PHNOM PENH — The Cambodian government said Thursday that next year’s minimum wage for the country’s 680,000 garment workers will be raised to $170 a month, an 11 percent increase from the current amount of $153 a month.
The prime minister also agreed to eliminate an export management fee that factories pay each year, as well as to suspend the payment of a 1 percent advanced profit tax, to help manufacturers offset the rising labor costs.
The industry produced $7.2 billion in garment and footwear exports in 2016, and has seen steady increases over the years. The latest wage increase — which is negotiated annually between the manufacturers, unions and the government — will take effect in January. In initial talks, the manufacturers had proposed $162 as the new amount, the government $165 and the unions had requested $170.
The Labor Ministry said that while the government’s number of $165 had won out, Prime Minister Hun Sen had tacked on an extra $5.
“The Ministry of Labor wishes to thank Samdech Prime Minister Hun Sen, who offered the additional $5 for the minimum wage in 2018, so that the garment workers are able to better their standard of living,” the ministry said, using a Cambodian honorific to address the country’s leader.
Ath Thon, president of the Coalition of Cambodian Apparel Workers’ Democratic Union which is one of the biggest independent unions in the country that was part of the wage negotiations, praised the decision.
“I think that this wage of $170 is an appropriate amount for the workers during this current political and economic situation now, and this amount is not too much nor too small,” he said.
Kaing Monika, deputy secretary-general of the Garment Manufacturers Association in Cambodia which represents all the exporting factories in the country, disagreed, saying that the new amount “goes beyond the affordability of some of our members and the competitive level of the country” and that government assistance was needed to offset the cost of doing business.
GMAC’s request for help was highlighted the day before the minimum wage announcement in a statement. The association asked for the export management fee to be reduced by 50 percent; for the implementation of the 1 percent advanced profit tax to be suspended for five years, and for the inspection fee — which is an amount levied for every shipping container inspected — to be as low as the customs fee.
According to Kaing, Hun had agreed to the association’s first two points.
“We are highly appreciative of Samdech’s kind approval on the further suspension of 1 percent advanced profit tax for another five years and the complete elimination of the Export Management Fee,” he said.
GMAC’s statement had also said in addition to the wage increase enacted in January, manufacturers will be required to begin footing workers’ health care costs.
“Being just a production base, any increase in the labor cost of the country could potentially erode the country’s competitiveness, if it is not properly offset by improvement in other areas,” it said.