Following close on heels of Cambodian Prime Minister Hun Sen’s announcement of benefit packages to garment factory workers, the local manufacturers have appealed to the government to compensate for higher costs of productions that will ensue from this move.
The Prime Minister’s announcement recently when he averred that the garment factory workers in Cambodia from now on will be entitled to free health care facilities that will be footed by their employers. Besides, the premier also proposed that the workers should get free access to public transport and a hike in minimum monthly wages from $153 to $168.
The Garment Manufacturers Association in Cambodia (GMAC) Deputy General Secretary, Kaing Monika voiced concern about Cambodian firms continuing to stay competitive in the global markets in wake of this cost factor. In his opinion, “Once the new law is implemented, the garment and footwear manufacturers would incur an additional $10 mn cost on a monthly basis, keeping the escalation estimates on the lower side. Besides, the expenditure towards health care would entail an addition of $3.5 mn on a monthly basis.”
He however, expressed the sentiment that the government had arrived at the decision to grant benefits to the workers after careful consideration and a detailed study of conditions. “In view of this, we can only hope that our government facilitates us manufacturers by coming up with some encouraging policies that might nullify the cost escalation that’s bound to take place,” he said.
Pointing out that in the absence of such a compensatory move, there would be untold hardships for the manufacturers to combat, Kaing suggested that to alleviate the pain, the government could initiate steps like lowering the electricity tariffs, cutting down on red tape and enhancing the logistics system.” In the recently concluded year the country’s garment and footwear industry yielded revenues to the tune of $6.5 bn. At the same time, it employed more than 700,000 workers. The rise in factory workers wages should be seen from a cumulative perspective as in the current year the wages increased from $140 in 2016 to $153.
Compounding the minimum wage rise is the government’s move to set up a national scheme under the aegis of National Social Security Fund to provide workers with free health insurance and injury compensation. At present, the worker and the employer contribute 1.3 per cent of the gross monthly salary and share the burden. The Prime Minister’s announcement entails that the burden of the entire cost of health insurance will be shifted to the employer.