Workers in Cambodia’s textiles and footwear industry will get a 11 per cent hike in minimum monthly wage from next year. Wages for garment workers have increased over 150 per cent over the past five years. The country has had to tackle competitiveness, with some arguing wage increases have made Cambodia less appealing for some firms.

The garment industry employs an estimated 7,00,000 workers in Cambodia, helping to sustain rural livelihoods in one of the world’s poorest countries. The sector generates seven billion dollars annually for the economy. The government will continue to delay taxing profits in the textile sector and eliminate export management fees.

Of course, workers’ unions are happy with the hike. But some garment manufacturers say the new minimum wage is beyond their affordability and the competitive level of the country. The garment manufacturing industry in Cambodia has become the fifth largest apparel supplier to the European Union behind China, Bangladesh, Turkey and India.

Improving labor productivity would be fundamental for Cambodia to remain competitive, given rising competition from other low-wage garment exporting countries. Europe today takes up 43 per cent of the Cambodian sector’s exports as opposed to 29 per cent taken by the US market.