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US blamed for low wages

Cham Prasidh.
Cham Prasidh, then Minister of Commerce, speaks with the Post in 2008. Heng Chivoan

US blamed for low wages

The minimum wage issue took centre stage in the National Assembly yesterday, with the government arguing that if the US cut “unjust” import duties for Cambodian garments, factories could afford to pay the $177 wage demanded by unions and the opposition.

During a debate on a draft law on the control of factories and handicrafts – passed unanimously by both parties – Minister of Industry and Handicraft Cham Prasidh laid out the government’s position on the contentious wage question.

Although Prime Minister Hun Sen “wants so much” to increase workers’ salaries, even beyond $177, it is impossible because “all the factories will run away”, Prasidh told the assembly.

“If we demand too much, our rice pot will turn upside down and we will not have rice to eat,” he said, proposing that his ruling Cambodian People’s Party work together with the opposition Cambodia National Rescue Party to find a solution that keeps factories alive.

Cambodia exported about $5 billion worth of garments worldwide last year, Prasidh said, but paid $500 million in import duties to the United States alone, the destination for about half of those garments.

Given the figures, the minister claimed that a relaxation of the US’ tough tax regime on garment imports would free up plenty of cash to pay workers more.

According to Prasidh, France and Britain exported some $30 billion and $40 billion worth of goods to the US last year, respectively, but paid a similar dollar amount on duties as Cambodia, a developing country.

“It is so unjust for us. It means that these days we help America with $500 million every year,” he said, adding that the government should lobby Washington on the issue.

The European Union, in comparison, levies no taxes on Cambodian imports under its “Everything But Arms” trade scheme for least-developed nations.

Speaking to the assembly after Prasidh, CNRP leader Sam Rainsy again made the argument that the elimination of corruption would easily allow the government to bump up the minimum wage to $177.

“We must ask ourselves, if we want our country to be developed, who should it be developed for? For the factories or for the people?” he said.

“If we reduce under-the-table payments or clear out unofficial payments altogether, I believe that [we] will benefit – benefit for the nation and benefit for the workers.”

CNRP president Sam Rainsy talks to protesting garment workers in Svay Rieng province in December.
CNRP president Sam Rainsy talks to protesting garment workers in Svay Rieng province in December. PHOTO SUPPLIED

According to Rainsy, the prices of essential goods, public services and utilities like electricity are also much higher in Cambodia than in neighbouring Thailand or Vietnam, meaning workers require a higher basic wage to lead normal lives.

Ken Loo, secretary-general of the Garment Manufacturers Association in Cambodia (GMAC), said that the US was the only developed nation not to give Cambodia preferential duty access on garment imports.

Cambodia paid about a 16 per cent tariff on roughly $2.5 billion worth of garment exports to the US last year, he said.

“Of course, it depends on what goods are exported, [but] what the UK and France are paying as a percentage on the value of their exports is about 1 per cent.”

If duties were reduced, Loo agreed that it would “most likely be the case” that workers could be paid significantly more.

However, he disputed Rainsy’s claim that if factories entirely stopped paying bribes, they would be able to afford $177.

“They obviously haven’t done their homework and crunched their numbers. What he claims is not true,” Loo said.

He added that although Cambodians did indeed face higher costs than Thailand and Vietnam, this argument would apply to the costs of factory owners, too.

Pav Sina, president of the Collective Union of Movement of Workers, said that while he was pleased the wage was being debated in parliament, he did not believe the ruling party would acquiesce.

“If the wage was increased to $177, it would make the CNRP more popular [because they lobbied for it],” he said.

“But both parties should seek a solution that increases salaries to an appropriate level for workers.”

The Labour Advisory Committee – made up of employers, the government and unions – hopes to set a new wage on October 10.

ADDITIONAL REPORTING BY KEVIN PONNIAH

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