End Looms For Era of Cheap Chinese Labor
It feels like the end of an era. The spate of strikes and suicides that have rocked China’s southern manufacturing belt over the last fortnight could well go down as the moment that China stopped being a place of endless cheap labor. And for the economy, it could be a thoroughly good thing.
The manufacturing hub in Guangdong province has been buzzing with two different but related stories—the spate of suicides at Foxconn, the company that makes the iPad and other hi-tech gadgets, and a high-profile strike at a Honda components plant.
Both events have also resulted in eye-catching wage increases—30 percent in the case of the Foxconn workers and a 24 percent offer at the Honda factory (they want 50 percent).
They are part of a pattern of rising wages across the economy. Dai Qinlan, director of the Careers Information Center in Wenzhou, another export hub on the east coast, said that wages are up around 20 percent in most of the region’s factories this year.
“Companies in China can still get young workers for their factories, but they are going to have to pay significantly more for them,” says Arthur Kroeber, managing director of Dragonomics in Beijing.
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Related paper: What Does the Lewis Turning Point Mean for China?
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