about that.

'Government grants labour new bargaining power' is perhaps a more correct headline.

Plough through the coverage by Xinhua and other state media on the Foxconn and Honda incidents and you will see what I mean.

It is overwhelming, not just in the volume, but the timeliness and the intensity. In short, Xinhua is acting like a real news agency.

First, the sensational Foxconn suicides.

In January, Xinhua reported the first case among the 450,000 employee of the mobile-phone maker. In the following months up to this week's pay rise, the agency filed 27 reports on Foxconn - and was mentioned in numerous other reports.

It reported all 10 suicides, and mostly within hours of their happening. On eight occasions, it gave the identity, age and home town of the victims, quoting police sources.

In effect, it got the snowball rolling. This is because for the country's much-controlled media, Xinhua's reports provide two important things - the political signals and the details for doing major follow-ups.

By topping off the reports with two commentaries - the deficiency of Foxconn's military-style management in catering for workers' emotional needs and the tragedies as a reflection of problems in the country's development model - Xinhua made sure the issue became the talk of the town.

Foxconn's chairman arrived, bowed and lifted the wages.

The Taiwanese media considered it coercion by Beijing on a Taiwanese businessman, but look at the strikingly similar 'special treatment' given by Xinhua to the Honda story, and one can see it is much more than that.

A day after the Foxconn story reached its climax with the chairman bowing to apologise, Xinhua reported on May 27 that workers at the Honda component plants in Guangdong were on strike. The strike had begun on May 21.

While it has given fewer headlines to Honda, its coverage has been no less strategic. It carried interviews with the workers, complaining of below-average wages and the huge pay gap with Japanese staff.

While Honda told foreign media deals had been struck with workers on May 31, Xinhua said some workers rejected the deal and there were physical clashes between different camps.

Again, Xinhua put out two commentaries - how Honda's demand for a written no-strike guarantee from workers reflected its attitude and the strike as a reflection of macro problems.

The report, and Xinhua's coverage, ended with the same result - a pay rise.

Can it be just coincidence?

Labour disputes are rarely covered by Xinhua.

Last September, several thousand coal miners went on strike in Hunan in protest against massive lay-offs by the Xiang Mei Group, the province's largest state-owned miner. Xinhua never reported it, and neither did any state media.

Last July, an executive of a private steel company was beaten to death during a 1,000-strong workers' protest at state-owned Tonghua Iron and Steel on his arrival to take over the plant. The workers were concerned about wage cuts and lay-offs.

The tragedy was widely circulated on the internet. Xinhua was silent until four days after the incident when the local government held a press conference. It took the agency eight more days to run a commentary titled 'Steel company executive's death reflects workers' insecurities'.

It is also worth pointing out that mainland authorities are known to be efficient at dealing with disgruntled workers.

An executive of a listed manufacturer in Guangdong has first-hand experience of this. In 2004, a dozen workers staged a protest against a cut in working hours. Police rounded them up within hours. They were jailed and on their release were given a life ban from working in the province.

So why is it so different with Foxconn and Honda? Why has Beijing allowed such high tolerance and exposure?

The anti-foreign corporate theory is an easy conclusion to jump to, but instead I shall refer you to two of Xinhua's commentaries.

On Foxconn, it said the tragedy was a result of the country's assembly-and-export development model. 'While Apple reaps the juicy profits of an iPad, China suffers a vicious cycle of a low value-added, low margin, labour-intensive and low wage industry. It is a warning on the urgency of a change in the way we develop our economy'.

On Honda, it said: 'In our country, many corporates still rely on low wages to make huge profits ...They should not take this for granted.' Given the gap between pay rises and economic growth, it's now the government's priority to 'adjust income distribution among its citizens'.

If there is still any confusion about these messages, the National Development and Reform Commission set it more clearly on June 2.

It said the post-economic-crisis international order would undergo a significant change and the old development model cannot be relied on. To win the race, China's domestic consumption must grow to build a self-sufficient economy.

This will require reform in three areas, including a distribution of income that brings pay rises in line with economic growth. 'Only by improving people's livelihood can the economic development be sustained and stability be maintained,' it said.

Translation: Higher pay, higher domestic spending, bigger domestic economy, less reliance on others and greater security. Can't afford to pay? Sorry, but we are sure many countries will welcome you with open arms.

And who better to act as messenger than Foxconn and Honda, two of the country's largest foreign corporates.

If any company was in any doubt about how serious officials are with the new minimum wage announced by one province after another, it should be clear by now.



Send to a friend

To forward this article using your default email client (e.g. Outlook), click here.

Enter multiple addresses separated by commas(,)

For unlimited access to: SCMP Tablet Edition SCMP Mobile Edition 10-year news archive