By Alexandra Demetrianova
THE garment industry is Cambodia’s leading export sector (80 percent) and puts the developing country among the most attractive textile sourcing regions of the world, along with China, India and Bangladesh. While a huge part of country’s GDP and employing over 700,000 people, mostly women, the garment sector wages situation has been controversial. Just this week garment trade unions in Cambodia failed to reach an agreement on how much to ask for as a minimum wage from employers in the upcoming negotiations.
The struggle for decent wages as well as work safety and conditions has been going on for several years now, sparking strikes, protests and even clashes between garment factory workers and deployed security forces. Cambodia’s government is attempting to strike a balance between what the unions and workers want – as high as possible, and what the textile producers and manufacturers prefer – the lowest possible. If the minimum wage is set too high, Cambodia’s garment sector workers might become simply too expensive and clothing giants such as H&M, Puma or Marks & Spencer could move elsewhere – for example to Burma (Myanmar), where labor is far cheaper and the country is opening up to foreign companies and manufacturers.
On Wednesday, garment trade unions representing some of 700,000 garment workers failed to reach consensus on a new minimum wage. At least one major union refused to participate in the secret vote. More than a dozen garment sector unions were present at this third attempt in just one week. The current monthly minimum wage in the textile industry stands at US$128 dollars. The new rate is to be proposed in front of the Labor Advisory Committee (LAC), which is composed of trade unions, employers and Cambodian government representatives. Those negotiations get underway today, but it’s not clear what the unions will present as their new demand having failed to reach an agreement among themselves.
The limbo however, could be a result of government intervention. Just a day ahead of trade unions negotiations, Labor Ministry spokesman Heng Sour warned that the unions had to agree on one single number, otherwise they won’t have a say in the tripartite LAC negotiations. Following the warning, the largest of independent unions abstained from the union vote. “The Coalition of Cambodian Apparel Workers’ Democratic Union (CCAWDU) is upset with the vote system, so we did not join the vote. We don’t need to vote; we need to find consensus,” said deputy president Mr. Kong Athit.
The CCAWDU accused pro-government forces of orchestrating the secret vote, particularly Chuon Mom Thal, who is an adviser to Labor Ministry and also leads a prominent pro-government union. The independent unions on the other hand want to decide their own figure and reach a consensus rather than secretly vote. CCAWDU originally aspired for a US$207 minimum wage, but then lowered their expectations to $178.70. The pro-government unions supported a much lower figure. Mr. Mom Thal revealed the secret vote was supposed to decide between five options – between US$150 and US$178. Apparently, most unions – nine out of 14 – voted for $158. “The majority approved this number, so more or less I have to go with it,” Mr. Mom Thal said, adding he would send a letter to LAC submitting the $158 as official wage proposal by trade unions.
Clearly there is much pressure in the garment sector minimum wage struggle from all sides. According to the Cambodian government, the main problem lies in people confusing minimum and living wage, which are two different terms and rates. Ministry of Labor spokesman Heng Sour even threatened legal action against those confusing the two words. “You all have to be responsible for every issue which occurs by the confusion that you intentionally created,” Sour said. That statement came as a reaction to a recent research by DC Institute which showed that garment workers’ median monthly spending is up to $207. Some independent unions then used this number as a minimum wage proposal. Heng Sour then warned “academics and professionals would face repercussions if their wrong use of terminology led to social problems.” Labor rights group Solidarity Centre hit back at Heng Sour, saying the research did not refer to minimum wage or living wage, but rather spending habits of garment workers. This was supposed to help unions in bargaining over the minimum wage rate. As no consensus had been reached, a secret vote has decided the proposed figure for now, even with one major union abstaining from the vote. Cambodia’s government position is clear – it wants to close this deal by October. If an agreement isn’t reached at the tripartite LAC talks, another session will be held next month. If that ends without success, a secret vote between unions, employers and the government will decide the issue.
