PHNOM PENH: Cambodia on Friday raised next year's legal minimum wage for workers in its crucial textiles and footwear industry to US$190 (5,800 baht) per month, an increase of 4.4%, amid pressure from the European Union over its human rights and political record, officials said.
The garment industry is Cambodia's largest employer, generating $7 billion for the economy each year. It faces uncertainty after the EU in February began a process that could suspend the country's special trade preferences.
"The minimum wage for textile, garment and shoe workers for 2020 is set at $190 per month," Labour Minister Ith Sam Heng said in a directive on Friday, adding that the new wage takes effect in January.
Cambodia benefits from the EU's "Everything But Arms" (EBA) trade programme, which allows the world's least-developed countries to export most goods to the EU free of duties.
Pav Sina, president of the Collective Union Movement of Workers, said unions would accept the new hike, although it fell short of their $195 demand, after a representative vote.
"Even though this figure is not what we wanted as our position, it is positive, as Cambodia is in the midst of uncertainties of the trade preferences," Sina said.
"If our wage goes higher than countries in the region, we will also suffer," Sina said.
The EU, which accounts for more than one-third of Cambodia's exports, including garments, footwear and bicycles, in February began an 18-month consideration that could lead to the EBA suspension.
The re-examination of the European preferences began after the arrest of opposition leader Kem Sokha and the dissolution of his party, leading to longtime Prime Minister Hun Sen's party's holding all seats in parliament.
Ken Loo, secretary general at the Garment Manufacturers Association of Cambodia, said employers accepted the new minimum wage but were concerned about rising pay.
"We are always worried ... we are always concerned about rising wages, but we also understand that we just have to go up in line with inflation and other factors," Loo told Reuters on Friday.