China labor unrest spreads as workers seek more

Workers stand by a fence during a strike at a Honda Motor vehicle manufacturing plant in Zhongshan, Guangdong province, June 10, 2010.

HONG KONG (Reuters) - Labor unrest that began among foreign firms in south China's Pearl Delta area is showing signs of spreading to poorer interior regions, as a new generation of workers seek a bigger portion of the nation's growing wealth.

The burst of reported strikes is a worry for China's ruling Communist Party, which has long discouraged independent worker action and punished protesters.

While Beijing has made vows of better incomes for workers and farmers a cornerstone of policy, local officials are often focused on attracting investors with cheap, trouble-free labor to fuel China's export boom.

Following recent high-profile disputes at Honda Motor and iPhone maker Foxconn International, strikes were reported at a Taiwanese-owned sports goods supplier in Jiangxi province, and at Japanese sewing machine maker Brother Industries in Xian -- both some distance from China's wealthier regions near Hong Kong and Shanghai.

"All it takes now is a single spark and news will spread all over China, which could lead to similar industrial action in other factories," said Paul Tang, chief economist at Bank of East Asia in Hong Kong.

FOREIGN FOCUS

Reports of the poor working conditions first began to surface last month when Chinese and later foreign media began detailing a string of suicides at a massive south China compound run by Foxconn, a unit of Taiwan electronics giant Hon Hai.

Subsequent outbreaks of labor unrest have not been as widely reported in local media, possibly reflecting official reluctance to spread word of the disputes.

All of the problems reported so far has occurred at foreign-run factories, and Hon Hai has said it is looking for other locations to shift some of its production.

However, a senior trade official said China's rising labor costs would not deter foreign investors because policies to boost domestic consumption provide a new reason for them to seek profits.

Most disputes center on workers resentful of large income gaps, higher living costs and long hours with little rest, and employers trying to rein in rising costs as labor pools shrink.

Resolution of the disputes has resulted in sizable pay increases, including a 66 percent raise for Foxconn workers and 20 percent or more for workers in the first Honda strike.

The unrest also reflects the rise of a new generation of young Chinese who grew up in the country's market-oriented era, with little memory of a tumultuous socialist past that included a crackdown that left hundreds dead during the Tiananmen demonstrations of 1989.

In the latest incidents, about 900 workers demanding better pay and work conditions at two plants in the interior city of Xian brought production to a halt at a complex operated by Japan's Brother.

The company said it restarted production on Thursday, but was still in talks on pay and conditions.

Elsewhere, 8,000 workers for Smartball Inc, a Taiwanese-owned supplier for Adidas, also went on strike, according to China Labor Watch, a labor advocacy group.

A representative of the Taiwan business association in Jiujiang, where Smartball is located, said production resumed at the factory on Thursday, after a dispute that began between workers and guards unrelated to wages.

Workers at a Shanghai-based unit of Taiwan LCD maker Chimei Innolux briefly went on strike to demand more benefits, but the dispute was settled and work resumed, said a person who answered the phone at the factory but declined to give his name.

On Wednesday, Taiwan media reported 2,000 workers at a Taiwanese-owned machinery firm near Shanghai had also gone on strike on Tuesday.

Labor issues have been on the rise in China in recent years, with 875,000 cases dealt with by official arbitration panels last year, up from 500,000 cases in 2007, according to China's Ministry of Human Resources and Social Security. Over that time, collective disputes rose to 14,000 from 13,000.

HONDA HIT

Honda has been one of the hardest hit in recent weeks, with a domino-style string of strikes at its China-based suppliers.

The company settled a dispute at a transmission factory late last week in the city of Foshan, only to see workers at a nearby exhaust factory go on strike on Monday and a separate action by workers in a lock-making factory in Zhongshan later in the week.

The work stoppages have rippled up the supply chain, forcing Honda to halt some or all of its China car production for much of the last two weeks, though Honda said it would resume normal production on Friday.

Workers at the various plants have complained of long hours, including forced overtime, for pay that often totals 1,000-2,000 yuan ($146-$292) per month.

"For a long time workers' wages and conditions have been held down, below what even government regulations mandate and also below the country's general level of economic development," said Duan Yi, a labor lawyer in Shenzhen who has advised workers in disputes.

"Migrant workers have also become more conscious of their power. Many of these companies operate with very thin supply chains, and if one factory stops the whole chain can seize up." (Additional reporting by Kelvin Soh, James Pomfret and Alison Leung in HONG KONG, Chris Buckley in BEIJING, Lin Miao-jung in TAIPEI and Chang-Ran Kim in TOKYO; Editing by Lincoln Feast)