Real Wages in Garment Sector Fell Over 10 Years

By Dene-Hern Chen 

The Cambodia Daily

July 15, 2013

Wages for Cambodian garment workers decreased by more than 20 percent in real terms between 2001 and 2011 despite the industry’s exponential increase in exports, which in 2012 were valued at more than $4 billion, according to a recent report by a U.S.-based workers advocacy group.

Studying purchasing power among garment workers in 15 countries, the Worker Rights Consortium (WRC) said that wages in Cambodia over the 10-year period to 2011 had experienced a “significant” drop when adjusted for inflation.

“[A] comparison of prevailing straight-time wage rates in 2001 and 2011 reveals that, when adjusted for inflation, pay rates declined significantly over the decade,” according to the report, which calculated the average wage rate—including bonuses but not accounting for overtime—to be $51 per month in 2001, while in 2011 it was $70 per month.

According to the report, 2011’s average wage had actually dropped by 22 percent in real terms due to rising inflation. After taking into account the rise in consumer prices, the average wage in 2011 would have been the equivalent of earning $39.78 per month in 2001, the report states.

The WRC report also said the drop in real wages in Cambodia was all the more “significant” considering the country’s garment industry is monitored by the U.N.’s Inter­national Labor Organization (ILO).

In Bangladesh, which is not monitored by ILO, the drop of wages in real terms was only 2 percent over the decade-long period. Vietnam and Indonesia’s apparel industries saw an increase of 28.4 percent and 39.7 percent, respectively, in real-term wages. And in China, the wage gain “more than doubled in real terms by 129.4 percent,” the report says.

“[T]he loss of buying power for workers was much more significant…particularly as the country’s export-apparel industry was under the oversight of the International Labor Organization’s Better Factories Cambodia program during the entire period,” the report says.

The ILO program, created in 2001 to monitor working conditions in the country’s garment factories, came under fire earlier this year when it was slammed in a February report by Stanford Law School researchers that said wages in Cambodia had fallen significantly in the past 10 years while China, Indonesia and Vietnam—which, until re­cently, did not have an equivalent program—had seen wages increases.

Officials at ILO in Cambodia did not immediately respond to a re­quest for comment.

Despite WRC’s findings, the minimum wage in Cambodia has increased since 2011 to $80 per month and workers on average earn more than $100 after overtime.

Van Sou Ieng, chairman of the Garment Manufacturers Association in Cambodia, disputed the numbers provided by WRC, saying that $70 per month was at the low-end of what a worker was making in 2011.

“Cambodia has to have a competitive advantage compared to other countries,” Mr. Sou Ieng said. “[WRC] can take the figure to justify the means if they want. But for me, I have to look at the sustainability for the industry, and look at the jobs of 700,000 people which maintains the livelihoods of 2.5 million people indirectly.”

He added that the brands sourcing from Cambodia have the real power to change wages but refuse to do so, as illustrated by their continued sourcing from Bangladesh, which remains one of the cheapest manufacturing hubs on earth but has been called out lately for its safety standards.

“They will never want to pay more. It is naive to believe so, and it is a dream to tell the buyers to pay more, because they will move somewhere else.”

Dave Welsh, country director of the Solidarity Center, another U.S.-based labor rights organization, said Cambodian workers deserved more.

“There’s no reason why workers in by far the largest export sector in the country, that is generating enormous wealth for brands and factory owners, shouldn’t get the fair share of the pie.”