• Society

Labour Ministry Proposed $2 Minimum Wage Increase for 2024

• By Meng Seavmey
• September 19, 2023 7:30 PM

PHNOM PENH – The Ministry of Labour and Vocational Training proposed on Sept. 18 to set the 2024 minimum wage at $202 for workers in the textile, garment, footwear and travel goods sectors. This would represent a $2 increase compared to current standards.

In the fifth meeting of the annual negotiations on minimum wage, union representatives lowered their former ambitions. While their initial claim stood at $215, the 17 unions split into two groups, with 12 of them pushing for $204 and the other five going with $213.

On the other hand, employer representatives stood firm on their $201.5 proposal, according to the ministry’s statement published on Sept. 18.

The final round of negotiations will be held on Sept. 28, at the end of which the 2024 minimum wage will be announced.

Khun Tharo, program manager at the Centre for Alliance of Labour and Human Rights (CENTRAL), said he “was not surprised” by the employer representatives’ proposal and the argument they raised that the industry has had little profits this year.

Tharo added that profit is a sensitive topic for employers because they are required to be transparent about their financial situation to make sure that profits are shared with the employees.

“The non-implementation of tariff barriers allows employers to make profits because the goods and raw materials to supply the industry are mostly imported from China,” he told Cambodianess on Sept. 18, referring to the China-Cambodia Free Trade Agreement, which allows Cambodian imports from China to benefit from tax incentives.

“Even if the minimum wage increases, the workers’ total incomes still decrease when compared to the pre-COVID-19 period. The payment for working overtime, bonuses, and other benefits has decreased, while daily expenses have risen because of inflation. [Workers] lack nutrition and mostly have to pay loans,” he added.

In some of Cambodia’s biggest factories, up to 20-to-30 percent of the workforce has been laid off, and workers say they have lost 25-to-30 percent of their income compared to 2022, Tharo said in a previous interview in August.

One of the reasons for such a fall is that orders from the U.S. and European countries, Cambodia’s traditional export markets, have remained lower than usual since the beginning of the year.

After the E.U. partially suspended its tax incentive program, called Everything But Arms (EBA), in February 2020, and the U.S.’ Generalized Scheme of Preferences (GSP) was terminated at the end of that same year, the two regions faced growing inflation caused by the invasion of Ukraine by Russia, limiting the consumers’ purchasing power.

As Cambodian workers also face inflation, the minimum wage must be an acceptable figure, Tharo argued. He pledged to reduce the impacts of the rising prices by providing a better wage-bonus structure and a change in loan repayment conditions.

Som Sreymom, secretary-general of the Free Trade Union of Workers of the Kingdom of Cambodia (FTUWKC), said union representatives have had a hard time to agree upon one unique proposal.

“The negotiation, this year, has been tough because it's hard for us all to finalize a common decision,” she said. "The figures of $202 and $204 are not acceptable for us...The Ministry of Labour, who is the guardian of the workers, should have considered a higher figure that the workers, especially women, can accept.”

"I still urge the government representative to consider an acceptable figure that both the unionists and employers can agree on," she added.

Sam Nang, who has been working in a factory since 2012 in Kampot province, said he and other workers would be happy if they received $215 as a minimum wage next year.

He has been having a hard time living up to his current salary, as the expenses on the rental house and food have increased, leaving little money for his family.

While he said he would appreciate any raise in salary, he reckoned that the $201.5 minimum wage offered by the employers' representatives wouldn’t make such a difference compared to his current income.

Sam Nang said the livelihood was better before the pandemic, even though the minimum wage was below $200 because food supplies and home rent were more affordable.

Working hours have also been reduced, which led to less extra payment.

The last round of negotiations with all the stakeholders from the industry to finalize the 2024 minimum wage will be held on Sept. 28, the Labour Ministry said on Sept. 18.

The minimum wage increased from $40 in 1997 to $190 in 2020. Because of the pandemic, it then only increased by $2 for two consecutive years, before the government decided to set it at $200 in 2023.