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back to article Foxconn pay hikes 'driving tech titans into Philippines'

More signs have emerged that China’s rising labour costs are driving electronics firms out of the country: Philippine officials claim that foreign biz barons are looking to relocate to the small south-east Asian nation. Philippine trade secretary Gregory Domingo reported “very strong interest” from Japanese electronics, ship …

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Anonymous Coward

Welcome to the New World Order...

The Nordic "Empire", The Roman Empire, The British Empire and now...The Big Business Empire.

Invade a country and exploit it for everything it's got.

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Devil

Not to worry...

...there are PLENTY of countires left to exploit by these businesses. Going to take them a few centuries before they run out of them. By that time, the planet will be so polluted that most consumers will be dead anyway.

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Anonymous Coward

Re: Welcome to the New World Order...

SOON we will have the worlds cheapest labour force and they will all relocate to the UK.

Welcome to Britain Foxcom

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Err, yes, that's the point

"there are PLENTY of countires left to exploit by these businesses."

Back in 1978 the per capita GDP of China (not a perfect measure of living standards but a reasonable one) was the same as that in the UK in 1600 AD. Today it's where we were in about 1948.

So all this exploitation of the Chinese wage slaves has allowed them to cram 350 years of economic development into 34 years. That's not bad as a solution to the perennial human problem: how do we get the poor to become rich?

And indeed, this past 40 odd years of neoliberal globalisation has seen the largest reduction in absolute poverty in the history of our species. It's a pretty good result, as I say.

And yes, we really do rather want such exploitation to move from country to country. Wouldn't it, just as an example, be wonderful if North Korean living standards rose sixfold (from their current to Chinese levels, just as China's have from 1978 to today) because we exploited the hell out of them by buying the things they made?

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Devil

Re: "how do we get the poor to become rich?"

Are you sure you're asking the right question ?

From where I sit, it looks more like how do we get the poor to stay happy being poor.

Sorry, I'm being cynical again. My only excuse is that it's an election year.

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WTF?

Re: Err, yes, that's the point

Hey...nice theories. People just LOVE being exploited for their own good. What a concept.

You have any Benevolent Despots in your family history? Just wondering.

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Thumb Down

Minimum wage

How about we be responsible and apply a minimum wage that firms have to pay in order to get their product.. oh wait we already do that, it's called fair trade.

Let's make that mandatory.

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FAIL

"Let's make that mandatory"

Which 'we' do you mean here? Can you narrow it down at all, or do you not even realize that your casually tossed-off "let's make that mandatory" implies, of necessity, a single planetwide political system?

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FAIL

Re: "Let's make that mandatory"

Ever heard of fair trade food? There's a regulatory body for that isn't there. I fail to see how you need a global government in order to regulate how industries obtain labour

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"Fair trade food"

I'm talking about governance, not branding.

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Holmes

Re: "Let's make that mandatory"

"I fail to see how you need a global government in order to regulate how industries obtain labour."

Because if the law isn't global (or isn't a law), then manufacturers will just move on to a different country.

For example, say labor costs went up in China by 16%, a company might move their operations to the Philippines instead. I think I saw an article online somewhere that was talking about this.

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Facepalm

Re: Re: "Let's make that mandatory"

Apple (American company)

Apple spends American dollars from American people on foreign labour

American goverment checks to see if labour payment is in appropriate range

American goverment fines American company for not paying appropriate pay rate

Law does not need to be global.

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FAIL

Re: "Let's make that mandatory"

American industry pays more for its supplies/components/etc than those not doing this arsehattery.

American industry goes titsup as everything moves offshore where supplies etc are cheaper.

You really have never heard of this funny thing called "economics", have you? Hint: Take off the starry eyed blinkers and remove the flawed assumption that everyone globally gives a shit about this from your logic.

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Re: "Let's make that mandatory"

"Apple (American company)

Apple spends American dollars from American people on foreign labour"

You mean Apple pays Foxconn for the iPads they build; Apple doesn't own Foxconn nor do they control wages at the factories. Could they? Maybe, it would depend on what sort of contract exists between Apple and Foxconn.

