Bank Of America, you know that corporation based in the United States, land of the free, home of the brave, is telling investors to sell because wages in China might have to rise.
Investors should sell shares of Chinese cement and metal companies as increases in labor costs will curb capital spending in those industries, according to BofA Merrill Lynch Global Research.
Seven Chinese provinces raised minimum wages in the first quarter after halting them last year amid the global recession, according to the Labor Ministry. Higher salaries may deter foreign investment in China, which has been a low-cost manufacturing base.
Astounding huh? The Yuan is still undervalued ranging up to 40%, yet the minute Chinese workers get anywhere with wages, investors should pull out.
Chinese Honda workers managed to get a 30% wage increase and 30 states increased the minimum wage by 15%. This amounts to $23.5 a month. That's a cocktail to investors. Suck it up!
I guess BoA just wants workers to continue committing suicide so as to not disturb ROI:
The rash of suicides has intensified scrutiny of the working and living conditions at Foxconn, the world’s biggest contract electronics supplier. Responding to the clamor, Foxconn has raised salaries steeply twice in the last five days. The company announced the latest increase on Sunday, saying that after a three-month trial period, the basic salaries of many of its workers in China could reach nearly $300 a month, more than double what they were a few weeks ago.
Sociologists and other academics see the deaths as extreme signals of a more pervasive trend: a generation of workers rejecting the regimented hardships their predecessors endured as the cheap labor army behind China’s economic miracle.
Rather than take their own lives, many more workers at Foxconn — tens of thousands more — have simply quit. In recent interviews here, employees said the typical Foxconn hire lasted just a few months at the factory before leaving, demoralized.
They complain about military-style drills, verbal abuse by superiors and “self-criticisms” they are forced to read aloud, as well as occasionally being pressured to work as many 13 consecutive days to complete a big customer order — even when it means sleeping on the factory floor.
Foxconn just increased wages to $294 a month after a trial period. Believe this or not, Foxconn has to halt trading of their stock to avoid a collapse when making the announcement of the wage increase. Yes, investors will punish Foxconn for paying their workers enough so they stop killing themselves.
No surprise BoA and other investors mean to gang up on companies responding to their employees and dump their stock. When BoA fired workers and offshore outsourced their jobs, one person, Kevin Flanagan, shot himself in the parking lot.
If you think this means those jobs will return to the United States due to rising Chinese labor costs, think again. Without trade modifications as well as a host of new regulations, multinationals will just hunt the globe once more looking for the cheapest, most exploitable labor.
Big Bill Heywood
There was a romantic time, so long ago, when it was thought that the only answer to what the 'bosses' do, was One Big Union Worldwide.
The will shred us to pieces before that, but something big like this may at least come out of the darkness, at least some talk anyway. How much do we need unions? Even if they are commie or mob they way many not so long ago.
I am glad for the Chinese at Honda and Foxconn. It has been a long time coming for them. Multinationals have been looking to Vietnam. Bush created a bi-lateral trade agreement with Vietnam for the day when the Chinese stood up.
Burton Leed
Vietnam
Yup, they are seriously considering Vietnam, but they do not like their currency instability and potential for inflation, which hurts their cheap numbers profit games.
Why we never see the Chinese currency become unpegged, multinationals want that guaranteed profit advantage. We blame the Chinese but it is U.S. multinationals also in that mix.
I was pretty disgusted (obviously by the Populist rant) that they were issuing "sells" when you have conditions so bad workers are killing themselves.
Frankly it's just as bad here but notice how the U.S. doesn't report those suicides. They act like all is caused by a "chemical imbalance".
I should do a piece (or if someone else is of a mind to write about it) on the percentage of financial distress related suicides in the U.S.