Workers at a southern China factory owned by Japanese firm Omron Corp. (6645.OK) went on strike Wednesday and demanded higher salaries, state media reported, adding to a spate of labor disputes that have come as wages rise in parts of China.

Wage hikes in China at companies like Hon Hai Precision Industry Co. (2317.TW) have helped fuel speculation that companies could increasingly shift their manufacturing operations from China to other countries.

An undetermined number of workers at Omron (Guangzhou) Automobile Electronics Co.'s factory in Guangzhou staged a walk-out to pressure the company to raise their monthly salaries to CNY1,800 each from CNY1,300 ($191), the state Xinhua News Agency said, citing local sources, adding Omron supplies electronic components to Honda Motor Corp. (HMC) and Toyota Motor Corp.(TM).

The company's management is in negotiations with workers, the sources were cited as saying.

The strike comes one day after Chimei Innolux Corp. (3481.TW), an affiliate of Hon Hai, said a contract worker fell to his death at its production plant in Foshan, a city in southern China's Guangdong province.

In June, Hon Hai, a contract electronics maker, raised wages for its staff after 10 Hon Hai workers in the southern city of Shenzhen jumped to their deaths. Recent wage hikes have also affected companies including Yum Brands Inc. (YUM), Honda and Toyota.

Labor costs this year have risen between 20% and 25% in the Pearl River Delta and the Yangtze River Delta, two major manufacturing regions that extend inward from China's east coast, a spokesman for China's Ministry of Industry and Information Technology said earlier this week.

In a sign of official concern about recent labor unrest, South China's Guangdong province on Wednesday reviewed a draft of the country's first law covering labor disputes and wage negotiations amid efforts to ease labor tensions in the country, according to another Xinhua report.

One of the major purposes of the revised draft of The Regulation on the Democratic Management of Enterprises in Guangdong is to establish a legally binding wage negotiation mechanism, Xinhua said. Among the regulation's 83 articles, 25 concern wage negotiations.

The draft law says the relevant union should organize wage negotiations between elected worker representatives and the employer when more than a fifth of workers demand a pay rise.

If the employer refuses to hold or join wage negotiations, the workers would be entitled to stop working and the employer shouldn't fire them for doing so, according to the draft law, Xinhua reported.

The Regulation is the most comprehensive labor law in China, Liu Mu, head of the labor law department of the standing committee of the Guangdong Provincial People's Congress, was cited as saying.

"It will establish a mechanism so workers can legally voice demands for pay raises."

-By Owen Fletcher, Dow Jones Newswires; 8610 8400 7702; owen.fletcher@dowjones.com

 
 
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