Editorials

Welcome move

(China Daily)
Updated: 2010-06-04 07:54

Both Foxconn's offer of a 30-percent rise in wages to counter the spate of recent worker suicides at its Shenzhen unit, and Honda's plan to raise basic pay by almost a quarter to end a strike at its Guangdong plant, are clearly long overdue.

It is a pity, however, that such badly needed wage rises have come about only as a result of crisis management.

Foxconn, the world's largest electronics contract manufacturer, said in a statement that it was hiking pay to offset rising consumer prices and living costs of workers. It also cited better corporate performance as reasons for the raise.

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Had that been the case, the company should have given its employees such a pay increase a long time back.

Honda's and Foxconn's cases are compelling evidence of the need for substantial pay hikes for China's lowly paid workers.

It is hoped that this will help drive home the message to other enterprises which have built their successes on China's robust economic growth over the past three decades. It should also serve to remind them that they will no longer be able to prosper by depressing the share of labor in corporate profits.

Enterprises should certainly do more to raise basic salaries of workers. But their efforts alone are insufficient to arrest the steady decline in the share of gross domestic product that goes to wages, a root cause behind the country's widening wealth disparity.

To encourage these enterprises to push up employee wages, the government should come up with targeted tax cuts to reduce their financial burden after such wage hikes.

It was reported that the country's top legislature had suggested such tax cuts to cushion labor-intensive enterprises from the negative impact of wage rise.

Since enterprises are taking action to forego some of their corporate profits for wage increases, the government should not hesitate to do its bit to raise workers' income directly or indirectly.

(China Daily 06/04/2010 page8)