The Ministry of Labor set the new monthly minimum wage for the country’s garment workers at $128 Wednesday, hoping it will be enough to stave off the crippling strikes that hit the $5.5 billion industry after the last wage revision in December while still keeping Cambodia competitive.
The announcement follows months of fraught negotiations between the government, unions and factory owners during which all sides had divergent views on how much to raise the current $100 minimum wage by.
Labor Minister Ith Sam Heng announced the new wage Wednesday afternoon, only a few hours after the ministry’s 28-member Labor Advisory Committee (LAC) —made up of government, union and factory representatives—voted for a new wage of $123.
“The minimum wage for employees working in the garment and footwear sector in 2015 is officially set at $128 per month,” the minister said in a signed government decree.
It says the new wage will take effect on January 1 for most workers. Those on probation will receive only $123 until their probation ends.
The LAC’s two independent unions—the other five unions on the committee are widely seen as aligned with the government—said they would meet with their members in the coming days before deciding whether to accept or oppose the new wage.
“We are waiting to discuss it with our members. We will meet next week,” said Ath Thorn, president of the Coalition of Cambodian Apparel Workers’ Democratic Union, the country’s largest independent union.
Mr. Thorn’s union helped launch nationwide strikes that briefly brought the garment sector to a standstill in December when the Labor Ministry rejected union calls at the time for a new minimum wage of $160 and decided on $95 instead.
The ministry quickly raised the wage to $100 but failed to quell the spreading strikes and demonstrations, which came to a bloody halt on January 3 when military police shot into a crowd of protesters lobbing Molotov cocktails. The police killed at least five garment workers and wounded dozens more.
Mr. Thorn would not speculate on the likelihood of a repeat of those events, but did not rule out a return to mass strikes, either.
“I think there will be protests any time the workers do not agree,” he said.
Ken Chheng Lang, acting president of the National Independent Federation of Textile Unions in Cambodia, the LAC’s other independent union, said its members would also be meeting next week before taking a position on the new wage.
Both unions have been demanding a substantial hike to the minimum wage, insisting that $100 was not nearly enough the meet the basic needs of most garment workers, even factoring in overtime, monthly bonuses and allowances for food and transportation.
Eight of the country’s most strident unions, including the two on the LAC, had started out sticking to the $160 they were demanding in December, but soon began calling for $177, before gradually coming down to $150 and finally $140, a figure that received only two votes Wednesday.
During recent negotiations, the government said that the minimum wage should be set above the “poverty line” in Phnom Penh, which it put at $120 per month.
The Garment Manufacturers Association in Cambodia (GMAC), which represents most of the country’s garment and footwear factories, was pushing for a minimum wage of $110, insisting that much more than that would force its members to shut down.
In a statement following the announcement of the new wage, the association expressed “strong regret” over the ministry’s decision.
With the standard bonuses and allowances, it said, the base pay for the industry will now rise to $145, bringing Cambodia just about level with Vietnam, where garment workers are significantly more productive.
“This sharp increase will definitely and seriously affect the survival of many factories that are members of GMAC, especially those factories with weak finances and fragile orders,” it said.
Nang Sothy, a factory representative who sits on the LAC, warned that at least 30 factories were likely to close because of the new wage, costing at least 50,000 jobs. The entire industry employs more than 600,000 people, the vast majority of them young women.
Labor Ministry spokesman Heng Suor said he knew employers would not be happy with the new wage, but was equally sure that most workers would be.
“For employees, even an increase of $1, $2 or $5 is a lot more than before,” he said. “This increase will make employees happy because it will make their standard of living better and motivate them to increase their productivity.”
However, Dave Welsh, country director for the Solidarity Center, a U.S.-based labor advocacy group, said the new minimum wage was likely to disappoint employers and employees alike, and called the consequences of the decision “unpredictable.”
“$128 isn’t really going to satisfy anyone,” he said.
Mr. Welsh worked closely with the unions during the negotiations in hopes of getting all sides to compromise on a new wage. He would not venture a guess at how they will react to the ministry’s decision, but said the new wage was “far short of what every independent union in the country wanted. I suspect there’s going to be widespread disappointment.”
Mr. Welsh accused the government and factories of having “dropped the ball” in their commitments to making the process of setting the new wage transparent, and said they likely colluded on the LAC vote.
“It’s basically pretty clear that this was in no way an independent vote,” he said.
But Mr. Welsh also held out hope that Wednesday’s decision would not be the ministry’s final word on the new wage. “There’s still time to change this,” he said. “They did it in December and they can do it again.”
(Additional reporting by Mech Dara)