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Cambodia Raises Minimum Wage for Garment Workers

Garment workers in Cambodia on Friday received a $12 monthly minimum wage increase, to $182, following the controversial July election of Hun Sen as premier.

Sen pledged to raise wages as a campaign promise to garment workers. The Cambodian Ministry of Labor and Vocational Training announced the 7 percent increase on Friday. Last October, Cambodia raised the minimum monthly wage for workers in its textiles and footwear industry by 11 percent, to $170, following months of labor unrest that sparked concern among U.S. importers.

After Sen’s election, the ministry began talks with factory owners, industry representatives and unions to include inflation rates, living expenses, productivity, the country’s competitiveness, labor market conditions, profit margins and poverty levels. However, a representative for the Coalition of Cambodia Apparel Workers Democratic Union told the AFP news wire that it wasn’t satisfied with the increase, saying the union was “demanding an increase of at least $15 a month.”

A New World Bank report released last week noted that Cambodia’s economy remained strong during the first half of 2018, with garment exports reaching a two-year high. The Cambodian economy is expected to grow 7 percent in 2018, compared to 6.9% in 2017, thanks to upbeat investor sentiment and rising government spending.

Cambodia’s apparel shipments to the United States increased 1.11%, to 90 million square meter equivalents in August from a year earlier. The country has become a strong supplier of denim, with those imports rising 32.8%, to $78.63 million.

Also on Friday, European Union Commissioner for Trade Anna Cecilia Malmstrom warned Cambodia that it would lose preferential trade status unless it makes “clear and demonstrable improvements” to its rights record, as dictated by the Everything but Arms duty-free plan export program.

Textile and apparel exports to the European Union, including the U.K., grew 7.4% year-over-year in 2017, while those exports to the U.S. expanded 3.7%, compared to a decline of 3.5% a year earlier. Despite rapidly rising wages, overall textile and apparel exports rose 7.7% in 2017, a slight deceleration from 8.4% growth in 2016, according to the World Bank.