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The first meeting of the National Minimum Wage Council 2022
Every year in Cambodia, representatives of workers and factory owners meet with the Ministry of Labour and Vocational Training to discuss the minimum wage for factory workers and to try to strike the right balance between social welfare and industry competitiveness.
This year, the discussion is more crucial than ever, as Cambodia has received a lot of attention for its recent progress and spectacular economic growth. Given the number of people involved in these meetings, the evolution of the minimum wage is highly political. In addition, the cost of living in the country is rising, making it difficult for workers to get by on just USD 200 a month.
Here is a rundown of the first meeting of the National Minimum Wage Council 2022.
The current status quo
As every year, a discussion on the minimum wage is organised in Cambodia through several meetings of the National Minimum Wage Council (NMWC) to discuss the amount allocated to workers. The first tripartite meeting of the series, attended by workers’ representatives from trade unions and factory owners’ representatives, was held on 15 August to discuss the minimum wage for 2023. From 2022, the minimum wage for workers in textile, clothing, footwear and travel and bag factories will be $194 per month.
As far as we know, the unions intend to ask for an increase of at least USD 20 (up to USD 50).
What is the Union’s point of view?
According to the unions, the 2023 minimum wage should be increased for three main reasons, namely the rising cost of living in the country as well as the good performance of the sectors in recent times, but also because the coming year is an election year and the public will therefore support the politicians in favour of an increase.
The textile and clothing industries are among the most important in the country and play a major role in public opinion.
What are the factory owners’ representatives saying?
On the other hand, factory owners point to the low margin achieved in the sector, even though performance figures show positive signs.
Indeed, on the face of it, exports are strong, but only 39% of Cambodian companies made a profit last year, 43% lost money and 18 just broke even, according to a study by the Japan External Trade Organisation (JETRO).
The 2022 minimum wage
Last year, the NMWC initially voted to keep the 2022 minimum wage for these sectors unchanged from the 2021 figure of $192, until Prime Minister Hun Sen intervened to add $2 to the total, or $194 per month. In addition, workers are entitled to benefits such as a $7 transport and housing allowance and a regular attendance bonus of $10 per month.
Textile and garment industry figures at a glance :
- 6.6 billion in the first half of this year (an increase of 40% compared to the same period last year)
- 1,100 factories and branches employing about 750,000 workers, according to the authorities
- Cambodia’s largest source of foreign exchange
How does the minimum wage work in cambodia?
While Cambodia has a minimum wage regulated by law and adjusted annually by a ministerial decision (Prakas), it is important to understand that it only applies to a certain type of worker, namely garment and textile workers, of which there will soon be one million. However, this means that all other workers in the country are not subject to this law and can be paid less than USD 194.
Unions have repeatedly highlighted the difficulties faced by workers on such low wages, as most of them send half of their salary each month to their elders who rely heavily on them. However, with the recent introduction of a pension scheme under the National Social Security Fund, the situation may change in the near future.
What is next for the National Minimum Wage Council?
This first meeting is one of a series that will take place between August and September, the last one being on 23 September. They will all be held in the vocational training room of the Ministry of Labour.
How can our experts help?
To find out more about how these developments may affect your company, why not book a consultation with one of our experts.
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