Employees Versus Robots: The Ultimate Wage and Social dumping?

Chinese workers have become too expensive, too demanding and too fragile. That might be the conclusion of the Taiwanese tycoon Terry Gou. His Foxconn group, a Taiwanese subcontractor will permanently replace 500,000 workers with robots, within three years.

As it is difficult or impossible to relocate the production in a more optimal place other than China, in order to circumvent the problems of strikes and suicides increasingly confronted, the group’s president told the Chinese press that he wanted to replace 500,000 Group employees with robots in three years. Foxconn currently has 10,000 robots performing tasks of painting, welding and assembly. This number should be gradually increased to 300,000 in 2012 and one million in 2014.

The current logic of the market economy is simple and particularly perverse. To maximize corporate profits, wages must remain low. The purchasing power implies that products must cost less and less, thus the production should located in countries with low wage costs and less social protection. But facing the wage demands and increase production costs in those countries, the only solutions are outsourcing to countries of lowest bidders or permanent replacement of workers – robots.

Nothing really new some would say. Indeed, in the 19th century: “… science, technology and greater wealth to gather hundreds of workers to produce large quantities of various goods. We call this period the industrial revolution because it corresponds to a total change in the production and consumption of manufactured goods …”

The mass production has a price: the misery of the blackmailed workers hiring and living in conditions beyond the precarious. Poverty and insecurity are found today in Asia including China where labor is abundant, low-paid and especially without any social protection.

Earlier, companies like Apple, Dell and HP pretended to be moved from the tenth worker suicide (30 total) in Foxconn’s Chinese factories, which employs 400,000 people.

Apple said it was “shocked and saddened” by the wave of suicide and stated that it was conducting its own investigation into working conditions in factories of its main contractor, which makes the iPhone, iPod and iPad.

Dell claimed that its suppliers adopt the same standards as its own.

HP indicated that it was studying “the practices of Foxconn, which may be associated with these tragic events.”

Probably very impressed with these “violent reaction”, the CEO of Foxconn had formally asked employees: a written undertaking not to attempt on their lives. He was also forced by pressure from employees and their advocacy organizations to increase wages by nearly 70% in its factories in China.

After the mass implementation of robots in production, the big companies like Apple, Dell and HP will be able to continue to obtain exceptional purchase price, without having to share their concerns about the fate of employees.

Questions: will there be employees who have lost their jobs and how do we compensate for this lack of employment?

Nobody knows, because, unlike previous major periods of industrialization, no major industry as claimed by economist Alfred Sauvy, is able to recycle such a large number of people.

Economist Edward Bareiro writes: “if innovation eventually leads to reduce the need to work in certain activities in the tertiary sector, the compensation between jobs lost and jobs created do not apply the same individuals, so that there is an structural unemployment, from the decline of certain industrial activities.”

Clearly, there will be the case and there will be policies to manage the problem.