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As Phnom Penh's skyline rises, so do wages

Regular construction workers usually earn a little less than $6 a day
Regular construction workers usually earn a little less than $6 a day. Hong Menea

As Phnom Penh's skyline rises, so do wages

Cambodia’s booming construction industry is putting more money into labourers’ pockets, despite the lack of union involvement. However, safety standards remain a big issue

Much like salaries in Cambodia’s garment sector, wages in the Kingdom’s exploding construction industry have rocketed at a similar rate in recent years.

But while it may be tempting to draw parallels, the factors behind rising wages in the two industries are different. With booming demand driving wage growth, Cambodian construction workers are increasingly finding themselves the beneficiaries of a robust real estate market, despite having much less union involvement than the textiles industry.

The Kingdom’s construction sector has become a critical pillar of the Cambodian economy, accounting for 8 per cent of Cambodia’s GDP last year, according to government data. That’s almost as much as garments, which took up a 10 per cent slice of the pie.

Jan Hansen, senior country economist for the Asian Development Bank, said the construction boom was being driven by optimism in the Cambodian economy, strong foreign direct investment and growing credit for construction projects.

Tighter banking supervision was required to avoid a bubble, Hansen added, but, for the time being, if other parts of the economy remained stable, so too would construction.

“If it is driven by other sectors of the economy, rather than driving the economy, it will remain sustainable.”

The government approved $2.5 billion worth of projects in 2014.

Meanwhile, imports of construction equipment increased a colossal 132 per cent year-on-year from October 2013 to 2014, according to ANZ Bank’s Quarterly Mekong Outlook.

Cambodia’s construction boom is pushing up wages.
Cambodia’s construction boom is pushing up wages. Hong Menea

Wages too have increased, thanks to the strong demand, leading ANZ to label the industry as “the best paymaster in Cambodia”.

According to Thierry Loustau, managing director of construction group LBL, construction has always stayed one step ahead of other industries in its wages.

“The garment sector fixes the benchmark somewhat. In construction, we have always been above that [wage level]. But when wages increase in textiles, naturally they increase in construction,” he said.

Loustau, whose group was started in 1992 and has completed more than 250 projects since, said the fact that the construction industry was relatively better-paid than others was due to the difficult nature of the work, although recent competition has upped the ante.

“They’re better paid than in the factories because of the strenuousness of the work – make the slightest effort for 15 minutes outside and you’ll realise it’s a very difficult job,” he said.

As the number of projects has swollen from 1,694 in 2012 to 1,960 last year, so too has the competition for workers.

“[There is also] a rarity of workers because of all the construction projects, so naturally wages are increasing.”

According to the ANZ report, the market for skilled construction workers is especially tight, leading to a 30 per cent jump in wages from August 2013 to August 2014.

Currently, on average, skilled workers can expect around $8 per day, while regular workers make slightly less than $6, the report says.

For 35-year-old electrician Veasna Phon, who is paid a fixed rate to install wiring in the seemingly endless rows of unfinished concrete homes at Chbar Ampov’s Borey Peng Huoth residential development, better pay offers a chance to set up his own business.

“I don’t get a salary, but on the highest months I make $300 to $400,” he said.

“With the money, I will open my own electrical supplies shop.”

Unlike the garment sector, there are no minimum wage negotiations in the building industry and there are very few labour disputes, which may account for a level of stability in construction when comparing the two industries.

But there is also a relatively low level of unionisation in construction, which raises fears for the safety of labourers in such a dangerous working environment.

And the lack of safety standards is starting to impact on some workers’ employment decisions.

“I will quit in one month. It’s so difficult and the work is tiring,” said construction worker Da, standing in front of the dusty construction site for The Bridge, a luxury condominium project by the Bassac river.

The vast majority of the more than 160,000 Cambodians who work in the construction sector are unskilled day labourers, many of whom come in from the provinces temporarily to work on construction sites.

The Building and Wood Workers Trade Union Federation of Cambodia (BWTUC) is the largest construction-sector union, with about 3,000 “stable” members.

BWTUC treasurer Me Chhlonhh said the union was working with other labour organisations to demand a base salary and safety requirements, which are often lacking in the sprawling, ill-regulated sector.

“Because we see that the garment sector can do it, we have a pattern already,” he said.

“In reality, there are many contractors in construction sites, but no one takes responsibility when a lethal accident happens to workers.”

For now, the government predicts the sector’s expansion to continue, at an average of 10 per cent per annum over the next four years.

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