Rising Wages In Kampuchea, Lower Competitiveness Of Products, Declining Clothing Orders

Since the workers' strike last January, Cambodia The wages of workers have risen by 63% now. However, the rise in wage costs and the rise in labor costs have led to a decline in the international competitiveness of "made in Kampuchea". Many Kampuchea Garment factory And the number of orders received by shoe factories declined, and some factories even shut down.

In a recent report, a 25 year old woman named Chheav Sarun looked sad in the dormitory of a garment factory in Kampuchea. The woman had two pictures on her bedside, one was her own wedding photo and the other was her late husband. Last year, her husband died in police strikes during a strike.

In January 2014, a nationwide strike took place in Kampuchea. Workers generally asked for a raise in the minimum monthly wage. After that, police shot workers and suppressed the strike. After the incident, 33 customers from the Kampuchea factory, including Adidas, Gap and H&M, wrote a letter asking the Prime Minister of Kampuchea Hun Sen to launch a judicial investigation into the shooting.

Wages have now risen to $128 a month from $80 before strike. This is a triumph for the workers of Kampuchea, but at the same time it will bring worrying consequences. According to the Kampuchea apparel manufacturers association, orders for clothing and footwear received by Kampuchea factories increased by only 1% in the first 11 months of 2014 compared to the same period in 2013. Such a small increase is a sharp decline compared to the average annual growth rate of 20% over the past ten years. Ken Loo, general secretary of the Kampuchea apparel manufacturers association, said that the sharp rise in wages, frequent strikes, political instability and negative media coverage caused Kampuchea factories to decline in competitiveness.

In a Canadia Industrial Park in Phnom Penh, Kampuchea, a garment worker, Vorn Kanha, said she was very pleased with the recent rise in wages. Vorn Kanh intends to send the newly saved money to his own family because three of his children are taken care of by their parents in the countryside. Another worker who worked in the Kin Tay clothing factory said that factory workers have temporarily dismissed some workers, including themselves, because the recent orders have been reduced. The factory manager said that if the factory was reopened, there would be no way to ensure that all the workers who had been temporarily dismissed could return to their posts. Kin Tay garment factory owner refused to be interviewed on this matter.

Kampuchea still enjoys export duties to several important markets, including Canada, the European Union, Japan, South Korea, New Zealand and the United States. This treatment is an extremely important advantage for Kampuchea. However, the sharp rise in minimum wage makes the advantage less obvious. Ken Loo said: "labor costs account for about 20% of the cost of clothing production in Kampuchea. Now the minimum wage rises to $128, plus employers have to give workers $17 mandatory monthly allowance as transportation and housing subsidies. The cost of labor in Kampuchea has been in line with the higher wage level in Vietnam (Vietnam's salary is about $145), which is far higher than the average wage of 68 dollars in Bangladesh. " In Loo's view, high wage levels will no longer allow Kampuchea to do business. Especially for the clothing industry, multinational enterprises often migrate from one country to another in order to obtain the lowest labor cost.

Yang Sophorn, chairman of the Kampuchea Federation of trade unions, said: "after the strike last year, the two sides started negotiations. Garment industry representatives say that if wages rise, many factories will have to close. In view of this management, I also indicated that such risks could happen. But for the time being, I don't see many factories closing down. "

It seems that many international customers in Kampuchea garment factories seem to be on the sidelines: they will not easily give up outsourcing business in Kampuchea, but at the same time be very cautious about increasing orders. One of the questions is whether wages will continue to rise rapidly in Kampuchea, forcing American and European retailers to find other countries. clothing Production plant. Another question is whether or not political instability such as violence will erupt again. Ida Stahlnacke, a spokeswoman for H&M, said: "the criteria we choose to outsource factories are political stability in the local market and respect for workers."