Thousands of micro-businesses across the country are looking to cash in on salary increase to $128
With rising industry incomes on the horizon, 30-year-old Houch Ling quit her job in a garment factory in mid-2013 and opened a clothes store outside Hoyear factory along National Road 2 in Khan Meanchey district.
“When garment workers earn just a little income, they spend nearly all of it on food, rent and sending money home. But, when they get $20 to $30 more, they can save some to buy new clothes and buy more things than they could afford before,” she said.
Ling’s clothes shop is one of thousands of Cambodian micro businesses seeking to cash in on increased disposable income among Cambodia’s 600,000-strong garment work force.
Speaking this week, vendors said they had seen modest returns after this year’s wage increase from $80 to $100 per month in February. But many are hoping to cash in on the additional 28 per cent increase (to $128) set for January.
“The business is profitable, and I think it will be better when factory workers have a higher wage,” Sok Vandy, a mobile-phone dealer set up near a cluster of factories in Chom Chao district, said yesterday.
“I am thinking about other businesses like selling fake jewellery, like necklaces, bracelets, because I think that demand of these products will be higher when they [workers] get paid more,” she said.
Dr Hing Thoraxy, a secretary of state at the Council of Ministers and a senior researcher at the Cambodian Institute for Cooperation and Peace, is confident that, as salaries rise in Cambodia’s largest export industry, others will share the profit.
“The big jump in workers’ wages will create and support hundreds of small businesses around workers’ homes, and thus people who live near the factory will receive higher incomes,” he said.
The anticipated flow-on effect will spill into the provinces too, according to Thoraxy. “Once workers can send money to their parents in larger amounts, their parents can generate more capital to create other businesses,’ he said.
Not everyone shares that enthusiasm. The wage increase to $128 is a “missed opportunity” according to Dave Welsh, country director of labour rights group Solidarity Center. “There was a great
opportunity to provide garment workers with a living wage,” he said.
Welsh said that his organisation has seen evidence of “artificial” increases to worker accommodation and food prices in and around factories in anticipation of next year’s wage increase.
“I don’t think there is going to be much of an impact on other industries, unless the government and the industry get serious about substantive rent controls or rent freezes in and around the garment factories,” he said.
As local businesses attempt to cash in on the rising wages, there are concerns from the industry’s factory representative that wage pressures are deterring foreign investment. Kaing Monika, deputy
secretary general of the Garment Manufacturers Association in Cambodia (GMAC), said from January to September this year, GMAC registered a total of 78 factories, down from 108 in the same period last year.
“It’s a sign of the decline of the garment sector,” Monika said, attributing the slowdown to both the protests early this year and the wage increase.
For Moa Sophat, a 25-year-old garment worker who earns on average about $170 per month, the increase to $128 basic salary will mean both more money sent home and more to spend on herself.
“I hope I can save and send more money to my parents. Now I can send them about $30 per month, and I hope I can send them $40 to $45 after I get the new salary,” she said. “I also plan to spend
more on new clothes, make-up, and some jewellery as well,” she said.
Additional reporting by Daniel de Carteret.