Is Cambodia Headed For Another Wage War?
Forbes | 10 November 2914
Tensions
are rising in the Cambodian capital as negotiations between garment
workers and their employers and the government for a wage hike remain
unresolved even as the Wednesday deadline to set the final wage rate
looms.
Cambodian garment sectors earn a monthly minimum wage of $100–an
amount that was agreed upon after labor disputes rocked the country at
the start of the year in which five people were killed and 38 injured an
a military crackdown. (I detailed some of that violence in a story for Forbes Asia in September.)
“I hold the industry and government completely responsible
for this current state of affairs,” says David Welsh, program director
for Cambodia at the Solidarity Center, a D.C.-based non profit
international workers rights organization. “There has never been a
better opportunity to move forward, particularly given brand involvement
thus far, on the wage issue. Moreover, the unions made significant
concessions.”
Ken Loo, a spokesman for the manufacturers association,
did not respond to an emailed query seeking the views of the industry
body on this issue.
Cambodia, where half the population of 15 million is under the age of 25, is one of Asia’s
poorest countries. It has been averaging a growth rate near 7% since
2010, driven by the garment sector, as well as construction, agriculture
and tourism.
Garment work employs 400,000 people. Last year
it led to export of $5 billion in goods, accounting for nearly a third
of GDP, says U.K.-based risk analysis firm Maplecroft. Companies from
Korea and Greater China own many of the factories. While this has helped
pull hundreds of thousands out of abject poverty, the sector has some
of the lowest industrial wages in the region (China’s have risen far
ahead) and working conditions that aren’t much better.
The wage dispute goes back to last year when a
government-appointed committee did an analysis and announced that a
minimum living wage should be between $167 to $177 a month. (At the
time, it was $80 a month in the garment industry–the only sector in
Cambodia that has a minimum wage.) Based on that report, labor unions
set their stance at $160 as an acceptable minimum wage, an amount that
was rejected by the manufacturers association, their employers. Violence ensued starting Christmas eve when the army cracked down on the protesting workers.
A figure of $100 was agreed upon with the condition that there would be
annual reviews of it, to keep up with inflation and to meet the
$167-$177 range suggested by the government committee.
Those reviews started a few weeks ago and from
$177 the labor unions agreed to come down to $140. To make it easier
for the manufacturers to swallow that pill, the unions offered that the
$140 can include extras like transportation costs, that are usually paid
separately. For the workers it was important to have a high minimum
wage because that is their main income, and any overtime is calculated
on that base.
Even the brands that source the garments from
these manufacturers are on board with a wage hike. In a letter to Keat
Chhon, the deputy prime minister, and the manufacturers association,
several European garment companies including H&M and Inditex (which makes clothes under the brands of Zara
and Massimo Dutti), amongst others, said, “workers in all production
countries have the right to a fair living wage…. As responsible Business’
our purchasing practices will enable the payment of a fair living wage
and increased wages will reflect in our FOB prices.” The American
companies apparently made similar assurances verbally.
(FOB or Free on Board refers to the price quoted
by an exporter manufacturer and includes all charges up to placing the
goods on board a ship at the port of departure.) In other words, the
brands sourcing from these companies were willing to absorb some of the
costs of increasing minimum wage.
Neither the government nor the manufacturers, however, have so far agreed.
A vote to set the wage rate where all involved
are invited to cast their ballot–including the manufacturers
association and the labor unions–was deferred to Wednesday from
today. The government-affiliated unions are expected to abstain from the
vote while the two main independent unions have said they will boycott
the procedure, says Welsh.
“What will threaten the industry and cause brands to pull
out is if theres repeat of last year and there are all indications that
we are heading that way because they have handled it as badly as
possible,” says Welsh.
Wednesday isn’t too far off.
