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China Honda plant woes mirror wider labor disputes

From Tomas Etzler, CNN
  • Workers return from strike, but slow down assembly line
  • Honda workers want bigger pay increases
  • Pay is escalating in China's developing regions

Zhonhgshan, China (CNN) -- Workers at Honda subsidiary in southeastern China intentionally slowed down production at the facility Monday, after returning from a strike, the company said.

Previously it was believed that the job dispute -- which, among other strikes of Chinese Honda plant has impacted the global supply pipeline of its cars -- was resolved when the company offered a 200 yuan (U.S. $30) per month pay increase. The plant employs about 1,500 people.

Honda Lock -- a subsidiary of Honda Motor Inc. which makes locks, door sensors and mirrors for the company -- believed the negotiations were settled with an agreement reached on Saturday. But Monday, a spokesperson for the company told CNN it is "embarrassed to report 90 percent of the factory workers are slowing down inside the factory today," a Honda Lock spokesperson said. The company is working to redress the situation, the spokesperson said.

The wages debate at Honda Lock is a microcosm of labor disputes that are sweeping companies across developed regions of China. As workers seek better wages and working conditions, concerns are being raised that the turbulence could disrupt China's development model of offering multinational companies access to a massive, low-cost labor force.

"This is an ongoing process since China joined the WTO (in 2001). Chinese workers have enjoyed pay raises for some years," Pu Yonghao, chief Asian investment strategist for UBS Wealth Management, told CNN.

"We've come to a point where we will see more wage increases because a lot of national or multinational company's minimum wage level is below the market level -- that's why we see more strikes and more unrest," Pu said.

Productivity in China has increased faster than pay increases, Pu said, and could hasten the trend of moving labor-intensive labor farther inland or to other low-cost labor centers such as Bangladesh and Vietnam.

Honda Lock workers interviewed by CNN said they want their monthly base salary increased to 1600 yuan ($234). The basic salary used to be 900 yuan, workers said, although with overtime that usually rose to about 1200 yuan ($175) a month. They were seeking a pay increase similar to the 500 yuan ($73) pay increase given to workers striking at the Nanhai Honda Auto Parts Manufacturing company.

"Our salary is not enough. (After) living costs and rent, we have nothing left," one worker, who asked not to be named, told CNN. Adds Liu Ping, another worker there: "Nanhai Honda is Honda and we are also Honda. Living cost is similar but how come their salary is so high?"

Monday's on-the-job slowdown was the latest tit-for-tat in the ongoing labor dispute at the Zhongshan plant, located in Guangdong Province near Hong Kong. Even as an agreement appeared to be reached on Saturday, the Honda plant was actively recruiting replacement workers over the weekend in case the negotiations were unsuccessful to return existing employees to the line.

"I've been looking for a job for months -- I may want to work there," one person in line for a job interview told CNN.

On Monday morning, a factory manager stood outside and counted down the minutes before the morning shift began, threatening that strikers who did not return back to work would be replaced. About 100 employees were demonstrating outside before most went back into the factory to begin the morning shift.

Still, some workers say they are willing to be fired in their quest for better wages -- especially since there are regional job shortages for qualified workers. "If most of us are fired because of this, I am not scared. Around here there are many factories with high salaries," one worker told CNN.

She said she hopes she will be able to send more money back home to her parents with her salary increase. "I don't have any money left after deducting rent and meals," she said.

CNN's Junko Ogura contributed to this report