As minimum wage negotiations continue, GMAC has asked the government to refrain from increasing the agreed-upon pay bump for garment workers by $5 because it reduces the industry’s competitiveness due to the added financial burden on employers.
Minimum wage negotiations between employers, the government and unions began on August 29 and are expected to end before September 25.
Ken Loo, secretary-general for the Garment Manufacturers Association in Cambodia, yesterday said the minimum wage continues to increase, burdening employers who must bear the costs.
Mr Loo said even though the final decision rests with the government, it should consider the burden employers have to bear.
“Next year, on top of the wage increase, if any, factories will also be required to pay quite a heavy pension fund contribution of another four percent,” he said. “We respectfully request the government not to add in another $5 as in the past. This is to reduce cost pressure and help the industry to stay afloat.”
In the past few years, it has become the norm for Prime Minister Hun Sen to add $5 after the final agreed-upon figure is reached between employers, unions and the Labour Ministry. This $5 is often thought to be shouldered by the government, but in fact is covered by employers.
Pav Sina, president of the Collective Union of Movement of Workers, yesterday said it is likely the government will listen to GMAC’s request because it has done so in the past by amending trade union laws and cutting public holidays.
“If the government accepts or agrees to GMAC’s request, I think what the government has done for workers in the past will be meaningless,” Mr Sina said. “The reason why the government always adds $5 on top of the proposed minimum wage is that the government thinks about the living standards of workers.”
“I see that employers receive a lot of support from the government, but if we look at the side of unions and workers, our requests never get solved or approved by the government, including requests regarding safe transportation and free lunch for workers,” he said.
Mann Seng Hak, vice president of the Free Trade Union, yesterday said GMAC should not have asked the government to refrain from adding the $5 increase.
“The government has already cut six public holidays, causing workers to lose $42 per year,” he noted. “GMAC should not have requested the government to not add the $5 increase. The government should not accept this request.”
The current minimum wage for workers is $182, an increase of $12 when compared to last year’s $170.
Labour Ministry spokesman Heng Sour could not be reached for comment yesterday.
According to Mr Loo, employers will soon face too many financial burdens to again shoulder the extra $5.
“So far, employers have been implementing the [work] accident insurance, which [requires employers] to pay 0.8 percent of a worker’s gross salary to the NSSF. We have to pay 2.6 percent […] for health insurance,” Mr Loo said. “The coming pension scheme, which will be starting from 2020, [will require] employers to pay another two percent – in total, employers are going to pay 5.4 percent.”
“The coming pension fund payment [at] the end of this year or early next year would be another heavy blow on the factory,” he added.
Mr Loo was referring to a draft law to expand the NSSF to provide pension funds to civil servants, and those in the private and informal sectors, including garment and textile factory workers.
“This trajectory cannot continue and we have to see much lower rates of increase over the next few years in order to remain competitive,” Mr Loo said. “Sustainable wage growth is only possible with corresponding productivity increases.”
Chan Sophal, director of the Centre for Policy Studies, yesterday said the issue of the minimum wage is dividing employers and workers.
“The government has to think and find a middle point that is good for both sides, without pressuring each side,” Mr Sophal said. “The government has to think about the economy and find a win-win solution for all. It is not only for workers and employers, but also for the economy of our country.”