Garment Factory Owners Say ‘No’ to Wage Hike

James Reddick and Igor Kossov / Khmer Times No Comments Share:

PHNOM PENH (Khmer Times) – One month before negotiations begin over a proposed minimum wage hike for garment sector workers, factory owners have signaled their opposition to a salary raise. 

The Garment Manufacturers Association of Cambodia (GMAC), which represents the country’s apparel factories, surveyed its members’ appetite for an increase and found that 62 percent of owners are opposed to any hike whatsoever. 26 percent of owners would approve a minimum wage hike of less than $5. 

While not an official vote, the survey is an indication of the gulf separating the garment unions and factories leading up to negotiations. The unions have previously called for a $177 monthly wage, a nearly 40 percent increase on the current $128 per month. 

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“The situation here is very terrible,” said Raymond Tam, a GMAC member. “That’s why the companies said they have no budget for an increase.” 

GMAC maintains that higher wages would hurt the sector’s competitiveness with neighboring countries by increasing the cost of their goods. A recent International Labor Organization report countered that suggestion. They found that successive wage hikes in the last year and a half–from $80 to the current $128–have been followed by booming business in garment and footwear factories. 

Total exports grew by nearly 10 percent last year, and the first quarter of this year showed the same trend. Rather than leading to factory closures, as the GMAC predicted, there were 98 more operating factories at the end of 2014 than the year before. 

Ken Loo, the GMAC’s Secretary General, says that it’s premature to conclude that everything is fine just because of solid investment to start the year.

“GMAC always says they don’t have the ability to raise the minimum wage,” said Say Sokny, secretary general of the Free Trade Union, which represents more than 100,000 workers.  “For more than a decade or two decades, they always say ‘business isn’t good’.”

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Several brands including H&M, Adidas and Levis expressed support for higher wages.

“We want suppliers to pay their textile workers a fair living wage, and we are prepared to pay the prices to the supplier to do so,” said Anna Eriksson, a spokeswoman for H&M.

These pledges aside, GMAC’s Mr. Loo is doubtful that buyers will shoulder higher costs without seeing an increase in productivity, which he says is low compared to neighbors.

Richard Vuylsteke, president of the American Chamber of Commerce in Hong Kong, recently came to Cambodia with a delegation of apparel companies. He said that, when it comes to increasing wages, consistency for buyers–rather than what he called “dartboard raise patterns”– is the key. “Predictability is one of the most important things,” he said.

The garment and footwear industry is currently the only sector in Cambodia with a minimum wage. Ministry of Labor spokesman Heng Sour says once the minimum wage debate in the garment sector is resolved, the government may take a look at wage controls in other industries, but it doesn’t currently have plans to do so.  

From 1998 until the mid-2000s, the minimum wage for garment workers stayed at $45, before rising inflation triggered calls for a hike. Since 2011, inflation rates have slowed. The government of Cambodia has not published official cost of living estimates but the ILO report finds that garment workers’ purchasing power has increased by more than one third since 2010.
(Additional reporting by Srey Kumneth)

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