Cambodia’s disputed trade union law may spur social unrest
Global Risks Insights | 24 April 2016
Cambodia’s new trade union law fails to address familiar problems
for factory workers. While relations between the ruling party and the
opposition deteriorate, Cambodia’s labour practices remain poor with
risk of violent protests highly possible.
Following eight years of drafting, this April the Cambodian National
Assembly and the Cambodian Senate passed a controversial trade union law
to regulate some 3,400 trade unions in the country. The new legislation
has drawn a wide range of criticisms both from domestic and
international trade unionists as well as human rights groups.
The most contested issues concern clauses that exclude informal
workers and public servants from the scope of the law. Furthermore, the
law requires unions to disclose their finances to the government, and it
increases the minimum threshold of workers required for union formation
from 10 percent to 20 percent for a given factory.
Finally, workers who have been abused or mistreated at work must ask
permission from their factory owners prior to stage a protest, and they
can be arrested for disrupting production. Union leaders and human
rights activists argue the new law makes it much harder for unions to
form and more difficult for workers to strike.
The Minister of Labour, Ith Sam Heng,
defended the new trade union law, claiming it “would bring stability
and bigger investments.” The ruling Cambodia People’s Party (CPP) with
the backing of the factory owners have long blamed the trade unions for
poor relations, and condemned strikes have dented the performance of
some sectors.
For a good twenty years, Cambodia has been exhibiting high growth, especially due to the garment industry, which employs 700,000 workers
and churns out $7 bn per year. However, factory workers are often
subject to exploitative practices and harsh working conditions such as
overcrowded factories, violence at the workplace, harassment, short term
contracts, and few or no breaks. With the help of trade unions, workers
have frequently been striking for higher pay and better working
conditions.
New trade union law fails to address old problems
Nothing in the new law improve on the harsh working conditions and
abuse. Weakening the power of labour groups and restricting industrial
action is hardly a sustainable solution. It robs workers of the only
vent for frustration available to them.
The situation is even worse due to the macroeconomic environment.
Businesses are under pressure to cut costs by keeping wages low, since
the appreciation of USD (Cambodia is heavily dollarised) and rising
competitiveness in neighbouring countries such as Myanmar and Vietnam
erode profits.
However, persistent low wages coupled with widening inequality is an
accelerator for social unrest. The current wage-setting mechanism, run
by the Labour Advisory Committee (LAC), is not representative, since
many of the trade unions affiliated with the opposition party are not
part of the LAC. Therefore, strike is often the only channel for weak
trade unions to make their demands heard.
Labour relations in Cambodia are heavily politicised
While the CCP-led government is backed by garment factory owners, the
opposition Cambodia National Rescue Party (CNRP) has a large support
base of garment workers. This gave the CNRP 2.9 million votes and 55
seats in Parliament following the July 2013 general election. The trade
union law is passed at a time when political disputes between the two
sides have heated up.
Cambodia saw a brief period of political stability after the
opposition party ended a 10-month parliamentary boycott following the
ruling party’s agreement to electoral reforms, and a new election law
passed in March 2015. Political instability has risen since late 2015.
Prime Minister Hun Sen is feeling threatened by the oppositions’
significant support from the garment workers. Tolerance to dissent has
decreased, and political violence against the opposition is rising.
Two CNRP MPs were attacked
by government supporters in October, coinciding with the CNRP deputy
leader, Kem Sokha, being voted out by the ruling party as the first vice
president of the National Assembly. Later in November, a Cambodia court
issued an arrest warrant for the CNRP-leader Sam Rainsy
over a seven-year-old defamation case.
Strikes amid political conflict have turned violent previously. The new law provides the government with an extra tool to crack down on opposition affiliates with clauses that are open to politically motivated interpretation.
Business needs to be aware of potential operational and reputational risks
A more inclusive wage-setting mechanism and improving working
conditions would be a more sustainable solution for solving the issue of
frequent industrial action. Meanwhile, the possibility of strikes and
riots will remain high for the foreseeable future, and companies need to
be aware of potential operational risks.
In addition, customers are becoming more aware of the labour
situation in Cambodia as more domestic and international NGO’s are
closely monitoring it. Foreign businesses will have to take appropriate
measures to mitigate reputational risk.
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