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Cambodia’s Garment Sector Records Strong Growth Despite Higher Wages

IndustriAll Global Union Cambodia minimum wage strike

Cambodian factory owners’ fears that a higher minimum wage for garment workers would lead to less business appear to be unfounded.

According to the latest figures from the Ministry of Commerce, published by the International Labor Organization (ILO), the country’s garment and footwear exports grew by 12.7 percent in the first half of 2015 and employment rose 10.2 percent, despite the 28 percent monthly minimum wage increase that came into effect last January.

In fact, the sector did better in the first six months of this year than it did in the same period in 2014, when it registered 10.2 percent year-on-year growth.

“At the same time, 29 net new factories opened over the indicated period and average monthly wages earned by the workers rose to $169 during the first half of 2015, up from $141 in the same period of 2014,” ILO said, calling the sector “healthy.”

The news came less than a month after the Cambodian government agreed to raise the monthly minimum wage for more than 600,000 workers again next year, this time by 9 percent to $140.

Ken Loo, secretary general of the Garment Manufacturers Association in Cambodia (GMAC), said that low productivity levels had failed to prove to employers that there was a “solid economic rationale” for a pay raise.

Nonetheless, the data speaks for itself. The garment and footwear industry, which accounts for around 80 percent of Cambodia’s exports, has continued to perform solidly and reached $3 billion in the first half of 2015 to rank eighth globally in terms of market share.

The European Union is the country’s biggest customer (43 percent), followed by the U.S. (30 percent).

“Setting minimum wages at appropriate levels can help prevent in-work poverty and can be an important factor in ensuring decent job quality,” the ILO said, noting that Cambodia’s current $128-a-month pay is still lower than that of China, the Philippines and Thailand. It is, however, more than garment workers get in Sri Lanka ($66), Bangladesh ($71) and Pakistan ($99 to $119).

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