Cambodian Garment Factory Owners Urge Suspension of Minimum Wage Talks Citing Outbreak Impact


2020-06-23
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cambodia-garment-workers-eba-feb-2020.jpg Garment workers leave at the end of their shift from a factory near Phnom Penh, Cambodia, Feb. 11, 2020.
AP Photo

Garment factory owners on Tuesday urged Cambodia’s government to postpone annual negotiations on minimum wage, saying the sector needs to first recover from the devastation of the coronavirus pandemic, while unions sought to downplay the severity of its impact and demand that talks go ahead.

The Garment Manufacturers Association in Cambodia (GMAC) issued a statement calling on the Ministry of Labor to stall minimum wage negotiations in the textile, garment, and footwear sector for 2021, planned to take place between July and September, citing a dearth of orders from foreign buyers and factory shutdowns caused by the outbreak.

“In the textile, garment, and footwear industry, many enterprises have temporarily suspended their production,” it reads.

“At the same time, some enterprises have decided to shut down their operations as buyers have canceled orders and refused to accept products already produced and also failed to make payments for goods that have been produced and delivered for the reason that stores and retailers around the world have closed, and the demands have declined to the minimum.”

The GMAC noted that Cambodia’s Labor Law and Law on Minimum Wage stipulate that minimum wage negotiations must be based on criteria that include the profitability of the sector and allow for the Ministry of Labor to suspend or change the schedule of discussions. In the case of such a suspension, the minimum wage of the previous year will remain in effect.

It said that amid the outbreak, the sector is “fragile” and “uncertain in its return to its normal operation,” while recovery will “take a long time.” Meanwhile, the GMAC said that supporting mechanisms are necessary to help stabilize the industry.

“The Garment Manufacturers Association in Cambodia (GMAC) is of the view that the new minimum wage negotiations for 2021 should be postponed … until the situation in the sector is restored,” the statement said.

“Delaying the minimum wage negotiations will be a mechanism to support the sector to stay alive as well as maintain employment for workers.”

Union will seek wage increase

In response to the request, Yang Sophoan, president of the Cambodian Alliance of Trade Unions told RFA’s Khmer Service that the situation caused by the outbreak is not severe enough to warrant calling off the talks.

Buyers have also made commitments for future orders, she noted, adding that her union and others expect negotiations to take place.

“If the government has a strong commitment to helping the garment sector survive and workers to be able to support themselves, it shouldn’t accede to the GMAC’s request and force the unions and workers to comply with it,” she said. “We’ll never accept it.”

The current minimum wage is U.S. $190 per month and the unions will push for an increase, Yang Sophoan said. Any changes to the minimum wage would go into effect beginning in January.

She explained that workers have been earning little more than U.S. $70 per month in addition to a small amount of assistance from the government because of the factory closures and suspensions, which she said “is not enough.”

In addition to the impact of the coronavirus outbreak, Cambodia’s key garment industry faces an uncertain future over the European Union’s impending suspension of trade preferences for the Southeast Asian nation.

The EU in mid-February announced plans to suspend tariff-free access to its market under the “Everything But Arms” (EBA) scheme for around one-fifth of Cambodia’s exports, citing rollbacks on democracy and human rights—a decision that would reinstate tariffs on garments and footwear beginning Aug. 12, unless it is overturned by the bloc’s governments or its parliament.

The decision will result in a loss of around U.S. $1.1 billion of the country’s annual U.S. $5.8 billion in exports to the bloc, some 75 percent of which are made up of clothing and textiles—a crucial industry in Cambodia that employs one million people.

Cambodia’s Prime Minister Hun Sen has shrugged off the EU’s move, but unions have warned that the reinstatement of tariffs on Cambodian exports to the EU could leave 80,000 workers from more than 1,000 garment factories in Cambodia jobless if buyers from the bloc stop placing orders because of increased costs.

Call for reopening

Amid widespread economic fallout from the coronavirus, businessmen and vendors in Banteay Meanchey province’s Poipet city urged provincial authorities to press Thailand to reopen its borders so they can resume work at markets located inside the neighboring nation.

Thailand sealed off it borders to Cambodians some three months ago to stop the spread of the coronavirus outbreak.

Din Puthy, the head of the Cambodia Informal Economy Reinforced Association, told RFA that since the border closure, his family had lost its only income from businesses in Thailand.

He said that he and other Cambodians living along the border who have lost their jobs are selling off their assets, including jewelry and motorbikes, to make sure they have enough food on their tables.

He urged Banteay Meanchey’s provincial authorities to close Cambodia’s border to Thais in retaliation for the continued shutdown.

“[Our provincial authorities] have not imposed any pressure and allowed [Thai business owners] into Cambodia,” he said.

“Thai business is going well, so they don’t mind and can continue to keep the border closed, even up to a year from now … The Thai side is suffocating us. The poor are starving. They are forced to borrow money, so it is making them even poorer.”

Provincial governor Um Reatrey posted a comment on his Facebook page saying that he had met with his Thai counterpart from Thailand’s Sa Kaeo province via video conference on Tuesday and was told that there are no plans to reopen the border.

However, he said Thailand will allow Cambodian businesses owners to inspect their belongings in Thai markets—permitting 50 cars with a maximum of two passengers each, who must undergo a health screening, to enter the country between 8:00 a.m. and 1:00 p.m. daily to transport goods back home.

Border disadvantage

A vendor who declined to be named said Cambodia is losing to Thailand because Thai trucks loaded with their products can still enter Cambodia.

“It isn’t right—Thai trucks can continue to enter Cambodia, but [Thailand] won’t allow us to do the same,” she said.

Banteay Meanchey provincial deputy governor Koeng Vannak recently told RFA that Thailand also allows Cambodian trucks to enter the country, but Cambodia has nothing to send across the border.

“At this point, we don’t have any goods for Thailand,” he said. “We have a fair-trade agreement in place, but we don’t have high demand from Thailand for our factories.”

Sum Chankea, provincial coordinator for Cambodian rights group Adhoc, said cross border relations have left Cambodia at a serious disadvantage to Thailand.

Thousands of families have lost their jobs because of the border closure, he said, especially workers in informal sectors.

“There must be a balance between the countries,” he said, noting that Thailand has had 3,156 cases of infection while Cambodia has only confirmed 130.

“[The Thais] have more infections, but they are afraid of us.”

Reported by RFA’s Khmer Service. Translated by Samean Yun. Written in English by Joshua Lipes.

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