Logo of Phnom Penh Post newspaper Phnom Penh Post - Minimum wage talks kick off Aug 15

Minimum wage talks kick off Aug 15

Content image - Phnom Penh Post
Garment workers ride home along National Road 5 after clocking out of work, in the capital’s Russey Keo district in May 2021. Hong Menea

Minimum wage talks kick off Aug 15

The Ministry of Labour and Vocational Training will convene a tripartite meeting on August 15 to negotiate a 2023 minimum wage in the garment sector. The meeting will be attended by workers’ representatives from trade unions and factory owner representatives.

In a notice, the ministry said the meeting of the National Council on Minimum Wage (NCMW) will be convened at the ministry in the presence of Ith Samheng, labour minister and head of the NCMW.

“The meeting will involve the presentation of updated figures of formal data and reputable academic research on social criteria – such as household status, inflation rates and the cost of living – and economic criteria, including productivity, competitiveness of the country, the labour market situation and sectoral profitability,” the notice said.

“As we do every year according to the law, the government must establish a forum where factory owners’ representatives and workers’ representatives can meet and exchange requests and necessities. We will do our best to act as a facilitators in these negotiations,” said labour ministry spokesman Heng Sour.

No hints were available for what the potential final wage would be. In 2021, employers’ parties set a figure of $183.4, while unions argued for $214.2 a month.

Cambodian Labour Confederation president Ath Thorn said that workers’ representatives from major trade unions had met on August 4 to negotiate a 2023 minimum wage.

“We are collecting figures from stakeholders such as ministries and international institutions. We have received some preliminary figures, but we cannot release them yet because some documents lack verification. When we have arrived at a final figure, we will release it,” he said.

He added that he expected the 2023 minimum wage to increase due to three main factors –a high cost of living, strong performances from the textile and garment sectors, as well as the fact that it be introduced in an election year, and the public will support any politician who backs an increase.

Speaking to The Post, Kaing Monika, deputy secretary-general of Garment Manufacturers Association in Cambodia, the apex trade body for the industry, acknowledged the difficult situation facing the Kingdom’s workers and the delicate balance between supporting their living conditions and improving the industry’s competitiveness.

Monika commented that while the sector experienced robust export performance in the first half of the year, the unstable global environment and economic downturn in Western countries that constitute some of the biggest buyers of Cambodian garments translate to “serious concern over the export situation for the second half”.

He cautioned that while increases in export value are generally positive, these figures can be misleading and don’t account for the net incomes of the businesses involved, after all costs are deducted.

“Statistically, the sector profit margin is running very low reflecting from the ratio of value added versus wage plus other labour-related costs,” Monika said.

For example, only 39 per cent of companies in Cambodia made a profit last year, 43 per cent lost money, while 18 merely broke even, he said citing a study by the Japan External Trade Organisation (JETRO).

For reference, last year, the NCMW initially voted to keep the 2022 minimum wage for these sectors unchanged from the 2021 figure, $192, until Prime Minister Hun Sen stepped in to add $2 to the total, making it $194 per month.

The council took a vote on three competing minimum wages proposed for 2022. The workers’ representatives requested $204, employers and industry representatives offered $188 and the compromise figure of $192 was offered.

The votes tallied up to 45 in favour of the $192 wage, six for the $204 figure and no votes cast at all for the employers’ proposal that the minimum pay be lowered to $188.

In an announcement issued after the vote, the ministry said Hun Sen was adding another $2 to the $192 figure, an idea which the council overwhelmingly voted in favour of.

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