Garment workers and government employees can expect pay raises in 2009, but officials said they will be undermined by skyrocketing inflation, which the government put at 22 percent in July.
“I think [wages] will increase 8 to 10 percent,” GMAC External Affairs Manager Kaing Monika said Wednesday by telephone.
GMAC’s 310 member factories employ about 325,000 Cambodians and pay workers an average of $80 to $85 a month, including overtime, Kaing Monika said.
Anything higher than a 10 percent increase in wages in 2009 would likely break the backs of Cambodia’s garment factories, he said.
About 25,000 employees have left the garment sector for other employment since the start of 2008. While inflation is pressuring factories to increase wages, a global economic slowdown is also pressuring factories to cut costs, Kaing Monika said.
“Inflation is really affecting our wages,” he said.
Civil servants—who take home an average of about $60 a month—can expect a 20 percent salary increase in 2009, just as they did in 2008, Finance Ministry Secretary-General Hang Chuon Naron said. Salaries only make up a portion of the money civil servants receive each month, the remainder consisting of various bonuses and allowances.
According to Hang Chuon Naron, workers who do not see their salaries increase more than 10 percent in 2009 will likely experience their wages decreasing in real terms because of inflation.
Workers will “see their purchasing power drop if their wages increase less than the inflation rate,” he said.
If workers’ wages don’t meet living needs, then employers can expect more strikes, said John Ritchotte, chief technical adviser for the International Labor Organization’s labor dispute program.
“Workers will ‘vote with their feet’ if they feel that their current wage does not meet their needs or if they can get a better wage elsewhere,” Ritchotte said.
“Hence the reports of garment workers leaving the factories for other employment,” he wrote by e-mail Wednesday.
Skyrocketing inflation across the Asia-Pacific region will hike salaries regionwide, according to a study by HR Business Solutions.
Wages are expected to increase 8 percent across the region in 2009 compared to 6.7 percent in 2008, HRBS found.
According to HRBS, Cambodia is forecast to see a 9.8 percent increase in employees’ wages in 2009, up a percentage point from 2008.
Vietnam will see one of the highest wage increases in the region, at 12.4 percent, due to 25 percent annual inflation, HRBS found.
“A high inflation rate is one of the key drivers for pay increases,” HRBS Managing Principle Elaine Ng said Wednesday by telephone from Hong Kong.
But based on lower reported inflation in Cambodia, projected by HRBS to be just 9 percent over 2008, Cambodian businesses will see a lower jump in pay increases, Ng said.
HRBS’ projected inflation rate for 2008 is substantially lower than the Ministry of Planning’s estimate of 22 percent inflation from July 2007 to July 2008. The ministry last projected inflation at 18.7 percent in January.
Cambodian Independent Teachers’ Association President Rong Chhun said the annual 20 percent pay raise for teachers isn’t enough to match rising costs of food and goods.
Teachers’ official take-home pay ranges from $40 to $60 a month, Rong Chhun said, and a 300 percent pay hike would more likely match the soaring cost of living.
“The pay raises have not matched with rising cost of goods in markets that increase up to 300 percent, so teachers still face difficulties in their living conditions,” he said by telephone Wednesday.
But not all employers are factoring inflation into salary increases for their employees. Anco Brothers Co is the sole Cambodia distributor for 555 Cigarettes, British American Tobacco products, Evian water and Budweiser beer, with additional investments in shipping, agribusiness, hotels, casinos and electricity networks. But despite skyrocketing inflation, Anco Brothers Chairman Kok An said he would only increase his 3,000-plus employees’ wages by 5 percent next year.
“If private companies gave wage raises as high as the state they’d go bankrupt,” he said Wednesday.
Kok An said his employees, who earn between $60 to $500 a month, choose to work at Anco Brothers because it offers decent working conditions and also because of necessity.
“If they stop working with us, they won’t know what else to do,” he said.