The days of endless cheap labour in the "workshop of the world" could be numbered as a shortage of workers and government fears of social unrest drive up wages in China, experts say.

A spate of suicides at Taiwanese high-tech firm Foxconn and an unprecedented strike at Honda's auto parts factory in southern China suggest that employers can no longer take their workforces for granted after decades of rapid growth.

Beijing has reacted to the labour unrest by launching a round of minimum wage hikes across the nation, reflecting concern among top leaders that frustrated workers could trigger wider social turmoil.

Under President Hu Jintao, "the direction of policy has been towards greater concern about income distribution, less emphasis on growth at all costs", Tsinghua University economist Patrick Chovanec said.

The labour problems have received widespread coverage by state-run media and sparked statements of concern from official trade unions -- essentially an adjunct of the communist regime.

Nearly a quarter of Chinese employees have not had a raise in five years, according to the All-China Federation of Trade Unions. Inflation has stayed low, despite blistering economic growth during the period.

But IT giant Foxconn -- which counts heavyweights Apple, Dell, Sony and Panasonic among its clients -- has now given staff a 70 percent pay rise after 11 suicides among its vast Chinese workforce.

Honda, Japan's number two carmaker, last week offered a 24 percent rise to workers to end a crippling strike that had brought the company's vehicle production in China to a halt for more than a week.

In another case, Taiwanese handset component maker Merry Electronics Co. raised the basic wages of 7,000 staff at its factory in the southern city of Shenzhen by 17 percent to end a brief strike, Taiwanese media reported.

"If you are a factory owner in Guangdong (southern China), you have got a few things working against you now and you have definitely got to start making it a bit more attractive to make labour come to you," said Brian Jackson, a senior analyst at the Royal Bank of Canada in Hong Kong.

"All the indications are this is something that is going to continue in the months ahead -- assuming you don't have a big impact from European problems on the manufacturing sector," he said, alluding to eurozone economic worries.

But some Chinese-owned factories fear the wage pressure could hurt the vast manufacturing industry as it bounces back from the global financial crisis.

"We are all worried about the cost push and how that will continue to have a higher stress on manufacturers who export," said Jimmy Kwok, managing director of Rambo Chemicals, which employs 400 workers at a plant in Shenzhen.

He said higher labour costs might force manufacturers to pull back on planned investments in new equipment, to lay off staff or to move their operations to regions where labour costs less.

As China's economy surges, wage demands will continue to pose a headache for companies, forcing some to relocate or pass on the cost through higher prices for their toys and electronic gadgets, analysts say.

The market verdict against Foxconn's parent company has been brutal. Hon Hai Precision Industry has lost billions of dollars in market valuation as its share price has slumped since the steep wage hikes were announced.

For Arthur Kroeber, managing director of the Dragonomics consultancy in Beijing, the laws of supply and demand are reawakening in China.

"The simple reason for the wage pressure is that the supply of young workers who are typically the people who move into these factories in coastal China is shrinking," he said.

Huge government spending on infrastructure projects in central and western China and increasing relocation of factories inland are encouraging workers to stay home, where the cost of living is cheaper and they have family support.

Kroeber cautioned it was too soon to say workers have gained the upper hand in one-party China.

"It is still the case that there are lots of workers, employers still get to set the rules, workers do not have the right to independently organise, so it is early days yet," he said.

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