"American goverment checks to see if labour payment is in appropriate range

American goverment fines American company for not paying appropriate pay rate"

Except Apple doesn't own Foxconn and Foxconn is NOT an American company. All of ->APPLE'S<- employees are paid wages consistent with the law; The US cannot directly control the wages at Foxconn.

What *could* the US do? They could ban imports of products made in sub-standard conditions (wages, safety, etc) but I'm pretty sure that our modern world would grind to a halt at that point.

As 1st world residents our lives are built on the backs of some of the poorest paid workers on the planet. The result is cheap shoes, cheap electronics, and especially record profits for all of the companies doing it. Corporations will find a way around any legislation that increases their production costs like water encountering a stone. It may take time, but it will happen.

In fact they've already done so numerous times in history. The US used to manufacture a lot of things, and those jobs went to places with cheaper labor costs. Not because the products weren't profitable but because there is slightly more profit to be had by having 2nd/3rd world wage-slaves assemble them rather than 1st worlders (who want living wages, health insurance, safe working conditions, and all those other things that eat into the profit margins.)

This problem will not be fixed unless people either refuse to purchase these products (which seems unlikely) or if there are globally enforced laws requiring safe and fair working conditions (which sadly seems to be equally unlikely.) Well I suppose the workers might unionize and fight back, but in a lot of places that's illegal (China for example) so employees run the risk of arrest or worse.

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Stop

Re: "Let's make that mandatory"

If they can do it for taxes, I'm sure they can do it for wages.

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Anonymous Coward

I dont get it... wages are still minimal, sure you can live comfortably on 1500yuan a month in China, I know people doing that, although its getting more costly to live....

But even when it reaches £200/month the cost to the consumer will be negligible, the problem is the companies just want massive profits for their shareholders and don't care about their workforces...

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Big Brother

Exactly

That's why you need a regulation that says something like 'you must pay foreign labour at least $x per hour'. That's how fair trade for foods industry works after all "a fair and stable price for their products"[1]. Otherwise, yes, companies will just switch to the cheapest, nastiest, most cut-safety-costs country they can find.

1. http://www.stokefairtrade.org.uk/whatis.html

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FAIL

You're finally understanding business

Business is about profits for it's shareholders. Shareholders hold the risk and expect profits.

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Anonymous Coward

Re: Exactly

Actually you are wrong.

Fairtrade does NOT say you must pay at least $x / hour.

It pays a sustainable rate and MUST never be below market price (note doesn't say it must be above market price)

Therefore for Country A you can pay $1 / hour, but country B may require you pay $3/hour.

If you paid, say the UK minimum wage £6.08 to someone in China, they not only would be "sustainable" but would also probably employ a cleaner, a gardener, a nanny for the kids and go out on the lash every night.

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Orv

Well, it used to be...

These days it's mostly the government that ends up holding the risk, thanks to the influence of nearly unlimited corporate cash on politics. The thing to remember about corporations is they're essentially machines for privatizing profit and socializing risk.

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Anonymous Coward

1500 yuan may be a lot in China, it is very little in Foxconnia because of the higher cost of living behind the fence on the Foxconn campus. Foxconn charges rates for their accommodation, food, etc which are above the average rate for China. This is doubly so if you see what exactly do they charge it for - bunk bed in a room shared with 4-8 people and some stir fry.

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Facepalm

So very weird

It's almost as if - and bear with me here, because I know this sounds a bit nuts - these companies are trying to make money.

Madness I tell you, utter madness.

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Not madness - criminality

Don't believe me? Go check out the comments on that article about Whitney Houston's death, and the consequent uptick in purchases of her music, and the resulting uptick in prices on her back catalog -- from the way people were squealing about it there, you'd think Sony sent MIBs to drown the woman in her bathtub just so's to make a few bucks.

People really do seem to be more and more getting the idea that the pursuit of profit is sinful in its own right. There's a word for that sort of attitude, but I won't use it here -- I get enough noise about sounding like a Bircher as it is.

