iPhone manufacturer Foxconn to double worker salaries by 2013

Foxconn’s current base salary ($350) per month is already higher than the RMB 1,500 ($240) statutory minimum wage per month in the city of Shenzhen.
Written by Cyrus Lee, Contributor

The base salary in Foxconn's Chinese manufacturing bases will be lifted to RMB 4,400 ($700) per month by the end of 2013, from current RMB 2,200 ($350) per month, Taiwan-based Business Weekly reported last week, citing Foxconn’s President Terry Gou.

Gou also aims to raise the entrance labor wages to RMB 4,000 ($635) by the end of this year in China firstly, which represents an 82 percent jump from current RMB 2,200 ($350), to exceed the entry-level wage of graduate students working for its headquarter in Taiwan.

Foxconn will have its employees “reasonably paid”, Gou said during an event in China this month.

The electronics manufacturing giant produces various high-tech devices including the iPhone, iPad and Kindle.

The basic salary at Foxconn’s Shenzhen plant in China, which employs almost 400,000 workers to feed the rolling manufacturing contracts from all over the globe, was only about RMB 900 ($145) per month back to early 2010.

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However, after 11 employees of Foxconn’s Shenzhen factory jumped from high buildings in the first five months of 2010, the company initiated rounds of pay raises to prevent more deaths as they believe the suicides are for money compensation.

Foxconn’s current basic salary ($350) per month is already higher than the RMB 1,500 ($240) statutory minimum wage per month in the city of Shenzhen this year. The latter is also the highest statutory minimum wage throughout China, which is higher than that in Beijing ($200) and Shanghai ($230).

However, the gross profit margin of Foxconn’s parent company, Hon Hai Precision Industry, was only at 4 percent in the first three months of 2012, down 0.5 percent from the 4.5 percent for the same period last year, according to its first quarter report.

The low profit margin amid aggressive wage hikes is likely to make Foxconn transfer the higher costs to its contractors, said a report by the Chinese leading portal NetEase. Foxconn manufactures gadgets for the likes of Apple, Sony, Nintendo, Hewlett-Packard, Nokia and Dell and etc.

First Financial Daily, a Chinese newspaper, reported that  Foxconn spokespersons in China said they have not received notice from corporate headquarters to raise the wages at the moment.

The newspaper also reported a rising rental prices around Foxconn’s manufacturing bases in China as the landlords are lifting the prices after hearing about the rumors of the pay raises.

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