Strike Puts Poor Labor Relations on Display

As a bitter labor dispute continues to suck money and guests out of Cambodia’s deserted luxury hotels, outside investors are carefully observing whether the government and newly formed Arbitration Council can defuse the emotional rift and restore business as usual.

The flap between workers and hotel management has already dragged on for months, resulting in a weeklong strike earlier this month and causing one hotel in Siem Reap to effectively close. Two hotels have fired a total of some 280 workers and are awaiting court hearings. Five others have seen their workers walk out on the job.

The issue could face a final resolution this week when, for the first time, a foreign professional mediator brings the two sides to the negotiating table in a last-ditch effort to prevent a ruling by the council and the legal fight that would likely follow.

In the eyes of potential invest­ors, a mediated resolution would counteract some of the failings that have been embarrassingly evident in the dispute thus far. Many observers say there are ample targets for blame in the dispute, including a government that was slow to react to the dispute, stubborn union leaders and foreign-owned hotels that have disregarded their workers.

“Blame has to be distributed evenly,” said one Asian diplomat. “The government is to blame for not making a firm decision, soon. And both sides are being uncooperative…. This country is at a stage of development where it is important to manage labor disputes better than this.”

Indeed, those close to the dispute say the Ministry of Social Affairs and Labor was aware in mid-February that a strike could ensue at several hotels, but was slow to bring the parties together for mediation and failed to assign its best arbitrators to the case.

The dispute wasn’t passed to the Arbitration Council—the independent body organized to resolve labor disputes—until April 9, well after workers had taken to the streets in the run-up to the Khmer New Year and struck a blow to hotel bookings at seven hotels in Phnom Penh and Siem Reap.

“If it had come to the Arbitration Council in March, there’s no reason why the council couldn’t have organized a mediation then,” said one person close to the dispute, who requested anonymity so as not to disturb efforts at mediation.

Ker Soksidney, an adviser to Minister of Social Affairs Ith Sam Heng, said mediation was impossible between the two parties because both sides were sticking staunchly to their demands. The unions, under the Cambodian Tourism and Service Worker Federation, have demanded that hotels reinstate the 10 percent service charge that was added to every bill, and give a percentage to employees. Hotels have balked and instead offered other formulas for compensation.

“I tried my best to mediate them, but the workers stuck with their demands,” said Ker Soksidney, who participated in the ministry’s attempt at mediation.

The dispute has caused trouble at Hotel Cambodiana, Hotel InterContinental, Sunway Hotel, Pansea Hotel, Sofitel Royal Angkor Hotel, and the Raffles-owned Hotel Le Royal and Grand Hotel d’Angkor.

In addition to lost revenue, the strike also tarnished the hotels’ reputations. When the federation launched its strike April 5, it began getting sympathy from expatriates such as Norma Bergoo, a teacher who is now pushing for a boycott of Le Royal through an open letter to its management.

“We won’t go to the Le Royal again if they don’t support the workers,” said Bergoo, who has frequented the hotel’s swimming pool, bar and gym for seven years. “They should know better.”

But it’s still unclear whether the labor dispute will have any real effect on foreign investors, who are more wary of a fragile system for resolving disputes than a confident workers’ movement, said one local economist. Kong Chandararot of the Cambodian Development Resource Institute said the council could still salvage the affair if it can successfully ease the dispute in the coming week.

“The strike is just a small thing…. We need clear institutional back-up. This is the crucial thing. We haven’t got any clear system for solving this problem,” he said.

That’s the gap the council is hoping to fill when Michael Gay arrives Friday. Gay is a commissioner on the Australian Industrial Relations Commission, the government body that oversees labor relations in that country, and will try to broker a solution and smooth the feathers of angry workers and exasperated hotel management. All the hotels in dispute have been invited to attend the mediation talks.

“This will be the first time these two sides have seen real mediation. It should be the norm,” said council member Matthew Rendall.

(Additional reporting by Daniel Ten Kate and Yun Samean)

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