Establishing a New Minimum Wage for Cambodian Workers

By William E. Todd, U.S. Ambassador to the Kingdom of Cambodia

I would like to begin this week by congratulating all Cambodians and the city of Phnom Penh for a wonderful Water Festival.  It was an honor to be present at the opening ceremony with His Royal Highness, the Prime Minister, and leaders from the National Assembly, and we were all impressed by the amazing athleticism of the racers.  Monday is Independence Day – a day that all Cambodians can reflect upon with pride.  

Soon it will be back to work, and on Wednesday the Labor Advisory Council (LAC), comprised of representatives from the government, garment factory management, and unions, is set to meet to make a recommendation to the Labor Ministry on raising the minimum wage for garment workers in Cambodia.  The minimum wage is a contentious issue in Cambodia – it led to mass demonstrations and violent clashes last year – and it is very much on the mind of my readers.  Sophorn from Phnom Penh asks, “What does the U.S. Embassy think that the minimum wage in Cambodia should be?”

A minimum wage that is determined through a fair and transparent process based on scientific research and international standards is critical for a healthy economy, and workers and management both benefit when workers receive such protections.  Importantly, our emphasis is not so much on a specific number but rather on the methodology that is used to determine the minimum wage.  As Cambodia seeks to become a destination of choice for international companies, it is important to recognize that international brands must carefully guard their image, which in turn depend on the image of the factories and countries from which they source their products.  Cambodia’s reputation and practices with respect to labor rights and working conditions in the textile factories, therefore, matter greatly.  As such, it is essential that the government, private sector, and unions find a way to work together to come up with a fair and equitable solution to the minimum wage issue.  If Cambodia can accomplish this, it will set itself apart from other countries in the region in a positive way and become more attractive to foreign business and investment.

This issue of the minimum wage and labor rights is particularly important as Cambodia heads toward Association for Asia South East Asian Nations (ASEAN) integration in 2015.  In order for this country to truly harness the opportunities that lay ahead with economic integration and cooperation through ASEAN, Cambodia must set and enforce fair labor standards to provide the stability the private sector needs and to avoid losing its most productive workers to other ASEAN members.   

The United States is proud to play a leading role in improving the working environment for thousands of Cambodian garment workers.  For example, the U.S. government supports the Better Factories Cambodia initiative that monitors over 400 factories, working to ensure that national and international labor standards are being met.  We work closely with the U.S.-funded non-profit Solidarity Center, which trains union leaders on how to protect workers’ rights, providing support and legal advocacy.  In partnership with the Solidarity Center, the U.S. government has helped rally support from over 30 private sector brands who have advocated to the government for an increase in the minimum wage.  We also collaborate with the American Chamber of Commerce and the U.S. business community to promote good business practices and corporate social responsibility.

On the issue of wages, the United States supports the work of organizations like the International Labor Organization (ILO).  The ILO has considerable expertise in this area, and they have agreed to provide technical assistance to the Cambodian government to establish an evidence-based mechanism for determining a minimum wage for garment workers.  

There are many factors that should go into setting a proper minimum wage, including the cost of housing, education, childcare, and healthcare, and it is no easy task to boil these down to one number that applies across many sectors.  Employers must also be mindful that a higher wage does not necessarily translate into a higher standard of living if costs rise as well.  The bottom line is that a proper minimum wage has to be enough for a worker to provide for his or her family’s basic needs.  

While the United States supports Cambodians’ right to working conditions and wages that meet international standards and conventions, we encourage all sides involved in the ongoing negotiations to remain committed to peaceful and respectful dialogue.  This is an emotional issue, and understandably so, but all sides will be best served by engaging constructively.  It is important to note that discussions about the minimum wage are a normal part of the democratic process, including in the United States, where President Obama has called on the U.S. Congress to raise the national minimum wage and the issue was on the ballot in five states in Tuesday’s midterm election.  (In the United States, the federal government sets a national minimum wage, but state and local governments can set a higher rate if they choose.)

We can all agree that employees should be able to work in environments that are safe and healthy, where they will be treated with dignity and respect.  This is not just a moral responsibility – it is also good business sense.  Workers who are treated well perform better, miss work less often, and are more likely to stay in their job.  Much of the responsibility rests with employers, but consumers also have an important role to play.  By choosing to patronize businesses that treat employees well, we can all make a conscious decision to support workers’ rights every day.

Holidays like Water Festival and Independence Day are an opportunity for many of us to take a break from work and to reflect on the many blessings in our lives.  It is also a good time to think about the welfare of others in our community, including workers who represent one of the most important sectors in Cambodia today.  I wish all of my readers a safe and enjoyable holiday!

Thank you very much for this opportunity to answer your important questions.  Please continue to send me questions at AskAMBToddPP@state.gov and leave comments on my blog at http://blogs.usembassy.gov/todd. 

William E. Todd is U.S. Ambassador to the Kingdom of Cambodia

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