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GLU Alumni Workshop in Manila, 7 - 14 August 2016
Minimum Wage in Cambodian
Garment Sector
Veasna Nuon
GLU Alumani
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Contents
1. Overview and context
2. Cambodian garment industry
3. Minimum wage developments
4. Suggestions
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Overview and context
• GDP and GDP per capita growth, but many still live in poverty
• Authoritarian government under domestic and international pressures
• Scored poorly in international rankings (govt effectiveness, corruption
index, rule of law and democracy)
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Cambodia Vietnam Bangladesh Indonesia
Govt effectiveness 25.48 52.40 21.63 54.81
Control of corruption 12.50 37.50 18.75 34.13
Rule of law 99th 64th 93th 52th
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Democracy Index in Selected Asian Garment Producing Countries, 2015
Ran
k
Sco
re
Ele
cto
ral
Pro
cess
es&
Plu
ralis
m
Fun
ctio
nin
g o
f
Gove
rnm
ent
Po
litic
al
Par
tici
pat
ion
Po
litic
al
Cult
ure
Civ
il L
iber
ties
Bangladesh 86 5.73 7.42 5.07 5.00 4.38 6.76
Cambodia 113 4.27 3.17 5.71 3.33 5.00 4.12
Indonesia 49 7.03 7.75 7.14 6.67 6.25 7.35
Vietnam 128 3.53 0.00 3.93 3.89 4.38 2.94
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Cambodian garment industry
• Significant (value, employment, number of factories, market
destinations, ILO monitoring program, benefiting from trade
agreements)
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Sector vs the total export
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Garment sector wage employment as
share of manufacturing wage employment
Source: Huynh 2015, ILO ROAP
13%
14%
17%
27%
28%
28%
40%
47%
77%
0% 20% 40% 60% 80% 100%
China 2013
Thailand 2013
Philippines 2013
Lao PDR 2010
Indonesia 2014
India 2011/12
Viet Nam 2013
Pakistan 2012/13
Cambodia 2012
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Cambodian garment industry (cont.)
• Key challenges
• Operation: (basic production, raw material import, low productivity, foreign ownership, high cost of transport, electricity, short term investment)
• Industrial relations (industrial unrest connected to wage contention, poor freedom of association with a recent adoption of new trade union law and collective bargaining and social dialogue)
• Beyond core labour standard (wage, working hour, labour contract, OSH, transport)
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Minimum and living wage
developments
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Minimum wage structure
• Institutional arrangements (tripartite body recommending the government who has
a final say on the amount)
• Use of 7 social and economic criteria
• Scope and coverage of minimum wage (only this sector)
• Occupation, skill or geographical variation (no)
• Annual adjustment
• Good enforcement but it is the common wage level due to a number of factors
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Minimum wages in the garment sector
in ASEAN countries (USD)
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Change in minimum wage -
2014 to 2016 (USD terms, per cent)
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Bonuses and benefits
Bonus and Benefits USD
1 Attendance 10
2 Seniority 2 to 11
3 Housing/transportation allowance 7
4 Meals for voluntary overtime work per day 0.50
Source: http://www.prake.org/home/salary/minimum-wages
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Minimum and living wage developments
(cont.)
• Significant increased over the past 4 years, but still among the lowest in
the region and far below sufficiency and living wage (the government
157-177 to cover basic needs and Asia Floor Wage Alliance 278.14)
• ILO monitors wage compliance but not living wage.
• No industry bargaining (no actual result yet from IFA and ACT) and
little workplace-based collective bargaining, the minimum wage is the
de facto ceiling
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Minimum and living wage developments
(cont.)
• Annual revision but setting rather than negotiation.
• Contentious and confrontational demands between workers and
government/employers (biggest casualty of workers in Jan 2014)
• The weight given to labour compliance has been less in the post US-
Cambodia agreement period
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Suggestions
• Key players, especially the EU and buyers, provides more interventions to
address workers’ issues (CLS and CLS+)
• Better wage determination mechanism and practices (genuine negotiation,
involvement of buyers, independence and unity of unions, capacity
development)
• Addressing freedom of association and factory or industry wide collective
bargaining
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