As demand comes down from Europe and to a lesser extent the US, is the lack of overtime proving to be an issue for factory managers?
It depends on the industry and size of factory, but at our shop (www.PSSchina.com), our line workers expect 12 to 15% of their total compensation to come from OT. We have been lucky that the influx of new projects has offset the slowdown of some of the old projects, but if the day every came that business slowed down, then yes, we would be forced to consider reducing OT or even layoffs. But that is not as easy as it sounds because we would need to pay our workers 1 month severance for every year that they have been with us. And we have been operating for over 10 years in China. So laying off staff is the last option. Finding new clients, keeping costs down, improving efficiency…those are where we take action before laying off people.
Question answered by Mike Bellamy
Advisory Board Member & Featured Blogger at the not-for-profit China Sourcing Information Center (www.ChinaSourcingInfo.org). He is also the author of, “The Essential Reference Guide to China Sourcing” (chinasourcinginfo.org/book) and founder of PassageMaker Sourcing Solutions (www.PSSchina.com )