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Cambodia Raises Monthly Minimum Wage to $140

Garment workers rest inside a factory after their lunch time in Phnom Penh, Oct. 8, 2015. Cambodia agreed on Thursday to raise the minimum wage for workers in its crucial textiles and footwear sector to $140 per month from next year.

The Cambodian government said Thursday that the minimum wage for the country’s garment sector – its key export earner and largest industrial employer – will rise to $140 a month.

The increase of nearly 10 percent was more than manufacturers wanted but far less than unions were seeking.

Thursday’s announcement by the Ministry of Labor that the minimum wage will rise to $140 a month for the garment sector’s 700,000 workers will come into effect in January.

The hike in the wage from the previous figure of $128 follows weeks of tough negotiations between the government, manufacturers and unions.

Manufacturers group

The Garment Manufacturers' Association in Cambodia, or GMAC, which represents about 600 factories that export garments and shoes, said the group accepts the increase despite lobbying for a lower figure.

“As entities or corporations operating within this environment we have to abide by the decision of the government," GMAC secretary-general Ken Loo said. "However, we would like to warn or raise to the attention of all stakeholders if we do not have corresponding increase in productivity and efficiency.

"And if the buyers continue to pay lip-service or continue to be hypocritical about actually raising their prices that they are paying to the factories here, then we will see more factory closures, we will see less new factories or new investors coming to Cambodia, and this is a fact," Loo said.

Media reports indicate that most unions, including those aligned with the government, have signed up to the new deal. At least two unions, however, have not.

Ath Thorn heads one of those two, the Cambodian Labor Confederation, which claims 70,000 members. He said his union will continue to push for $160, and will consult its members in the coming weeks to hear their views before deciding whether to strike.

The final decision on the increase to the minimum wage lay with the government.

Prime minister bump

After settling on a figure of $135, Cambodia’s Prime Minister Hun Sen ordered another $5 a month be added to that, bringing the total to $140.

The prime minister's increase was little surprise – he did the same thing last year, an indication of how politically sensitive the minimum wage issue is.

For its part the ruling party is caught between satisfying Cambodia’s electorate of 10 million, of which the garment sector workers are a significant part, and keeping investors happy.

Hun Sen’s party came close to losing the 2013 general election and, with the next general election scheduled for 2018, knows it must boost its image among garment workers, most of whom are young women whose wages support families living in rural areas, and who traditionally support the opposition.

Key industry

The garment manufacturing industry is central to Cambodia’s economy, and is not only the largest employer but also the key foreign exchange earner, worth more than $5 billion in annual exports, mainly to the United States and the European Union.

Dozens of well-known Western brands source from Cambodia.

The sector relies on household names such as H&M, Adidas, Gap and Armani, but its image has suffered in recent years with labor disputes and the bullying of independent unions. That culminated in early 2014 when Cambodian authorities shot dead at least five workers during unrest over the minimum wage and working conditions.