Cambodia: 2018 Minimum Wage set at $170

Cambodia agreed on 5 Oct 2017 to raise the minimum monthly wage of workers in its textiles and footwear industry by 11% to $170 from next year.

Of the $170, $165 is to be paid by employers and $5 by the government. The new wage will come into effect on Jan. 1, 2018.

The tripartite Labour Advisory Committee – consisting of representatives from the government, unions and employers – went into the meeting with their own wage proposals: $165, $170 and $162, respectively.

The committee selected the government proposal of $165, after which Prime Minister declared a now-customary $5 bump, bringing next year’s wage to $170.

The sector generates $7 billion annually for the economy. About 700,000 people work in the more than 700 garment and shoe factories in Cambodia, helping to sustain rural livelihoods in one of the world’s poorest countries.

Cambodian Prime Minister Hun Sen, who had not reached out to workers during his 32 years in power, had been telling workers he would increase the minimum wage to at least $168 on early 2018. Garment workers who have largely protested his government, are in the spotlight ahead of a general election.

Pav Sina, president of the Collective Union Movement of Workers, said the hike was welcome but still insufficient.

“$170 is not enough for a decent living yet. However, it is a good start for this year to increase the minimum wage to this level plus other benefits offered to workers which are paid by employers,” he said.

Other benefits in the new package include free health care from employers and free access to public transport, which employers will also be expected to pay for or provide.

From the garment manufacturers’ perspective, the new wage rate could mean tough times ahead. Wages for garment workers have increased over 150% over the past five years from $61 per month in 2012 to the current $153.

By comparison, minimum wages in Vietnam will rise 6.5% to between $121 and $175 (depending on the region) next year. Myanmar could end up being a 55% wage jump, bringing the country’s monthly pay rate from $67 to $99.

It also said that the government will continue to delay taxing profits in the textiles sector and eliminate export management fees.

For the year to date, according to data from OTEXA, Cambodia makes up a 2.6% share of U.S. apparel imports, compared to 14.4% from Vietnam and Bangladesh’s 6.6% share.

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