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Re: Not madness - criminality

I think the problem people have is the pursuit of profitability over everything else (thus leading to what people consider to be excessive profits). It's also things like the ever increasing wage gap between the top earners in a company and the bottom earners in a company (which is then driving up prices due to the previous issue)

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Strange, then,

that no one is clamoring to pay $2000 for an iPad...

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Orv

Re: Strange, then,

Would it matter if they were? The additional profit would all go to the top 1% anyway. The workers on the ground haven't shared in corporate profit increases for many years now.

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Re: Strange, then,

What additional profit?

What I'm saying is that the labor practices advocated here would drive the cost of manufacture for consumer electronics (any consumer electronics, the iPad being only a handy example) up several times; that that increased cost would of course be passed directly along to the consumer; and that, for all that people like to identify as "progressive" in parties and job interviews and sexual negotiations by babbling about injustice and fair trade, it's when you ask them whether they'd be willing to pay $2000 for an iPad or $500 after subsidy for a mid-range smartphone or $85 for Virgin Mobile's dumbest PAYG feature phone, that you find out what really hits them where they live -- and the plight of Foxconn workers, it ain't.

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Orv

Re: Strange, then,

That's a valid point. But it's also not as if, if the market could bear $2000, they would be paying the workers any more than they do now.

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Re: Strange, then,

Perhaps not. Even assuming you're correct, though, the market won't bear $2000 iPads and wouldn't even if every free-trade fan on the planet were willing to put his money where his mouth is, so what point wasting time on the hypothetical?

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FAIL

Predictable!

I emphasised the fact that this may happen on a few ElReg articles that have highlighted the increase in Chinese workers' wages.

So, whether it's Dell, Apple. IBM, HP. Nokia, Sony or Microsoft put against the ropes over the workers' rights, this shift to the Philippines shows that large manufacturers contracted to make and/or assemble tech items are directed to turn a profit, irrespective of who they manufacture for.

It's a game of economic chess where the production line workers are the pawns and when the manufacturers are checkmated by cost, it's time to set up the board in a more favourable area.

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Re: Predictable!

History repeats itself. Look at all the wonderful manufacturing jobs that the US had. The workers overseas are glad to have them now!

Taxes + Labor + Regulatory compliance + Red Tape = Total Cost of doing business

You might have 1 or 2 of those components be a tad high, but when all 4 are well above average you are going to see business leave pronto. The USA could support good wages and EPA standards, but the government would have to make taxes and red tape pretty much non-existent.

The US used to be able to command a premium for her stability and the quality of her labor force, but failed to compete when other countries caught up on the value offered for a fraction of the total price.

Sad, really.

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Coat

Re: Predictable!

Yeah, we're all in a race to the bottom now. Or rather, a race to a midpoint that's a lot lower than the standard of living we're used to enjoying. The middle class was nice while it lasted.

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Anonymous Coward

Vietnam is in the mix too in the race for the bottom.

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WTF?

Selective Racism?

So, they were forced to give the Chinese workers more money when details of the low pay, bad conditions and child labour got out, so now they're moving to the Philippines to exploit their workers in the same way ... and, erm, we're supposed to not notice this time ... ?

Or do they figure it will be a few years before we find out, and then they can move on elsewhere?

How do these people think?

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Re: Selective Racism?

It doesn't matter how we think they think, as long as we all still turn up at Amazon etc and buy whatever competitively-priced, big-name kit that we think we 'need'.

A consciencious consumer probably ought to feel queasy about a lot of the stuff they choose to spend their money on. (I have no solution btw)

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Re: Selective Racism?

They think that, while there are some people who talk a good game on the subject, no one really wants to pay a couple of grand for an iPad or $500 for a mid-range smartphone.

They're right, too...

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Anonymous Coward

Re: Selective Racism?

You call it exploiting, I call it liberating. I have a lot of Filipino friends who would jump at a chance to earn the kind of wages that these jobs will bring to the country.

Get off your high horse and realise that 1) cost of living is different so these 'low wages' are actually higher and quite reasonable in comparison and 2) some people would rather live a modest life on these 'low wages' than live a terrible life on no wage.

More power to the Philippines!

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Anonymous Coward

Re: Selective Racism?

