I seem to be near the lone voice in the global press making this very simple point about the various pay rises and improvements in working conditions going on in the Chinese factories. Yes, Wintek, Foxconn, Pegatron, the factories that make near all of the kit for companies like Apple, Dell, Microsoft, HP and all the others, they are raising wages in those factories. Working conditions are getting better, dorms are being upgraded, better food is being provided in the canteens.
But this is not, repeat not, as a result of the various petitions, plays and mumbles about boycotts: this is a very simple and near inevitable consequence of China's economic development. This is just something that comes along with GDP growth rates of 8-10% a year for a couple of decades. Indeed, this is not just what economic development means it's the very reason that we like and desire economic development. So that that poor chump on the production line gets richer, this is the point of the whole exercise.
As I've pointed out before (using Angus Maddison's numbers) in 1978 China had GDP per capita of roughly the same level as Britain did in 1600 AD. Now they're at about the level of GDP per capita that the UK had in 1948. That economic growth is why Chinese manufacturing wages have been going up by 15 and 20 % a year recently. Why over the past 12 years since the millennium they have gone up, in real terms, by a factor of four.
Karl Marx himself made the point: as productivity rises then, as long as you have multiple competing capitalists desiring to exploit that labour, then wages will rise as productivity does. The only limit to this would be if there was a reserve army of the unemployed. In China that reserve army has disappeared. There are no more hundreds of millions of willing migrant workers, they're all already being employed. Thus further growth, further productivity growth, is going to feed through into higher wages for those workers.
Yet we're still being told that these wage rises are something to do with protests: they're not, they're a simple side effect of the development process itself:
Foxconn Technology's agreement to improve the lot of its 1.2 million workers in China who make Apple Inc's iPads and iPhones is a signal that China is losing its title as the world's lowest-cost producer of everything.
It is not a pure economic argument, but an ethical one too that is gaining momentum following Apple's unprecedented decision to allow the largest investigation ever into a U.S. company's operations abroad.
It's nothing to do with ethics. It doesn't matter how many baristas work themselves into a frothing outrage: there just aren't those more workers unemployed that the factories desire. Thus to get the workers they do desire they must raise wages to attract them from other factories.
China's economics and policy direction now suggest workers are a more powerful force though. Labor shortages and double-digit wage inflation give workers more choice. They are more likely to jump to another job to secure higher pay.
Finally, there it is, it's all in that one simple paragraph. Because there is no reserve army of the unemployed then the capitalist exploiters cannot have it all their own way. They must share the proceeds of growth with the workers.
There's nothing very unusual about this either. We can all note in the advanced economies at the moment that there's very few pay rises around because there's so much unemployment. And we all take it for granted that when there's low unemployment then real wages will rise. Why anyone at all should think that China is different is beyond me. Economic reality is economic reality whatever the political system imposed over the top of it.
There might be those who insist that actually it's all that agitation, that bringing to the forefront the conditions under which Foxconn employees work, which has led to these recent increases in pay and conditions. At which point I'd ask one question. That agitation has been going on for perhaps two years now: the pay and conditions have been getting better for well over a decade.
How come?
