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Foxconn Group Halts China Hiring to Review Workforce After Doubling Wages

Foxconn Technology Group, the maker of Apple Inc. iPhones and Hewlett-Packard Co. computers that’s grappled with a spate of suicides this year, said it halted hiring workers across China.

The Taiwanese company, which has 800,000 workers in China, stopped hiring two weeks ago as it “reviews resource allocation,” spokesman Edmund Ding said by phone today. Foxconn, which plans to boost productivity and retain more experienced employees, hasn’t decided when it will begin recruiting again, he said, declining to elaborate.

The world’s largest contract manufacturer of electronics said this month it will more than double base wages in Shenzhen, where it employs about 450,000 workers. Chairman Terry Gou said June 8 he hasn’t discussed the salary increase with clients and will need two to three months to assess the impact on costs.

“If they halt hiring for a few months then I’d be more concerned,” said Steven Tseng, who rates Hon Hai Precision Industry Co., Foxconn’s Taipei-listed flagship, “buy” at RBS Asia Ltd. “They’re thinking things through clearly. They’re a long-term player and know the situation better than their peers.”

Foxconn raised salaries, hired counselors, installed nets nearby dormitories and scaled back compensation to families of victims after at least 10 workers in China committed suicide, prompting rights groups including China Labor Watch to label the company a sweatshop, a claim Gou denied.

Shenzhen’s government this week announced it will raise the minimum wage an average 16 percent to 1,100 yuan ($161) a month from July. Hon Hai’s Gou said he plans to combat the higher wage costs by boosting automation and raising worker efficiency. Foxconn plans to increase the base salary in Shenzhen to 2,000 yuan a month in October from 900 yuan in May.

To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net.

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