After PRC, Other Asian Nations See Pay Disputes

♠ Posted by Emmanuel in ,,, at 7/19/2010 12:12:00 AM
Workers of the world unite! (Or, at least some of those in Asia.) After the much-ballyhooed worker suicides at Chinese original equipment manufacturer (OEM) Foxconn, many multinationals sensitive to charges of operating in China to, well, exploit labour arbitrage opportunities quickly followed suit with pay rises. The PRC powers-that-be then mounted an investigation to try and quell matters. Nevertheless, a spectre is haunting Asia--the spectre of labour militancy. In true butterfly-flapping-its-wings-starting-a-hurricane fashion, anecdotal reports now report that countries in the wider region are facing similar howls of protest over insufficient pay. Avast, ye capitalists!

The following FT article focuses on aftershocks being felt in Southeast Asia. Like China, Vietnam and Laos are ostensibly "socialist" regimes that have in recent times adopted measures to solicit foreign direct investment--AKA "market socialism." I'd certainly like to ask Marx what that is...
Chinese labour unrest is being replicated in south-east Asia where factories that compete with China to supply low-cost goods face walkouts as employees demand better pay and benefits. In Cambodia, workers are poised to stage a three-day strike this month in a dispute over the minimum wage while in Vietnam, thousands of workers at a Taiwanese-owned shoe factory staged a strike demanding higher salaries.

The disputes match similar action in China, where growing worker dissatisfaction has led to industrial unrest and higher wages. As a result, foreign factory owners are increasingly moving production from southern and eastern China – long seen as the “workshop of the world” – to the interior and other Asian developing nations. Chengdu in western China has already attracted IT giants such as Intel, Microsoft and IBM while Vietnam has become a manufacturing base for companies such as Foxconn, the world’s largest contract electronic manufacturer, Intel and Canon.

Labour costs in countries such as Cambodia, Vietnam and Laos remain a fraction of those in China. But, while their governments have been jostling to attract foreign manufacturers, unions are keen to protect their members and industrial action is on the rise, together with minimum wages across the region.

The average garment worker in Cambodia, where the minimum wage is one of the lowest in the world, earns $50 (€40, £33) per month plus a $6 living allowance bonus. The government has proposed a $5 increase but the Free Trade Union, which represents more than 80,000 labourers, intends to go ahead with the strike unless minimum pay is increased to $70.

The union represents more than 80,000 workers in factories across the country. Hundreds of international companies, including PCCS Garments, a Malaysian company which supplies goods to Adidas, Puma and Nike, and Korean manufacturer Yakjin, whose clients include Walmart and Gap, may have operations disrupted if the argument is not resolved.

The Vietnamese government increased the minimum wage for workers at foreign-owned companies to 1m dong ($52.50) this year. In Laos, the minimum wage was rose last year from 290,000 kip ($35) to 348,000 kip ($42) per month. Cambodia has a relatively high number of [real, not state-run] active unions and most garment factories are represented, says John Ritchotte, of the International Labour Organisation. However, he points out that industrial unrest is not uncommon across the region. “Even in those countries without independent unions, such as Vietnam and Laos, disputes occur, particularly during periods of high inflation,” he says. “The number of disputes has grown substantially over the past five years.”

At the same time, Cambodia’s open business environment, in which companies can be 100 per cent foreign owned [WOFE--wholly owned foreign enterprise], is expected to attract increasing foreign investment. According to figures from the Cambodian Ministry of Commerce, 290 new foreign companies registered in the country in the first quarter of 2010, an increase of 56 per cent on the same period last year. The World Bank estimates foreign direct investment in Cambodia will grow to $725m in 2010, up from $515m in 2009, partly as a result of an increase in Chinese investment.
Like China, most of Asia is open for business. However, might firms seeking relief from increasing wages in China find themselves having to deal with...workers clamouring for higher pay in Southeast Asia? As gnarly Uncle Karl once wrote, the proletarians have nothing to lose but their chains. They have a world to win.