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Payroll Pressure

If candidates are already pushing back on low pay, and Chinese are winning 65% pay hikes, what happens without cheap labor?

We already know that U.S. employers are low-balling new candidates wherever possible.

Who can blame them? Bush tax cuts are going away, taking money directly from the folks who hire and pay people.  Meanwhile; mounting taxes and benefit costs are bearing down like a freight train.

The first and most obvious move is to avoid hiring anyone.

The second plan is to pay as little as possible to the people you do hire. 

PUSHBACK IN THE IT INDUSTRY

Pay cuts have been going on in a big way in the IT industry. Only, now, it’s not really working.

Candidates have been asking me why the same positions are open all the time.

Answer: The same position is posted two, three, and four times because candidates accept; and then they refuse to show up. “Thanks all the same,” they say. “I found something better.”

That’s one way to get paid more for your work.

NOW THIS FROM CHINA

The Chinese are more action oriented. According to a recent…

report in Manufacturing Business Technology,

…eleven workers killed themselves and three attempted suicide over wage disputes with Foxconn.

In what seems to be a tragic and final demonstration of the end of cheap labor, Chinese workers would rather jump to their deaths off company buildings than continue slaving at modern day coolly wages.

Foxconn Technology Group has reportedly advised Apple, Dell, Sony, Nokia, and Hewlitt Packard that prices will go up to offset labor costs which are immediately jumping by as much as 65% for some 300,000 employees.

BY CONTRAST

The rising Chinese middle class will no longer tolerate toiling like peasants.  Not only is their pay going up, but the value of their currency is rising. Further, this culture likes to save.  They exchange their currency for gold.  Which is also increasing in value.

Meanwhile, Americans are struggling with higher taxes, potentially lower pay, and inevitable inflation.

Better buy your iPhone quick, while you can still afford one.

WHAT THIS MEANS TO U.S. EMPLOYERS

Short term savings from low-balling candidates may backfire.

U.S. employees who feel unappreciated will not hesitate to move on.  Current employees may well follow.

Other, better solutions may develop later this year.

www.dieck.us

Posted in Compensation, Reviewed.


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  1. Employers Intelligence Recovered – Latest - Ted Dieck, Recruiter linked to this post on June 23, 2010

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