After New Wage, Dissent Over Take Home Pay

Following months of fraught negotiations that led to the Labor Ministry setting the minimum wage in the garment sector at $128 last week, debate has begun over just how much garment workers will have in their pockets at the end of each month as a result of the increase.

The minimum wage for workers in the country’s crucial garment sector will rise 28 percent from $100 per month on January 1 next year, but estimates of the average take-home pay—taking into account overtime and allowances—vary widely.

In recent days, the Garment Manufacturers Association in Cambodia (GMAC), which represents the country’s 500 exporting factories, has gone on the offensive against the wage hike, placing newspaper advertisements and statements on social media setting out what it says will be the true take-home wage of garment workers.

GMAC claims that on average, workers will in fact earn $225 to $250 when overtime and seniority payments are taken into account.

The association calculates that after adding a minimum $7 transport and accommodation allowance and a $10 monthly bonus for good attendance, workers will start with a base of $145 per month. It then factors in two hours a day of overtime and seniority bonuses to come up with the total figure.

“For the industry, the new wage makes Cambodia increasingly uncompetitive in a tough global environment where factories in other countries can deliver more efficiently,” GMAC said in a statement Tuesday that also called for a new, favorable tax system to offset the minimum wage costs, along with major improvements in infrastructure.

However, Jill Tucker, technical adviser for the International Labor Organization’s Better Factories Cambodia program, says GMAC’s calculations fail to consider several important factors, including that the government has not specified that all workers’ wages must rise by $28, meaning that only the lowest-paid workers are likely to see a pay increase.

“The last wage increase, it was actually written into the prakas that all workers would get $20 more, but it’s not written into this one…so I think it’s going to be up to the factories to make that decision,” she said.

Ms. Tucker said the ILO has calculated the current average take-home wage to be $165 for line workers, adding she did not expect buyers to scale back on their commitments to factories in Cambodia following the wage revision.

“Every time the wage rises in Cambodia, the garment manufacturers’ association states that the sky will fall in and that it’s the end of the world,” she said.

“So far, that hasn’t happened and I don’t believe that will happen this time either.”

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