The Cambodian government has decided to increase the minimum wage for garment and footwear industry workers by $2 to $192 per month for 2021. Earlier, the National Council on Minimum Wage (NCMW) had approved $190 minimum wage for 2021, marking no increase over 2020, following sensitive negotiations in which unions requested a raise of nearly $12, and employers asked for a cut of $17. The government then decided to add a $2 raise, which will take effect on January 1.
This year’s minimum wage increase is the smallest since the wage went unchanged from 2010 to 2013. It affects about 800,000 workers from more than 1,000 factories in the textile, garment, and footwear industries. Union leaders held an internal meeting on August 28 to choose their desired minimum wage raise, agreeing on $11.59, which is similar to their requests made in previous years and amounts to a 6.1 percent raise. An employer representative said that the party would wait until the final day to put forth its suggested figure. Nang Sothy, Vice President, Cambodian Federation of Employers and Business Associations, said, the employers may continue to struggle in 2021 as it has been difficult for them to attract investors.
This year was an especially difficult to negotiate the minimum wage because of the combination of the Covid-19 crisis and the cuts due to the EBA. The reduction in the tariff scheme affects 20 percent of Cambodia’s garment and footwear exports to the EU, worth nearly $1.2 billion annually, according to the European Commission.