Since, we first published this post, there has been continued worker unrest particularly in Bangladesh after several factory disasters and wage disputes.
After watching many businesses race to China in pursuit of lower cost and higher profits, Chinese workers are now demanding fair and equal pay. This is partly due to changes in their employment law in 2008 with the enactment of the Labor Contract Law. This law outlines worker protection in terms of employment contracts, wages and working conditions.
The reaction of the employees who worked for Charles Starnes of Florida-based Specialty Medical Supplies is apparently not unwarranted. Some companies doing in business in China fail to compensate workers based on agreed to contracts. Apparently Mr. Starnes employees felt they were about to get short changed as well. So, they decided to detain (i.e.take hostage) their American manager and iron out the details of an agreement.
The irony was not lost on the media who intensely followed this story. A recent article by Scott Cendrowski for CNN Money states “What's more interesting than this nonviolent shakedown in Beijing is what the episode says of China's labor pool. Starnes said his medical device company was moving part of its operation as China's labor pool increasingly moves toward higher-skilled, higher-paying, and higher-technology jobs.” Mr. Cendrowski goes on to say “It may be the first act of a large shift underway in China. The evolution of China's economy from a manufacturing-based giant to a services-oriented economy means that lower-skilled workers will increasingly face obstacles. Workers in Pittsburgh and Detroit felt the same sting over the past forty years as jobs in those manufacturing centers migrated to lower-cost countries.”
We all know that wages in China are rising. Low-skilled manufacturing jobs are being replaced by higher-skilled technology driven employment. Businesses that are driven to find low-wage alternatives are moving production to other countries. Mr. Starnes was apparently planning on moving some production to India to reduce labor costs. India is just one choice amongst many. Other cheap labor countries include Vietnam, Cambodia, Indonesia and Bangladesh where wages are low, and worker protections are relatively non-existent.
Is there a lesson to be learned here? Should businesses continue to put profits above all else? The recent clothing plant disaster in Bangladesh is only one example of the how low-wage workers are neglected in so many ways. The actions by the employees who worked for Charles Starnes should be wake up call to all companies who are manufacturing in developing countries. People are people wherever they live. They deserve to be treated as such. American businesses, indeed all large commercial enterprises, should strive to create safe working environments and provide living wages. This is referred to as corporate responsibility. And, while the term may no longer be in fashion, trends change and fashions tends to repeat themselves.