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With Higher Wages Come Questions of Workers’ Productivity

Cambodian garment workers work inside a factory in Phnom Penh, file photo.

Cambodia’s garment sector is a major economic driver in the country, earning some $3 billion from exports in the first half of 2015.

With Cambodian workers demanding higher and higher wages, some labor experts say the sector’s garment workers are less competitive than in other countries.

The government recently agreed to raise the minimum monthly wage to $140, but union leaders say workers need at least $177 for a decent standard of living.

Ken Loo, secretary-general of the Garment Manufacturers Association in Cambodia, says higher wages call for higher productivity. Cambodian workers are less productive than workers in other countries, he said. “It’s very difficult for factories to survive if workers’ productivity does not increase.”

Cambodia’s garment sector is a major economic driver in the country, earning some $3 billion from exports in the first half of 2015—a 12.7 percent increase from the same period last year.

Labor leaders say Cambodian workers can be competitive with other countries, but they must be paid enough to live on.

“One worker can provide over $250 in profit a month to the employer, but the worker earns just above $100, considering that on average Cambodian workers can produce over 50 pieces of garments and footwear a day,” Ath Thorn, president of the Cambodian Labor Confederation, said.

And Cambodia has a higher cost of living than Vietnam or Myanmar, he said, so it requires a higher minimum wage.

In Myanmar, the recently raised minimum wage is $67 a month, making it potentially more competitive than Cambodia, said Thomas Rhoden, a political analyst. “One of the industries that has been hugely invested in Myanmar has been the garment industry,” he said. However, he added, it is unclear now how Myanmar’s upcoming election would affect the country’s garment industry.

Dyna Heng, a Cambodian economist based in Washington, said there is another solution. If Cambodia can improve its agricultural manufacturing, the cost of goods will lower, which will benefit workers a great deal.

“Improvement in our agricultural output should help provide cheaper and more nutritious food to our labor force, reducing the pressure for higher wages and thereby improving our competitiveness,” he said.

Ultimately, he said, government policy can improve the productivity of workers, by providing good, affordable healthcare, quality education, and skills training.