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Foxconn Shenzhen workers eligible for second pay raise

Chinese workers assemble electronic components at the Foxconn's Shenzhen factory in southern Guangzhou province.

Shares of Foxconn's flagship company fell by 5.6 percent at the close of Taipei trading as investors weighed word of another pay raise for workers at the company's Shenzhen factory, the second in less than a week. The raise hopes to improve working conditions plant where 10 employees committed suicide.

The raise follows Foxconn chairman Terry Gou's visit to the plant last week as labor groups threatened a worldwide boycott of Apple, which relies on the Foxconn plant to produce iPhones and iPads. The company says the move was an effort to "safeguard the dignity of workers." A growing labor shortage in China has also been empowering workers to demand better wages and treatment at their workplaces, particularly in the auto and technology sectors where skilled employees are difficult to replace.

Analysts watching the markets fall believe the wage hike will ultimately raise the cost of items "Made in China", and it's yet to be determined how consumers will compensate for improved worker pay. Some say the global electronics industry has hit a turning point and wage hikes will spread across factories, which will be tempted to charge tech companies like Apple and Dell more. By some estimates, the latest wage hike could dent Foxconn earnings by 10-20 percent.

Workers had already been approved for a 30 percent wage increase beginning July 1, a wage increase which exceeded expectations. The second raise says employees who reach certain performance standards will receive an additional 66 percent increase beginning October 1, according to The Financial Times. Employees will need to work towards this criteria over a period of three months; once met, the increase will come to about $300 U.S. a month.

iPhone 4G still coming

Meanwhile, Foxconn customer Apple is expected to unveil the iPhone 4G, or iPhone HD, at its annual World Wide Developers Conference near its headquarters in Cupertino, Calif. Apple has maintained the position that it would stay vigilant on Foxconn factory issues and that the facility is "not a sweatshop."

Most diehard iPhone enthusiasts know what to expect of the new iPhone, thanks to a prototype leak in March: a thinner body, cameras on both sides, a camera flash and a bigger battery. Beyond the official unveiling, the meeting will be fairly informative of Apple's business side: Apple's new iPhone software is a bigger deal than the hardware, according to ZDNet editor Larry Dignan. New functions like multi-tasking will be added to the smartphone, a feature users have long been requesting. Apple will also talk about its intention to start incorporating ads into applications for the iPhone and iPad.

About the author

Scott Tong is a correspondent for Marketplace’s sustainability desk, with a focus on energy, environment, resources, climate, supply chain and the global economy.

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