Prakas 465 delivers a minimum wage boost for employees in Cambodia’s textile, garment and footwear sector.

Released in early October 2018, Prakas No. 465 concerns the Minimum Wage Determination for Workers in Cambodia’s Textile Garment and Footwear Sector in 2019. After debate by Cambodia’s Labour Advisory Committee, the Prakas will come into effect from 1 January 2019, and deliver a 7% monthly minimum wage increase for textile workers.

While the Labour Advisory Committee voted for a minimum wage of $177, Prime Minister Hun Sen added $5 to that amount, effectively raising it to $182.

Minimum Wage Increases

In practical terms, the minimum wage rates introduced for 2019 break down as follows:

  • The minimum wage for workers in the textile, garment and footwear sector is set at $182 per month.
  • The minimum wage for probationary workers is set at $177 per month (rising to $182 after the probationary period).
  • Piecework which results in wages lower than the minimum rate shall be made up to $182 per month by employers (and up to $177 for probationary employees). Piecework wages exceeding the monthly minimum wage will be paid at the higher amount.
  • All associated benefits of employment are unaffected by the Prakas and remain the same.

Economic Growth

The minimum wage increase was part of an election promise made by Hun Sen and is buoyed by recent economic success: the textile, garment and footwear sector generates $7 billion per year for Cambodia’s economy and employs around 700,000 workers.

With that in mind, some industry figures argued that Prakas 465 hasn’t gone far enough: President of the Cambodian Alliance of Trade Unions, Yang Sophorn, pointed out that the minimum wage increase fell short of their proposed monthly rate of $189 and would not allow workers to keep up with inflation or “live with dignity”. On the other hand, Cambodian business figures have argued that the wage increase will make Cambodia less competitive with neighbouring countries, and particularly with Vietnam, where the minimum wage is $184 per month but electricity and transportation costs are lower.

Despite union concerns and growing levels of international competition, Cambodia’s textile industry is experiencing positive growth - and currently benefiting from a trade deal with the United States which saw exports grow by 16.1% in 2017.

For more insight into Cambodia’s business landscape and payroll regulations, browse activpayroll’s global payroll resources...

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