When workers took to the streets and protested for an immediate 100 per cent wage increase of up to $160 within a year, in hindsight I keep asking myself what should be the options for civil servants and university graduates who earn less than $100?
With 300,000 youth entering the job market each year, work is increasingly difficult to find, even for many university graduates, prompting some of them to take jobs with meager salaries in order to gain experience and to build skills to compete in the increasingly fierce job market.
For these people, should they also take to the streets or should they change their jobs to work at factories?
If we make such a comparison, then is the workers’ demand for $160 a luxury? Absolutely not.
However, in terms of income, factory workers are better off compared to being traditional farmers or seasonal construction workers.
Looking back at 10 or 20 years ago, it was widely accepted that the more than 400 garment factories, which employ about 600,000 workers and account for 35 per cent of the country’s GDP, have contributed significantly to the country’s economy as well as poverty reduction.
The fact is those 600,000 workers rely on their jobs to support not only themselves, but also their families in their hometowns. Generally, garment workers can earn more than $100 each month and many of them go home during festivities and the holiday season.
It is generally observed that people would not go for holidays if they don’t have extra money to bring home or cannot afford the transport fees.
On the other hand, from an employer’s point of view, if one is to run a company, doubling the wages in a single year is an unrealistic option, and it is especially true for a labour-intensive industry.
Compared to the region, it is understandable that workers demand a wage increase of 10-20 per cent each time, but 100 per cent is out of the question.
This raises the level of unpredictability of Cambodia’s investment climate, posing a serious blow to the management of the current investors and prompting potential investors to re-consider even harder before making their investment decision in Cambodia.
Being in a profession whose role is to promote investment, experience tells us that building investment confidence is something that is time-consuming and hard to earn, but it can fade away in the blink of an eye.
It is an inherent duty of every government to make their best efforts to attract foreign investment so as to boost the economy, create jobs and reduce poverty.
When Cambodia’s physical infrastructure and logistics are handicapped and the energy costs are high, foreign companies tend to look for low cost labour, which is Cambodia’s competitive advantage compared to the rest of the region, to off-set their total investment cost.
However, the demonstrations did show that the times are changing and that Cambodia is no longer a sanctuary for low-cost labour.
This should be clearly understood by every stakeholder. To balance the increasing labour cost, Cambodia has two major options, which is to improve its hard and soft infrastructure, so that companies can reduce their investment costs, and to build higher skilled labour, so that companies find it comfortable to pay higher wages.
These two options have to go hand-in-hand, but we have to be mindful that both options are not something that can be achieved in a single night.
An economy develops from non-skilled low wages to higher-skilled higher wages and Cambodia is in this transition period, so we need to be cautious and not to jump too fast before we are sure that we have better skilled labour and better infrastructure at a level of competitiveness on par with the region.
It is thus better for us to go step by step to maintain investment confidence, to ensure that this transition period goes smoothly and is acceptable to every stakeholder for the sake of, above all else, the wellbeing of the nation-wide economy.