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Will ASEAN Introduce a Regional Minimum Wage?

Players in Cambodia’s garment sector may be preparing for the next round of salary negotiations, but some officials are eager to implement an ASEAN-wide wage.

Some member countries of ASEAN (the Association of Southeast Asian Nations) have voiced concerns of late about wage disparities between low-cost production hubs such as Vietnam and the likes of China, which has a more expensive workforce.

The Jakarta Post reported that Jusuf Kalla, vice president of Indonesia, recently introduced the idea of a standard minimum wage for the Southeast Asian region when speaking at the World Economic Forum in Kuala Lumpur in Malaysia, noting that Vietnam and Cambodia had both expressed interest.

“Competition is good and so far we have not lost out due to low wages because the raw material is the same, the factories too,” Kalla said, according to the Post, but he also pointed out that many global garment and footwear companies had relocated their factories to Indonesia, Vietnam and Cambodia because wages there were lower. “They produce shoes and clothes for $15, but sell them for $100. Let’s not be played like that. Let’s also not let our workers be exploited.”

Wages in the ASEAN region range from as little as $2.74 a day in Myanmar to as much as $10.11 a day in Philippines. While the specifics of Indonesia’s proposal are expected to be outlined at the next ministers’ meeting, and beyond the fact that the rest of the region has yet to air its support, questions still remain about whether ASEAN has the capacity to implement a regional standard of this scale.