Plan will require employers to pay 0.8 percent payroll tax to fund accidental injury and death benefits for their workers
Workers do some heavy lifting. Under a new Ministry of Labour plan, all companies with more than eight employees will be required to pay accidental injury and death benefits.
An accidental death and disability fund would have to be set up by employers for the benefit of their workers under a Ministry of Labour plan announced last week.
The National Social Security Fund would require companies with eight or more employees to pay monthly insurance premiums of 0.8 percent of their payroll. Managers would be required to send injured workers to hospital, with medical bills to be covered by the fund.
Beyond incapacity benefits to workers, the fund's coverage would extend to survival benefits to families of workers who sustain lethal injuries at the workplace. Survival benefits would be paid to wives until they remarry and children until the age of 21, a statement from the ministry said.
The program would take effect in September and has been in the works since 2005 when the ILO drafted a report recommending a legal framework for the plan.
Unions and factories agreed that the plan would benefit workers but manufacturers complain the plan would increase costs in already difficult times.
The new measure would most affect the garment sector, the Kingdom's leading employer, with an estimated 360,000 workers in 400 factories.
"The [premium] of 0.8 percent is quite high if you compare it with the previous rates we had with private insurance companies of 0.4 percent or 0.5 percent," said Kaing Monika, external affairs manager for the Garment Manufacturers Association of Cambodia (GMAC). "But the coverage is more comprehensive, which is good for workers. As long as the rate is affordable to the industry, GMAC is not against it, but it is being implemented at a tough time for the garment industry and it's another cost for us."
The country's garment sector has seen growth of only five percent this year, down from about 20 percent last year, with increased competition from China and Vietnam, a slowed US economy and higher energy costs.
Free Trade Union President Chea Mony said the failure of past workplace compensation plans made him suspicious of the new social security scheme.
"In the past, workers with workplace accidents haven't received any benefits even though it was required by the law. The factories would say they already pay insurance to the ministry and don't want to pay again," Chea Mony said.
He also said the lack of labour involvement in drafting the plan was cause for concern.
"We are having some difficulty understanding the particulars of the plan since the ministry hasn't been transparent with us," he said.
Alonzo G Suson, country program director of the American Center for International Labour Solidarity, echoed Chea Mony's concern, saying that, while the concept of the fund was sound, hidden pitfalls could emerge in its methods, supporting infrastructure and opportunities for corruption.
Hiroshi Yamabana, a social security specialist at the ILO's East Asia regional office in Bangkok who was involved in drafting the bill, said the social security fund would be "up to international standards" and was "comparable" to or even "somewhat better" than compensation funds offered in other countries in the region.
"It's the right time for Cambodia to start to protecting workers in a systematic manner, not relying on malfunctioning direct compensation or on the ‘tender mercies' of employers," he said.
However, he recognised union concerns over management of the fund.
Compensation for workplace injuries would be the first step in a three-part employee welfare program that would include medical insurance by 2010 and retirement pensions by 2012, according to Sandra D'Amico, a member of the tripartite committee to oversee the fund.
"Medical insurance is going to be a big challenge because we will need to deduct it from employees, too," she added.