A representative for Cambodia’s garment factories on Tuesday said the government’s last-minute decision to delay a vote on a new minimum wage for the sector was unlikely to bridge the gap between factories and unions and could actually hurt the industry by further shaking buyers’ confidence in the country.
The Labor Advisory Committee (LAC)—composed of representatives from the government, factories and unions—was scheduled to vote on how high to raise the current monthly minimum wage of $100 on Friday. But in a move that took even factory owners by surprise, the Labor Ministry announced on Monday that the committee would instead be meeting sometime in November “to have enough time for the related parties to discuss and consider all angles to reach a consensus all parties can accept.”
But Ken Loo, secretary-general of the Garment Manufacturers Association in Cambodia (GMAC), said there was “no way in hell” the factories and unions will agree on a new figure with the added time. The unions are pushing for a $77 raise to the current wage, while the factories want a $10 hike.
“It depends on what each stakeholder does during this period,” he said. “If we all do nothing, how [will it] help? Or if we all meet and say the same things again and again and again?”
Drawing on past experience, and the temper of the present negotiations, Mr. Loo said he is not expecting a breakthrough. If he’s right, the LAC will take a vote by secret ballot come November and the Labor Ministry will take that number into consideration and set a new minimum wage that will take effect in January.
Rather than helping matters, Mr. Loo said the government’s surprise move to postpone a decision, and not even set a new date for the LAC’s next meeting, only adds more off what buyers hate most—uncertainty.
“Price, we always claim that it’s one of the most important factors, and it is,” Mr. Loo said. “But before the buyers can even consider your price, they need to have the confidence that we are able to hold on to our end of the bargain, we are able to deliver the goods. If they have no confidence in our promise to uphold the contract, then we can be as cheap as you want…. And the longer you delay, unless you have very clear plans, that’s going to create more uncertainty.”
If anyone does budge, Mr. Loo said it would not be the factories. He said employers are sticking to a $10 raise because it’s all they can afford.
Export earnings for the first half of 2014 were up year-on-year in the garment sector. But GMAC says a recent survey of about half their roughly 600 member factories found that many were starting to suffer from falling orders from buyers, even at the current minimum wage.
“Even at today’s prices, why are factories not at full capacity? Because they can’t get the orders,” Mr. Loo said. “We can’t even compete at current levels, so imagine if it’s jacked up some more by some ridiculous, silly amount?”
The unions pushing for a $77 raise accuse the factories of fear mongering and argue that similar warnings in the past have never proved true. They say the factories can afford higher wages and should be required to pay them. Some brands have even offered to raise the prices they pay factories to accommodate a higher minimum wage, though most have not.
The reaction of unions to the Labor Ministry’s decision to delay a decision on a new minimum wage were mixed.
Ath Thorn, who sits on the LAC and heads the largest of the independent unions, welcomed the delay. He said the previous two meetings between all three parties were not enough to get into the details of each other’s positions and was hopeful that more time would make a difference, though he still refused to entertain any new wage less than $150.
“If they had gone ahead with making a decision on October 10, there would have been protests and violence because there have only been two meetings and we haven’t discussed the details, and we heard the [new] wage would have been low,” he said.
“We hope the unions, employers and the ministry will now have more time to talk and find a solution everyone can accept.”
Six unions notified City Hall on Tuesday that they are planning to hold rally at Phnom Penh’s Freedom Park and march through the city on Sunday with up to 3,000 members to put pressure on the government, factories and buyers to meet their wage demands.
City Hall spokesman Long Dimanche said the notice was received and would be passed on to the governor.