I think many here may be missing the the point.

Foxconn workers have been made so damn unhappy that they are killing themselves. I sincerely doubt that an individual decides to do that because they are underpaid by a hundred yuan a month. Likewise paying them 200 yuan a month more probably isn't the issue.

I may be wrong though. Maybe they've found people who like being abused....

I think it's more likely to be related to the way the company treats its employees eg like modern day slaves.

Personally I choose not to buy goods made by 'Apple's slavers'.

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Re: Selective Racism?

Of course -- you just buy goods made by other companies' slaves instead, you paragon of ethics, you.

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Re: Selective Racism?

Hollywood's finest and lots of musicians off themselves every year too. Are you going to assert the same flim-flam for them, or will you just 'fess up to the fact that people sometimes off themselves for no good reason?

Remember, Foxconn's suicide rate was WELL below the national average.

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we still have the third world enslaved

I think The regulation mentioned by other posters would be a good thing - I realise there is no world govt - it would have to be some sort of treaty among as many developed nations as possible invoking import taxes - which would be fed back to the wages the poor peeps who made the product (impossible to implement to to 3rd word corruption buttheats my plan)

China is just crossing the line from exploited to exploiter

And to all those who say "these businesses are there to make a profit" - just remember you are the customer / consumer / beneficiary just as much as they are.

The proof is the unbelieveably cheap price of electronics -so much so that no one knows how to repair any of them - "Fuck it , throw it away , get another"

i.e. you cant moan or condemn about foxxconn's sweatshop practices when there's a £30 foxxcon motherboard in your pc

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"i.e. you cant moan or condemn"

Not without being a damned hypocrite, at least, but when did that ever stop anyone?

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Anonymous Coward

where will they go after the Philippines?

when the wages there become "too high"? Vietnam? Been there, done that. Britain? Neh, still a tad too expensive. Will they move to fully automatic manufacturing powered by wind? Floating in mid-ocean, to avoid paying any taxes?

...

actually, no, if floating was tax-less, all the banks (and MPs) would have been there already, rather than merely "off-shore"...

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Re: where will they go after the Philippines?

North Korea, maybe?

Pay the upper-class crooks some dollars, and feed the worker bees a cup of rice a day.

Shareholders of all American/Japanes/Wherever hightech companies would cry tears of joy.

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Dodgy Economics

This story makes no sense, labour costs are a few percentage points of the cost of an item, even if they manufactured stuff here, labour wouldnt be that much more in percentage terms. Assuming that the Philippines and China have equally bad pollution etc. then the measured against the costs of moving a high tech factory are such that it would take decades to recover the investment. As an example to make a car here, the labour costs are less than 5% of the costs of the car.

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Trollface

% Labour Costs?

I'd be amazed if the labour costs are more than a few percentage points of the costs of a car in the uk say let alone in China. I imagine the costs of moving a factory would be far higher.

Lets say you move your factory, this takes 6 months to gain that 1% saving in labour costs per item. It will then take 50 years to save the money for the 50% loss in that year. Lets say it takes a few months to get to full productivity etc.

Surely for high tech once the investments been made that factories going nowhere and this is really about garment factories etc where orders are fulfilled by existing sweatshops etc.

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bep

As for myself

When Nike's workers in Indonesia unionised and won higher wages, Nike moved their manufacturing to China - and I stopped buying Nike products. Of course, nobody noticed, least of all Nike. If everyone did that, however, it might be a different story. One of the key differences that no seems to be mentioning is that China is not a democracy, whereas Indonesia and the Phillipines are. I think that makes a difference to workers rights in the long term.

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Anonymous Coward

making the ipad2 would add $110 to the price apparently

http://www.forbes.com/sites/timworstall/2011/12/18/if-apple-onshored-ipad-production-it-would-create-67000-american-manufacturing-jobs/

Wages aren't that big a factor in highly mechanised factories otherwise they'd be making bmws for half the price rather than a couple of percent less.

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Anonymous Coward

huh?

181 pounds ~ USD283... that's just about the same minimum wage in the philippines.. maybe what they're afraid of is the huge jump in salaries.

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