PHNOM PENH (REUTERS) - Cambodia on Tuesday (Sept 28) raised the minimum monthly wage for workers in its key textiles and footwear industry by US$2 (S$2.70) to US$194, effective January next year, shy of a US$12 rise sought by major unions.
Factory wages have long been a tricky balancing act for Cambodia's government, to keep costs competitive for investors and brands, while satisfying influential unions representing 700,000 workers, which have held strikes in previous years.
Worth US$7 billion a year before the Covid-19 pandemic, the garment industry is Cambodia's largest employer and provides vital income for rural families, in making apparel for brands that include H&M, Adidas, Nike and Gap.
The new wage announced by the labour ministry would be a struggle to live on, said Mr Pav Sina, president of the Collective Union Movement of Workers.
"I request all relevant stakeholders, the employers and the government, to consider the possibilities of adding more to the workers' wage," Mr Sina told reporters.
However, Mr Kaing Monika, Deputy Secretary-General at the Garment Manufacturers Association of Cambodia (GMAC), said the raise could be problematic with operating costs also expected to rise.
"Even a US$2 increase would have a negative impact," Mr Monika said.
He said employers would spend more on pension, and healthcare contributions and workplace measures to counter Covid-19, including up to US$4 monthly per head on tests.
As of April, garments and textiles were no longer Cambodia's dominant export product, with agricultural goods and other new products on the rise, such as luggage, which is free of duties in the United States, according to the World Bank.
Cambodia's exports of travel goods to the US market were worth US$3.5 billion in 2020, up 3.6 per cent from 2019.
That compared to US$2.6 billion to the European Union, a 35 per cent contraction, in part due to a partial withdrawal of preferential EU tariffs over human rights and political concerns.