07 May 2015
PHNOM PENH (Khmer Times) – Industrial relations have been adversarial and confrontational in Cambodia since the late 1990s when foreign direct investment started flowing in. Coming up with effective preventions and settlements of labor disputes is one of the main priorities of the government and other related stakeholders. Cheap labor, vast natural resources, and market access are the three main determinants of foreign direct investment to the Kingdom.
Labor-intensive industry has emerged as the core economic sector after agriculture. The garment sector is the country’s largest foreign currency earner, generating around $6 billion last year – or about a third of Cambodia’s GDP – and accounting for more than 80 percent of the country’s total exports. The sector comprises more than 1,000 factories and employing 700,000 local workers.
The labor law adopted in 1997 to protect the rights of workers has not been effectively implemented. Worker safety and health remain the key issues that need to be seriously addressed. Some factories do not comply with the Cambodian labor law.
The protests demanding a rise in minimum wage for garment workers from $80 to $160 led to violence and a harsh crackdown in late Dec. 2013 and early Jan. 2014. To deal with the rising tensions, the government agreed to raise the minimum wage to $100 for the full-time workers and $95 for workers on probation.
And from Jan. 1 this year, the minimum wage was further increased to $128 for full-time workers and $123 for workers on probation. Despite the wage increase, the workers and their representatives continue to demand for an increase in the minimum wage to $177, in order to meet basic needs.
Institutionalize Tripartite Dialogue
Wage negotiation is a complex process. It involves three parties, namely the employers, labor unions and state agencies. The tripartite consultation and negotiation is critical in settling labor disputes and building healthy industrial relations and sound labor governance.
For instance, the tripartite dialogue model in Singapore under the National Wages Council created in 1972 is a success story. It provides relevant experiences for Cambodia in formulating wage guidelines to achieve orderly wage increases and to prevent wage disputes.
Frequent and frank dialogues among the three parties helped build trust and understanding. In turn, it led to the formation of various tripartite working groups, taskforces and committees to address main employment and industrial relations, and produce practical policy recommendations to bring about positive changes to the existing policy and practices.
Cambodia may take a step further by providing a legislative foundation to institutionalize these mechanisms. It creates win-win-win industrial relations among the three stakeholders.
Strive for Industrial Peace
At the national level, in order to make tripartite mechanism works, labor unions have to be politically independent and neutral. They should not be affiliated to any political party. Their missions and efforts are to serve the best interests of workers and not the political parties.
The government plays a critical role in mediating the differences and disputes between the employers and employees. The government needs to promote social welfare based on a just and fair industrialization.
At the industrial level, the employers must know how to balance individual and organizational needs, and how to align workers aspirations with enterprise objectives.
Sound labor relations must be built from within an organization. Safety, health care and social security need to be introduced. Such measures improve workplace cooperation and productivity.
Changing the Business Mindset
Efficiency and productivity are not achieved only through technology, allocation of resources and managerial control, but more importantly, through the greater involvement of the employees or workers.
Studies have proved that appropriate payment or decent wage, a fair rewards system, and workplace relations significantly motivate employees or workers to work more productively, hence improving labor productivity.