About 400,000 garment and footwear makers will get a US$5 a month raise starting in January, and the factories that employ them will receive a two-year tax holiday, Prime Minister Hun Sen said yesterday.

The $5 raise, from $61 to $66 a month, is intended to help the workers remain healthy, Hun Sen told a public and private sector forum yesterday. The move followed negotiations between Labour Minister Vong Sauth and employers in which the minister pushed for a raise for the workers to ensure they could maintain their health, he said. Factory owners said they would do this if the government delayed the introduction of a 1 per cent tax on their profits from 2013 to 2015, Hun Sen said.

“I agreed with this solution. It will benefit workers,” he said.

Van Sou Ieng, chairman of the Garment Manufacturers Association of Cambodia, said the move would cost factory owners. “The employers will face a loss of income due to the additional $5 a month for each worker. The government wants the employers to help the worker by providing more money, and employers willingly helped because our workers do not strike but respect the law,” he said.

Hun Sen said he had already instructed Minister of Finance and Economy Keat Chhon to inform all factories that the government would delay the 1 per cent tax until 2015 and that they must also pay $5 a month more to their employees starting next year.

Free Trade Union president Chea Mony said “the money for health services in an exchange for the suspension of the tax helped workers only a little, but provided a huge advantage for the government”. Still, he added, “it’s better than nothing”.

Nearly 400,000 workers could receive an additional $5 more a month for health services if their companies adhered to the law, he said. He does not believe all companies will raise the salaries of their workers, he said, adding that “factories in Cambodia always break the law”.

Representatives of the International Labour Organisation, which monitors all garment firms that export from Cambodia through its Better Factories program, welcomed the move. “This is good news for workers,” said Bun Ying a spokesperson for Better Factories Cambodia.

ILO advocacy officer Maeve Galvin said it was also “good news for Cambodia”. “The garment workers are sustaining up to 1.7 million Cambodians,” she explained, referring to their families. The workers, primarily women from rural areas, often skip meals and work overtime to support their families in villages, union representatives said. “This is a new industry for Cambodia, and there’s lots more to do, but this is a step in the right direction,” Galvin said.