Prime Minister Hun Sen yesterday urged thousands of garment workers to stop demanding one-time payments of owed seniority indemnity because their strike and protest actions are against the law and could lead to more factories closing.
Last week, thousands of garment factory workers in the province of Kandal and in Phnom Penh went on strike demanding their benefits as stipulated in the Labour Law, including healthcare, seniority indemnity and severance.
The companies issued an ultimatum for some of the workers to return to work or face dismissal, leading to the sacking of more than 1,000 workers at the W&D Garment factory who were demanding a one-time payment for their seniority indemnity dating back to the beginning of each workers’ employment.
The strikes came after the government last year amended the Labour Law to force garment factories to pay out workers a seniority indemnity once every six months as a safety net in the wake of dozens of factories closing without compensating workers.
The amended law only took affect at the beginning of this year, but factories are still obliged to pay workers their seniority indemnity for all previous years logged with their employer.
However, the government has told factory owners that they can disperse the back-pay in instalments.
“I want to appeal to all workers who are demanding their seniority indemnity to stay calm and understand the issue,” Mr Hun Sen said yesterday while addressing thousands of garment workers in Takeo province. “If factories spend all for all benefits all at once, these factories will go bankrupt. You will lose your jobs. Please, everyone consider this.”
“I can say that two thirds, or roughly 800 factories out of 1,159 will close because they won’t be able to allocate a budget efficiently,” he added. “So if you all demand these companies to disburse the benefits all at once, then these factories will close. You will all get the money, but after that you won’t have jobs because the factories will be bankrupt.”
Mr Hun Sen assured workers that the government has their interest in mind and reminded them that it spent about $22 million last year to compensate workers whose employers absconded.
“Please everyone, be understanding about this issue because factories will close,” Mr Hun Sen said. “Your money will not go away, you will have it once every six months.”
Mr Hun Sen noted that unions must do their part to ensure workers understand the amendment rather than inciting them to wrongly strike and protest.
Labour Ministry spokesman Heng Sour yesterday said that according to the old Labour Law adopted in 1997, only permanent workers were entitled to receive seniority benefits.
Mr Sour said the government amended the Labour Law’s Article 89 on seniority indemnity in order to protect the rights of garment and footwear factory workers.
Any benefits owed before 2019 must still be paid. However, due to financial constraints, companies are allowed to pay in instalments with payments in June and December each year.
“All garment workers and textile workers, please avoid being cheated or incited by some bad people,” Mr Sour said. “They’ll have you believe that employers are able to pay all your owed benefits all at once. The demand for this is illegal because this scheme is not mentioned in the Labour Laws.”
Kaing Monika, deputy secretary-general of Garment Manufacturers Association in Cambodia, yesterday said that he agrees with Mr Hun Sen’s assessment.
“Factories cannot clear pre 2019 seniority payments, increase the minimum wage by seven percent and set up pension funds of about six to eight percent of workers’ gross salary all at once,” Mr Monika said.In a letter issued by GMAC yesterday, it said that unions and activists could be to blame, noting that all sides need to work harmoniously in order to achieve economic growth.
“GMAC strongly hopes that this very important and invaluable explanation will make our workers/employees understand clearly about the financial condition of factories,” the letter said. “Please understand that there will soon be newly implemented laws in order to suppress incitement by crafty unions and activists.”
“GMAC supports the government and will continue our strong cooperation in the investment sector, aimed at ensuring national economic growth and the promotion of the well-being of the Cambodian people,” the letter added.
Ath Thorn, president of the Cambodian Labour Confederation, yesterday said that he predicted this outcome during Labour Law negotiations last year, when workers were demanding for all back-pay to be distributed at once.
Mr Thorn said the W&D Garment factory workers were sacked precisely over this issue, noting that their representatives visited him yesterday morning to seek his advice.
“I am concerned that some smaller factories do not have the ability to pay their workers, but it is no problem for big factories because they have resources,” Mr Thorn said.