Retailers Prepared to Pay Higher Prices for Cambodia Made Garments

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Garment union workers gather outside Phnom Penh Tower in a bid to petition branches of H&M and M&S to support their campaign for an increase in the minimum wage, Sept. 19, 2014.

Leading international fashion brands, including H & M, have hinted to Cambodia's government that they are prepared to pay higher prices for clothes made in the country by factoring in any increase in the minimum wage for garment workers.

The eight retailers gave the assurance in a letter to Deputy Prime Minister Keat Chhon and to the chairman of the Garment Manufacturers Association in Cambodia (GMAC), which represents garment factory owners in the country.

Cambodian garment workers launched a new campaign this week seeking an increase of their monthly minimum wage to U.S. $177 from U.S. $100 effective 2015.

Hundreds of workers demonstrated in their factories during lunch break on Wednesday to highlight their demand ahead of a meeting of the Labor Advisory Committee (LAC), an organization of employers, the government, and unions, on Sept. 26 during which officials will discuss a possible minimum wage increase in January.

A previous demand for a wage hike to U.S. $160 had been rejected by employers, who had raised salaries to U.S. $100 from U.S. $80 this year.

“As responsible business, our purchasing practices will enable the payment of a fair living wage and increased wages will be reflected in our FOB prices, taking also into account productivity and efficiency gains and the development of the skills of workers, carried out in cooperation with unions at workplace level," H &M and other retailers Inditex, C & A, N Brown, Tchibo, Next Retail, Primark and New Look said in the letter.

Free on board (FOB) prices refer to those that suppliers are paid for garments. Labor and other costs have to be considered by garment suppliers to arrive at the prices.

"Our experience within global sourcing markets shows, when we compare the productivity and efficiency with Cambodian factories, that there are significant opportunities for development and improvement," the letter said.

"To harness these opportunities, we will support the development and provision of processes that will enable our suppliers to deliver higher productivity and efficiency."

The retailers also said that they expect the government and GMAC to establish processes "to ensure all workers receive the new agreed minimum wage by monitoring wage implementation and policing suppliers that fail to meet the new minimum wage level."

"This will ensure an equal level playing field and create a competitive advantage for the factories that comply with the new minimum wage."

'Collaborative approach'

H & M said in a separate statement on its website that it has been engaged in raising the minimum wage in the textile industry in Cambodia for several years.

Under the heading "Joint call on higher minimum wage in Cambodia," H & M said "a collaborative approach is crucial."

"[A]nd that is why we today, together with other brands, have sent a letter to the Cambodian government and to [GMAC] to clarify our shared position and intention in the upcoming wage negotiations in Cambodia."

A recent study conducted by a task force set up by a government ministry found that garment workers need a minimum livable wage of U.S. $157-U.S. $177 a month to cover their basic needs.

Cheath Khemara, senior labor officer of GMAC said his organization would comply with any LAC’s decision on the issue and not talk privately to unions in the meantime.

Garment workers’ unions vowed to restart protests if the GMA raised the minimum wage to only U.S. $115 next year, as the organization proposed during at a meeting last month.

On Friday, 50 members of eight prominent unions representing garment workers gathered outside Phnom Penh Tower in a bid to petition branches of H&M and M&S to support their campaign for an increase in the minimum wage.


Cambodia Unions President Chheang Thida said unions want the retailers to help lobby the government and the factories to increase the workers’ minimum wage to U.S. $177.

She said that workers just can’t afford the cost of living.

“Every month, we don’t save any money," she said. "The salary we are receiving is not enough. We won’t abandon our demands until we get 177 dollars.”

Cambodian Confederation of Unions President Rong Chhun said the unions would press their case with other retailers at a later date.  

He said that the workers would demonstrate on Sept 26 in front of the Ministry of Labor when the LAC meets  to define a new minimum wage.

Reported by Leng Maly for RFA's Khmer Service. Translated by Samean Yun. Written in English by Parameswaran Ponnudurai.


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