The minimum wage negotiations in Cambodia's garment industry have different opinions
On September 14, the annual minimum wage negotiations in Cambodia's textile, clothing and footwear industries were re-launched.
Since the establishment of this mechanism in 2013, the industry's minimum wage has been raised from US$61 per month to US$192 per month in 2021, a significant increase.
Since this industry is Cambodia's largest export industry, employing more than 700,000 workers, the results of the negotiations will have a demonstrative effect on other industries, so every negotiation has attracted widespread attention from the local community.
Since 2020, due to the impact of the new crown pneumonia epidemic, Cambodia's clothing and footwear industry has faced the double test of declining foreign orders and domestic isolation. Hundreds of companies have suspended operations, and some companies have closed down, affecting more than 100,000 workers.
In July 2020, the Cambodian Garment Manufacturers Association and many other chambers of commerce issued a joint statement stating that about 400 apparel and footwear companies and travel goods companies have ceased production, affecting about 150,000 workers.
Although the government and enterprises provide monthly subsidies to suspended workers, which eases the pressure on workers’ lives to a certain extent, if the economic situation does not improve, this approach will not be maintained for a long time.
Fortunately, demand in the European and American markets has gradually rebounded with the advent of the new crown vaccine. Cambodian domestic factories have also started construction after the government's vigorous prevention and control and large-scale vaccination.
Recently, due to the resurgence of the epidemic in neighboring countries, many orders have flowed to Cambodia, and some factories have even begun to consider expanding production lines.
However, according to statistics from the Cambodian Ministry of Commerce, exports in the first eight months of this year still fell by 5.3% year-on-year, and textile exports were still showing a downward trend.
The complicated situation has caused the three parties involved in the negotiation to give different salary plans.
The union asked for an increase of 22.2 US dollars, rising to 214.2 US dollars per month.
The business side proposed a salary cut of 8.6 US dollars, down to 183.4 US dollars per month.
The government proposes to slightly reduce the minimum wage from the current US$192 per month to US$191.9 per month.
At this meeting, the parties clarified their positions and did not reach an agreement.
The “Minimum Wage Law” approved by Cambodia in 2018 clarified that the minimum wage will take into account the seven factors of family status, inflation, cost of living, production efficiency, national competitiveness, labor market, and industry profitability.
According to the materials seen by the reporter, the judgments of labor and management on many factors are quite different.
For example, in terms of cost of living, management believes that there is no change, but labor believes that there is a 4% increase; in terms of production efficiency, management believes it has decreased by 0.75%, and labor believes it has increased by 2.6%; in terms of national competitiveness, management believes it has declined by 5.25 %, the labor side thinks it has risen by 1%.
All things being combined, the business side believes that wages should be lowered by 4.5%, while the labor union believes that wages should be raised by 11.6%. The gap is huge.
The chairman of the Cambodian Labor Federation, Ai Tun, said that the union’s proposal was based on changes in the cost of living and other factors.
Fasali, chairman of the National Federation of Trade Unions, said he was optimistic about this result.
He believes that although the new crown pneumonia epidemic is still ongoing, exports seem to have improved and workers are still facing huge difficulties.
Yang Supu, chairman of the Cambodian Federation of Trade Unions, said that it is impossible to determine whether the minimum wage will rise, but negotiations must be carried out.
The current wages of workers are too low to meet basic daily expenses.
Regarding the labor's demands, Aiton said: "This figure comes from our investigation results, but it is not a final decision. Depending on the situation of the debate, we may make a downward adjustment."
Lu Qijian, secretary general of the Cambodian Garment Manufacturers Association, said that except for inflation, other factors remain unchanged or declined, so the minimum wage should be lowered, and various epidemic prevention measures have also increased business costs.
He Enjia, president of the Textile Enterprises Association of the Chinese Chamber of Commerce in Cambodia, said that the blockade and quarantine measures adopted to control the epidemic resulted in a decline in exports in the first half of the year, especially exports to Europe.
Recently, due to the transfer of some orders from Vietnam and Myanmar to Cambodia, the shortage of orders in Cambodia's off-season has been alleviated.
In general, this year is slightly better than the off-season of previous years, but due to the different ability of receiving orders, the situation of each factory is also uneven.
He Enjia said that the current minimum wage in Cambodia is basically the same as that in Vietnam, Hanoi, Ho Chi Minh and other regions, and exceeds that in countries such as Myanmar and Bangladesh.
Guo Mou, who opened a printing factory in Cambodia to provide supporting services for garment factories, said that the status of the garment industry has improved this year. In addition to new orders, there are still many historical backlogs that are rushing to work. Single” situation.
But he also said that if the minimum wage is increased to $214.2 per month, it will definitely have a huge impact on the entire industry.
Chen Congqi, the chief executive of Kunzhou International, the only listed garment company in Cambodia, said that in the second quarter of this year, the company stopped production due to the closure of the city, which caused a drag on the output value of about 5%.
Companies take timely measures to improve production efficiency, increase reasonable overtime, and improve logistics efficiency. It is expected that the export value for the whole year of 2021 will be the same as last year.
Regarding the new round of minimum wage negotiations, Chen Congqi said that the company has always regarded employees as the company's most important asset. Since its establishment, the company has not laid off employees, reduced wages or took unpaid leave.
However, the Cambodian economy has been hit hard by the epidemic. He hopes that shareholders, customers and employees will overcome the difficulties together and maintain the current minimum wage level of US$192.
The minimum wage negotiations in Cambodia are jointly participated by the trade unions, enterprises and the government, and there has never been a reduction in history.
Even in 2020, when the epidemic broke out, the minimum wage has risen slightly by $2.
In addition to wages, the government also requires companies to provide small transportation and rent subsidies, as well as full attendance bonuses, seniority allowances, etc., to reflect the government's concern for workers and win public support.
The election of the township next year is imminent, and lowering wages at this time is obviously "politically incorrect" and the possibility is very low.
However, as wages have risen year after year, it has indeed affected the competitiveness of Cambodia's garment industry.
Obviously, what Cambodia wants to solve is not simply the question of not raising wages, but how to make the economic structure more balanced, export more diversified products, and how to climb up the value chain.
At the same time, the cost of living continues to rise, and it is also a reality that wages cannot significantly improve the living conditions of workers.
How to make the people have a real sense of gain in the rapid development of the country obviously requires the government to issue more supporting policies in addition to wages.
(Zhang Bao, Phnom Penh correspondent of Economic Daily News)