Foxconn Relocates Workers, Grants 20% Pay Rise

Foxconn may have done its best to save face after the multiple suicides that occurred at its facility in Shenzhen, but even the most recent public statement made by the company in its defense lost credibility when another suicide occurred just hours later. As the situation gained more and more attention from the media, Apple, along with Dell and HP, got involved in the situation. Now, Foxconn has announced that it will take more direct measures to alleviate this problem.

There are two measures that the hardware manufacturer plans to take, one of which has been planned for some time. The first thing will be to increase wages (date not given), currently at 900 Yuan (roughly $131.80) per month, by 20%. 900 yuan is already above the minimum salary in the area, but such a wage increase is not unusual for the third quarter, when production is increased in anticipation of the holiday season. Foxconn will also continue to offer overtime bonuses and there are also plans to relocate about a fifth of the Shenzhen workforce to western parts of China, to bring them closer to their families.

"It may help the suicide situation, because we workers just need money and the financial pressure on us is great,"a Foxconn employee surnamed Wang is reported to have said. He was reached by telephone at the company's factory in Longhua, an industrial town North of Shenzhen. "Every little bit helps."

There is also a certain other sum of money that Foxconn will keep paying, namely 100,000 Yuan, which goes to families of suicide victims. It is the equivalent of ten times a worker's annual base salary. While undoubtedly a worthy effort, the dark side to this affair is that, according to Wang, this money may have tempted some of the suicide victims to end their lives. As for what impact this raise will have on the company itself, most analysts don't predict any major losses.

"I don't think this will impact Hon Hai's profitability," Vincent Chen, an analyst at Yuanta Securities in Taipei, said. "Salaries for production workers are usually raised at around the third quarter, which is the peak season for most contract manufacturers as they gear up for the year-end holiday season."