UN calls on brands to help Cambodian factories absorb wage hike
United Nations experts have called on global brands to help manufacturers in Cambodia absorb the rising costs after the minimum wage was raised 28% to $128 a month, effective January 1.
The International Labour Organization (ILO) estimates this will increase overall average wages in the garment industry – which include bonuses and overtime – from $183 to $217 per month, increasing factories’ wage bills by 19%.
Brands which source from footwear factories in Cambodia include: Asics, Nike, Merrell, Dockers, Paul Smith, adidas and Puma.
“It is important that all sides work together to ensure Cambodia’s garment industry remains economically viable,” said Maurizio Bussi, the ILO’s director for Thailand, Cambodia and Lao. “We call on the global brands to play their part. We have received encouraging signals that key buyers will honour the pledge they gave the Cambodian Government in September.”
The rise comes in the wake of other adjustments since 2012 that have seen the minimum wage increase from $61 per month while the prices Cambodian factories receive in their main markets have been stagnating or declining.
“Caught between these two forces, factories have seen a substantial fall in their operating margins over the past three years,” said Malte Luebker, the ILO’s senior regional wage specialist. “In principle, factories can respond by increasing efficiency, using measures that range from better work organisation to energy conservation. However, our research shows that these gains are gradual and will only enable factories to cover a small share of the expected wage increase.”
