The price of food spiked this month, and Cambodia’s low-paid garment workers are feeling the effects.
Meat, vegetables, toothbrushes, beauty accessories and even the plastic bags they get packed in have all seen a sharp bump up in price this month, some items by as much as 30 per cent, workers and traders said yesterday.
The Post reported last week that reforms to stamp out corruption in the customs department have led to an increase in the cost of imported goods. Customs officials who would often undercut tax rates on imports are now applying the official rate, meaning import costs have suddenly increased, leaving consumers to foot the bill.
With a base minimum wage of $75 a month, a garment worker’s budget is sensitive to even the slightest inflationary pressure.
“In the past, I have sent some money home [to my family], but now the price of goods is going up, so maybe I cannot afford to do it,” Lok Tho, a garment worker at M&V International Manufacturing in Phnom Penh’s Meanchey district, said.
Even with overtime, Tho said she earns little more than $100 per month. After rent and living expenses, money for food is tight. Tho said she is struggling to afford baby formula – the price of which she said has also gone up this month.
Another worker, Kim Rina, at the nearby Hoyear Cambodia garment factory, said she was paying between 10 and 30 per cent more this month for oil, sugar and salt.
“They [garment workers] are the most poorly paid workers in the world, and they are incredibly vulnerable to inflation,” Dave Welsh, country director for labour rights group Solidarity Center/ACILS, said.
Because of the nature of the sector – in which many migrate from rural provinces to factories in search of employment – workers are tied to the traders and landlords operating nearby, according to Welsh. Any rise in real wages is usually matched by an equivalent increase in food and rent.
Sudden increases, like tax hikes, are also inevitably passed on to workers, he said.
Welsh added that it is not just a pay increase needed to lift livelihoods, but that factories should also provide workers with three meals per day.
The Ministry of Planning’s National Institute of Statistics said yesterday that recent figures on inflation were not yet available. But the many vendors at nearby factories said they were forced to raise their prices after import costs rose at the beginning of the month.
Ek Narat sells vegetables down a narrow lane by Hoyear’s factory. Carrots and cauliflower are just some of the products she gets from Vietnam, all of which she says have increased on average by about 15 per cent.
“All imported goods that now have a higher price are difficult to sell,” Narat said.
Compounding the problem, she added, was that local supplies cut short by severe flooding this year had raised the price of Cambodian products.
A neighbouring vendor told the Post that fish from Vietnam had increased by 10 per cent, while a vendor selling basic goods like toothbrushes and hair accessories from Vietnam and China said everything had increased after the government reforms – some items by as much as 20 per cent.
About $6.8 billion was spent on imports in the first nine months of this year, an increase of 13 per cent from $6 billion in the same period last year, according to data from the Ministry of Commerce.
With local production capacity still quite low, Cambodia relies heavily on imports for basic goods.
Unless substitute products are found, “the increased prices are here to stay”, Kang Chandararot, director of the Cambodia Institute of Development Study, said.
Chandarot cautioned, however, that although the price increase had affected some products, any adjustment in garment wages to supplement this should be assessed against inflation measured across all products produced to meet basic needs.
At the National Bank of Cambodia, director general Chea Serey was confident yesterday that the effect of customs reforms on inflation “would be minimal”.
While food prices were the main indicator for inflation, the largest contributor was rice, which is locally produced and unlikely to be affected, she said.
Serey also pointed to the domestic price of oil, which she said so far had remained unaffected by the reforms.
Mey Kalyan, a senior adviser on the Supreme National Economic Council, said the balance between increasing tax revenue and price increases “is a trade-off that needs to be looked at on both sides”.
Kalyan could only comment “in principle” as he did not have all the details, but said that in the national interest, increasing tax revenue was critical for the government’s social spending. He added, however, that a review may be required if “excessive” taxation led to inflationary pressure.
On the factory floor, rising food costs is just one of many concerns linked to a call for higher pay.
Unions gathered in Phnom Penh yesterday demanding the minimum wage be increased to $154 a month.
Ath Thorn, president of the of Cambodian Apparel Workers’ Democratic Union, said workers were forced to put in overtime to pay for food and better living conditions.
“We are concerned with the workers’ health – that’s why we demand a rise to the minimum wage,” he said, calling for a week-long garment worker strike in December.
ADDITIONAL REPORTING BY MOM KUNTHEAR