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Cambodia Raises Garment Worker Minimum Wage

Following fraught discussions, Cambodia’s garment workers are finally getting a wage increase next year. But it’s not much.

The Southeast Asian nation’s Ministry of Labor announced Thursday that garment workers will be receiving just two extra dollars per month beginning Jan. 1, bumping up the minimum wage by 1.05 percent to $192, after negotiations between the ministry, factory owners and trade unions came to an impasse. The extra $2, the ministry said, amounted to an annual “gift” from the government. Depending on their seniority in the workplace, workers may also receive compensation for rent, transportation and food that could tip their monthly earnings to between $209 and $220 a month, it added.

“The Ministry of Labor would like to thank Samdech Prime Minister [Hun Sen] who has maintained peace, stability, social order and reforms to be more competitive with neighboring nations, drawing investors and creating jobs to relieve the people and restore the economy amid the Covid-19 pandemic,” the ministry said in a statement.

Cambodian Labor Confederation president Ath Thorn told local media outlet VOD that unions had urged for a $12.35 increase, employers pushed for a drop of $17.39 and the government suggested a $5 decrease. “We are not satisfied, but we have to consider the Covid situation,” Thorn said.

Garment manufacturers previously asked the Ministry of Labor to delay minimum-wage talks for 2021, citing the “fragile and uncertain” nature of a sector shaken by mass layoffs and factory suspensions in the wake of the Covid-19 outbreak.

Cambodia has seen at least 400 factory suspensions and more than 150,000 job losses in the garment sector, “with scores more factories and tens of thousands of additional workers at imminent risk,” the Garment Manufacturers Association in Cambodia wrote in a July update. Factories that have suspended operations are required by law to pay furloughed workers $114 per month, or 60 percent of the minimum wage. The Cambodian government contributes a “salary replacement” of roughly $38 per month.

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The apparel and footwear industry is Cambodia’s biggest export earner, employing some 800,000 workers and contributing 40 percent of its gross domestic product. The nation exported $9.3 billion in clothing and footwear last year, according to the Ministry of Industry and Handicraft, a year-on-year increase of 11 percent.

Cambodia is also anticipating the fallout of the European Union’s partial withdrawal of duty-free “Everything But Arms” privileges—a result of what the latter described as “severe deficiencies when it comes to human rights and labor rights”—which went into affect Aug. 12 and will affect selected garment and footwear products and all travel goods and sugar, amounting to roughly one-fifth or 1 billion euros ($1.18 billion) of Cambodia’s yearly exports to the bloc.

Nang Sothy, who represented the GMAC at Thursday’s meeting, told VOD that factories would struggle without wage reductions. “It’s difficult now,” Sothy said. “There is nothing big [happening] in terms of investments.”

But Thorn told Radio Free Asia’s Khmer Service that the new minimum wage fails to keep up with inflation rates and will put workers “in danger” because they will resort to working overtime to make the $230 to $250 per month they need to scrape by.

“We want a decent minimum wage for all workers—not just garment factory workers—but the government was unwilling to do so,” he said.

Labor Minister Ith Sam Heng appeared sanguine, however, telling reporters that the new wage level tried to strike a balance between livelihoods and competitiveness.

“I hope this wage will help the livelihoods of workers who are facing difficulties, and will help increase work productivity, and do whatever it takes to make our factories more competitive with foreign countries,” he said. “It is also a signal to attract more investment, to create new factories in Cambodia.”

Last year, garment workers received a 4.4 percent minimum-wage hike from $182 to $190.