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.