Cambodia on Friday raised the minimum monthly wage for workers in its crucial textiles and footwear industry to $182, an increase of seven percent, with effect from January.
The garment industry is Cambodia’s largest employer, generating $7 billion for the economy each year.
Boosted by a trade pact that allows Cambodia to export luggage items to the United States free of duty, garment exports grew 16.1 percent in the first half over the corresponding 2017 period, the World Bank has said.
“The minimum wage for textile, garment and shoe workers for 2019 is set at $182 per month,” Labour Minister Ith Sam Heng said in a directive on Friday, adding that the new wage takes effect from January 2019.
The current minimum wage, at $170, makes it a challenge for Cambodia to stay competitive, with some employers arguing the wage hike reduces its appeal for some firms.
“We can’t anymore say we are a cheap hub for labour,” said Kaing Monika, deputy secretary general of the Garment Manufacturers Association, adding that the new figure puts Cambodia on par with Vietnam for the region’s highest wage.
“It will be a big test for Cambodia’s competitiveness which so far has been strongly helped by better international market access.”
The garment industry employs an estimated 700,000 Cambodians, helping to provide livelihoods in one of the world’s poorest countries. The new wage fell short of a proposal of $189 put forward by major unions, said Yang Sophorn, the president of the Cambodian Alliance of Trade Unions. “I am not satisfied with $182, because it does not allow workers to live with dignity,” she added, saying it did not allow them to keep up with rising prices.