Foxconn lifting employees' wages in China by 20%

[Omaha Steve]

http://www.marketwatch.com/story/foxconn-reportedly-boosting-wages-in-china-by-20-2010-05-28?reflink=MW_news_stmp

By MarketWatch

HONG KONG (MarketWatch) -- Faced with an escalating management crisis following a spate of worker suicides, iPhone maker Foxconn Technology Group will increase employees' wages at its China operations by 20%, according to media reports Friday.

Company executives were cited in newswire reports as saying that the wage hikes had been planned for months as a way of helping overcome a labor shortage. It's generally believed that fewer migrant workers returned to China's southern industrial zone this spring because rapid economic growth in interior provinces has provided alternatives closer to home.

Foxconn /quotes/comstock/22h!e:2038 (HK:2038 5.77, -0.16, -2.70%) is a unit of Taiwan's Hon Hai Precision Industry Co. /quotes/comstock/11i!hnhpf (HNHPF 8.50, -0.10, -1.16%) , the world's largest manufacturer of electronics on a contract basis.

Executives also acknowledged that the wage hike would boost morale and calm jittery nerves, particularly among the more than 300,000 workers at the Longhua industrial complex in the city of Shenzhen. More a dozen employees have jumped off buildings in the complex this year, drawing allegations of unrelentingly stressful working conditions.

``Feeling sad is contagious, and so is feeling happy,'' an unidentified Taiwanese executive from the company was cited as saying in a report by Associated Press. ``We hope the workers will have a positive attitude toward their lives."

A Hon Hai spokesman told Reuters that the wage hike was tied to the cash portion of salary packages and would apply to all its workers in China.

Hon Hai's quarterly labor costs are pegged to rise by $84 million because of the wage hike, the report said, citing Citi estimates.

Foxconn's shares ended 2.7% lower in Hong Kong on Friday, while Hon Hai's shares fell 1.2% in Taipei.

FULL story and video at link.