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Wage Negotiations for Garment Workers Falter

Worker unions and garment factory managers have failed repeatedly since the beginning of the year to reach an agreement over an increase in salaries, leading to worries of more strikes in an industry hit hard by the financial crisis.

Workers say they need more than the $50 minimum wage agreed on in 2006 to meet rising costs of living. Managers say they are not in a position to increase salaries at a time when the sector needs to be competitive.

The textile industry is Cambodia’s largest, with some 300 companies providing jobs for an estimated 300,000 workers.

Workers say they need at least $70 to $90 a month to sustain a minimum standard of living.

“It is not possible to increase it that much, since this is still a hard time,” Van Sou Ieng, president of the Garment Manufacturers Association of Cambodia, told VOA Khmer.

Investors worry such increases will harm their businesses when orders have only now begun to recover from a drastic slide in the 2008 crisis. The industry has rebounded to an export value of $603 million in the first quarter of the year, up from $562 million from the same period a year earlier.

And not all unions agree on what would be the best salary.

A minimum that is too high could hurt small factories, which could put some people out of work, said Chuon Mom Thol, president of the Cambodia Worker Federation.

“Then at least half of our workers will be laid off,” he said.

However, economists say there is room for a wage increase, despite the economic downturn, especially because the scale of profits here is much wider than in places like Vietnam and China.

This “allows investors to increase the wage for workers without making them lose or increase production costs,” said Kang Chandararoth, president of the Cambodia Institute for Development Study.

He dismissed concerns that investors could turn to countries like Vietnam and Bangladesh, because most companies want to diversify into several countries to hedge against disasters or upsets.

“Even if there were to be reasonable wage increases, I think Cambodia could continue to be competitive,” said Tuomo Poutiainen, chief technical adviser for the International Labor Organization’s Better Factories program. “What continues to be good about Cambodia is the fact that there is an abundant labor force, the wage level continues to be relatively reasonable, and there are still other competitive advantages, such as physical allowances that allow investors to continue to gain profits.”

A wage decision could be made at the end of the year, based on inflation, worker welfare and competitiveness, he said.

Meanwhile, the nation’s largest union, the Free Trade Union, is calling for a three day strike starting from July 13 in a bid to build pressure for a wage increase.

Government labor officials were not immediately available for comment, but Labor Minister Vong Soth has in the past urged patience among unions.