Factory owners and workers in Cambodia's garment and footwear industry can’t agree on the minimum wage level. Owners say any rise in wages would devastate factories already struggling to make a profit after last increase. There is also a debate among labor unions about how high they want the minimum wage to rise. They have yet to arrive at an agreement.
The footwear and garment sector employs about seven lakh people and accounts for the lion’s share of the country’s exports. In November 2014 the minimum wage for garment and footwear workers was hiked by 28 per cent but faced strong resistance from employers. The industry meanwhile is on a downward trend. It shrank to four per cent in 2014 and has to be compared with the 35 per cent growth of only a few years ago. The 500 or so factories in Cambodia have reported reduced orders. Employers say this is because of the wage protests and strikes, which they claim has damaged buyer confidence. Cambodia’s minimum wage is now double that of competitor Bangladesh. So the sector’s ability to compete regionally is under strain.
Rapid wage hikes, frequent strikes, political instability, and negative media coverage have damaged the competitiveness of Cambodian factories.