PM urges factories to up wages

By Chhay Channyda and Stuart White

People exit a passport office on Mao Tse Toung Boulevard in Phnom Penh earlier in 2012. Photograph: Hong Menea/Phnom Penh Post

As the lure of Thailand grows increasingly attractive for cash-strapped and under-employed Cambodians, Prime Minister Hun Sen yesterday made a public appeal for workers to stay in the country, simultaneously urging the Cambodian market to up its competitive edge.
In a speech at the inauguration of a new administrative building for the Ministry of Labour, Hun Sen admonished employers, and garment manufacturers in particular, to make the domestic market more attractive to workers, citing Cambodia’s ongoing labour shortage.
“I think that if [the garment industry] gave them higher wages, the workers would like going to work,” the prime minister said.
“And right now, the problem for the industry is competition to recruit workers.”
At times, the premier’s speech read like a lecture in basic supply-side economics.
“Don’t blame the government for not caring that [factories] are bankrupt,” he said.
“We cannot force the workers to work for you for a lower wage than others.”
Meanwhile, in neighbouring Thailand, despite looming mass deportations, more than 50,000 Cambodians have successfully registered as legal migrant workers, making themselves eligible for a recently instated 300 baht daily minimum wage – a salary that comes to just under $300 a month,
or more than three-and-a-half times the basic salary of a Cambodian garment worker including mandatory bonuses and allowances.
In his remarks, Hun Sen pointed to the availability of local jobs, saying workers don’t have “to be at risk” working overseas. That risk is very real, even for legal migrants, according to Andy Hall, a labour migration expert at Mahidol University in Thailand, but workers will continue to be drawn to Thailand unless Cambodia can offer work “to their people in industries that provide long-term and reliable jobs”.
“If [they’re legal migrants], they are frequently exploited by unregulated Thai and Cambodian agencies,” Hall said via email.
“If [illegal], they frequently fall prey to corrupt traffickers, smugglers and law  enforcement officials. If they are lucky and get a good job, they can earn more than they would in Cambodia, and hopefully this will more often be the case after the January 1st increase in the national minimum wage.”
Dave Welsh, country director for the American Center for International Labor Solidarity, said that the ongoing expansion of the garment industry in Cambodia had “definitely” created a domestic labour shortage, but at the same time, wages had remained low.
“The industry is booming,” he said. “The buyers in the EU and the market in the EU is expanding rapidly, so there’s definitely room for the brands to kick in more wages.”
Ken Loo, secretary-general of the factory representative the Garment Manufacturers Association of Cambodia, said he would be in favour of a measure that saw increased wages – but only if output would go up as well.
“We support that, as long as we get in return a corresponding increase in productivity... and most importantly, correspondingly, an increase in the price we get from the buyers,” Loo said.
“Demand [for labour] is higher than supply in Phnom Penh, so why haven’t prices risen to reach equilibrium?” Loo went on to ask, noting that factories had increased wages above the minimum wage until running into resistance from the brands they supply. “We don’t have the ability to go any further. Any more that we go, it’s a loss.”
Welsh acknowledged that, given the industry’s structure, local factories are “squeezed” by brands, making more “creative” options like nutrition plans for workers more beneficial in the Cambodian system.
Welsh also noted that while the Thai minimum wage is higher than that in Cambodia, it comes with unexpected costs.
“If [migration is] done legally, you’re paying hidden fees,” he said. “The cost of living [in Thailand] is a lot higher than it is in rural Cambodia. So it’s a bit of a red herring to say the pay is better because the wage is higher. And in the [Thai] garment sector, a lot of it is informalised, whereas in Cambodia, at least it’s formalised.”
Nonetheless, said Moeun Tola, head of the labour program at the Community Legal Education Center, “if there is still low pay, we cannot stop [workers from migrating], and the working conditions in this country are also a problem”.
Tola also highlighted hidden costs – specifically the high passport fees, which he characterised as “money under the table” – as a driver of illegal immigration, which compounds risks for migrant workers.
“Samdech [Hun Sen] only receives reports from his officials, but he doesn’t know his officials’ secrets that they’re trying to hide from him,” he said.
“We have evidence that if workers want to go to Thailand, they have to pay officials between $150 to $300, and when workers ask them why, they reply that it’s to make the passport.”
Yesterday, Hun Sen and Ministry of Labour officials vehemently denied that migrant workers paid any more than their official discounted rate for passports – about $24.