Foxconn Hands Out More Raises

After being put under the microscope by the media and, more recently, by its customers following a rash of suicides that occurred at its Shenzhen, China factory, Foxconn said it is issuing another round of significant pay raises, the second time that this has been done this week.

According to a report in The New York Times, Foxconn plans to raise basic salaries for most of its 800,000 workers in China to nearly $300 a month within the next 90 days. That's about double what the workers were making just a couple of weeks ago, and also is indicative of rising labor costs in China's biggest manufacturing hubs.

Lost in the shuffle of all the suicides that have taken place, market analysts say that China's booming economy has led to a labor shortage, in turn creating competition for young workers in the manufacturing sector. As a result, it's possible that prices for everything from textiles to electronic components could go up.

"These moves are symbolic and significant," says Dong Tao, a Hong Kong-based economist at Credit Suisse. "The outcome is simple: manufacturers either improve productivity, shrink their margins, or pass the costs on to consumers."

Not all manufacturers are jumping on board with pay increases, however. According to news and rumor site DigiTimes, notebook makers Compal Electronics and Wistron said they would not be following in Foxconn's footsteps.

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