In China, iPhone maker Foxconn is offering employees money if they find new workers

iPhone maker Foxconn is struggling to find new workers for its factory in China after the recent chaos over COVID restrictions and protests over pay and working conditions. Foxconn is offering workers a 1,000 yuan award if they successfully refer someone they know to work at the iPhone maker's plant in Zhengzhou, China. If a Foxconn worker manages to make someone they know work at the factory for 15 days, they will receive 500 yuans and if they manage to convince someone to work for 30 days, they will get 1000 yuans, as per a report from BBC news. 

Apple has already acknowledged that the shipments of its iPhone 14 might be delayed due to all the challenges Foxconn's manufacturing plant is facing in China. China for a long time has been considered the world's factory floor, and much of China's growth has been driven by two steps - manufacturing goods and exporting them to the world. China became an attractive destination for manufacturing because one of the basic thumb rules of macroeconomics is this - all other things being equal, capital goes where labour is cheap. China is also in a precarious situation because economic growth has its own costs. Earlier, workers in China did not care about working conditions in the factories because no matter how horrid the conditions were, it was still a better option compared to working in rice paddies. 

Challenges China is facing

As China underwent economic development, the living standards of people went up, as a result, even people who work on factory floors expect certain standards. In economic terms, this is called the middle-income trap, and the middle-income trap is China's primary challenge. The reason Foxconn has to give financial awards to employees depicts that the balance of power has shifted towards the direction of labour. As the cost of labour rises, firms such as Foxconn will start to diversify their manufacturing plants into nations which still have cheap labour, such as India and Vietnam. This process has already started and US Secretary of the Treasury Janet Yellen has said that this process should be boosted, due to geopolitical concerns. She has come up with a term to describe this phenomenon - "friendshoring". Foxconn's struggles in China are a tiny part of wider structural challenges China is staring at but it does encapsulate a lot.