So how does the LAC decide on the final minimum wage for garment workers? According to Mr. Heng Sour, the negotiations are based on five principles and seven criteria, which should cover workers’ needs and industry productivity and competitiveness. One of them is the poverty line. The calculation for city dwellers goes like this: an average family of 5.1 in Phnom Penh, with living costs adjusted for inflation, needs US$300. Each worker, based on 2.5 breadwinners per household, would need to earn about US$120 a month. Currently the general minimum wage in Cambodia is at US$80 a month, while garment sector workers get a minimum wage of US$128 a month. In terms of productivity and competitiveness of the garment sector, the calculations stand by the general argument of employers/producers, that rising wages are not matched with increasing productivity.
But the minimum wage is not the only problem in the garment industry of Cambodia. Recently, new report has shown that there was a widespread use of short-term contracts in the sector with negative effects on workers and their living conditions. Swedish NGO Fair Action interviewed workers producing garments for H&M about fixed duration contracts (FDCs) and how those are used to exploit as well as intimidate employees. This happens despite the fact that H&M supplier factories pledged to reform FDC practice. The report, entitled ‘Short-Term Solution’, says workers from three H&M supplier factories were forced by FDCs not to take sick leave or work overtime because of “widespread and continuous fear of not having their contract renewed”. At one factory, where workers had been interviewd by the Swedish NGO, almost all employees were contracted on FDCs. At other factories, workers were put on FDCs beyond the two-year legal limit set by the government. Trade union pressure to put garment workers on unlimited duration contracts have simply not translated into reality when it comes to H&M supplier factories. As the report noted: “Through the trade with factories using FDC workers to illegally make up a permanent workforce, H&M breaches not only the company’s own code of conduct, but also Cambodian labor legislation as well as international norms.”
Some of the workers working for H&M supplier factories are employed on as short as two-month FDCs. They were cited in the research saying:
“We all want long-term contracts, but we do not protest. We are afraid that we will be sacked.”
“As workers, we were not given the option to choose the type of contract when we started the job.”
H&M reacted to the claims by Fair Action, saying: “Illegal use of short-term employment is an industry-wide problem. We always require that the suppliers we work with follow national legislation and implement awards from the Arbitration Council Foundation. Since 2015, we require that workers that have been employed for more than two years should have a contract valid for an unlimited time.”
In February H&M launched a project to reduce use of FDCs in its supplier factories, mapping where short-term contracts were used illegally. The clothing giant promises to work with unions and workers closely to reach better implementation. But the report by Fair Action notes that H&M has shown a “very low level of transparency”, because the company refused to disclose results of the mapping of illegal FDCs and it had never prohibited FDCs in its code of conduct.
But H&M is not the only mega-brand of clothing using short-term contracts to employ garment workers in Cambodia. Last year another report revealed that the use of FDCs beyond the two-year legal limit is widespread. Most major brands sewing and producing their textiles in Cambodia use FDCs illegally. The report from April last year by the Worker Rights Consortium (WRC) claimed that the widespread practice of employing regular, full-time staff under fixed-duration contracts is at least partially responsible for unrest and strikes in the sector in recent years. Last year, in January, clashes over better working conditions and wages in Cambodia’s garment sector resulted in the deaths of protesters. “The Cambodian garment industry’s shift to FDCs as its standard employment arrangement helped set the stage for this crisis,” said the report. WRC surveyed 127 garment factories between 2012 and 2013, all suppliers to mega-brands such as H&M or Puma. The research found that most of the plants employ workers on FDCs. Labor rights NGO Solidarity Center agreed with WRC, saying that this was the biggest illegality happening in garment sector in Cambodia and all producers are well aware of this. “FDCs are used against union leaders, women in need of maternity leave and to avoid paying seniority bonuses,” said Solidarity Center in a statement last year.
About the author:
Alexandra Demetrianova is a freelance journalist based in Bangkok covering politics, society and life in Southeast Asia. She specializes in human rights, environment and development. Originally from Slovakia, she is currently finishing a Masters degree in International Relations at the Faculty of Political Science at Thammasat University.