The 9 percent increase, which comes into effect on January 1, falls short of trade union demands, but is more than what factory owners had hoped for.
The announcement followed a morning vote by the Labor Advisory Committee (LAC)—comprising government, union and employer representatives—that resulted in a proposed hike of $135. Prime Minister Hun Sen then raised that by $5 to $140.
“This figure is reasonable and acceptable. Even it’s not acceptable to all, we have no choice,” Labour Minister Ith Sam Heng told reporters.
Most of the unions had been seeking a $160-a-month minimum wage for the sector’s 700,000-plus employees, having lowered their initial demand of $207, while factory owners had argued for a 3.75 percent increase to around $133.
“We will have meetings with our colleagues about what to do next,” said Alt Thon, president of the Coalition of Cambodia Apparel Workers’ Democratic Union, as reported by Reuters. “We didn’t succeed in votes because most people have political leanings toward the government and companies.”
This isn’t the first time that trade unions have had to settle for less than requested. Last year, after months of strife, the government increased the monthly minimum wage from $100 to $128, defying demands for $140.
The garment industry accounts for around 80 percent of Cambodia’s exports, mainly to the U.S. and the E.U., and is worth more than $5 billion annually. Manufacturers are concerned that raising the monthly pay will cause such clothing giants as H&M, Inditex and Primark to take their business to other low-cost countries, namely Vietnam.
Ken Loo, secretary general of the Garment Manufacturers Association in Cambodia (GMAC), commented, “If the industry starts to suffer, then I think a huge part of the responsibility has to be borne by the unions themselves.”