Raffle Le Royal Hotel, Phnom Penh
July 5, 2016
Good morning, Your Excellency Ith Sam Heng, Minister of Labor and Vocational Training, Swedish Ambassador Anna Maj Hultgard, and distinguished guests. It’s great to see this room full of friends and partners all working together in the field of labor and industrial relations.
On behalf of the U.S. government, I would like to take this opportunity to thank the Arbitration Council Foundation and the Ministry of Labor and Vocational Training for organizing this important conference.
As you may know, according to the International Labor Organization, the Ministry of Economy and Finance, and the Ministry of Commerce, around 620,000 Cambodians are currently employed by approximately 700 garment and footwear factories across the country. This sector alone earns an astounding $6.2 billion annually, represents about 73 percent of the country’s global exports, and accounts for approximately 10 percent of Cambodia’s gross domestic product.
We are talking about such statistics because the sector has such a large footprint in Cambodia. I would like to commend the government for taking some important steps to ensure the sustainability, transparency, and success of this important sector. In particular, I would like to applaud the Ministry of Labor and Vocational Training’s efforts to create a transparent and systematic method for determining the minimum wage in the garment sector. In fact, I think this model can be used as a successful basis for determining a cross-sectoral minimum wage. I would encourage the Ministry to work with all relevant stakeholders to explore this further. Creating a national minimum wage will be critical as Cambodia continues to integrate with ASEAN; its neighbors Laos and Myanmar have approved a national minimum wage standard already, so there is a regional precedent for the Ministry of Labor to consider such a measure.
I would also like to commend the Ministry’s efforts to work with all stakeholders to resolve labor disputes through mechanisms such as the Arbitration Council. Resolving such disputes leads to stronger foundations for many industries to remain competitive. Here as well there is a logical next step, and I would encourage the government to consider drafting the legislation necessary for the establishment of labor courts. These courts, created in a transparent and inclusive way, could help Cambodia reach the economic heights to which it aspires.
It’s a positive sign to see unionization has flourished noticeably in the past two decades, in particular in the garment and footwear industries. This is something about which Cambodia should be proud. Having widespread and established unions allows for the possibility of well-managed industrial relations, which in turn helps ensure that the industry is healthy, fair, productive, and sustainable. This is not to say there is no room for improvement, however. There are still concerns regarding workers’ transportation, mass fainting, low minimum wages, and unresolved labor disputes. Still, I believe the union model is a good one, and I believe it should be expanded to more effectively include sectors, such as construction, tourism, food and services, which still face significant challenges. In the longer run, vocational training and skills development for the workforce are critical if Cambodia is to increase its competiveness and productivity.
The United States is the largest single-country destination for Cambodia’s garment and footwear production. As such, we have a vital interest in working with our Cambodian partners to ensure the health and prosperity of this sector. There are several ways we are doing this. Through USAID, we are working with the Arbitration Council Foundation to improve industrial relations and Cambodia’s dispute resolution process. USAID also collaborates with the Solidarity Center to strengthen the economic and political power of Cambodian workers through effective, independent, and democratic unions. With our support, the Community Legal Education Center works directly with local unions and workers to advance labor rights. In addition, the U.S. Department of Labor is helping Better Factories Cambodia to improve factory conditions and advance workers’ welfare. The United States is proud of our support for labor rights, since it goes hand-in-hand with our commitment to a strategic economic trading partnership with Cambodia.
I hope this conference will foster more dialogue among trade unions, employers, employees, government officials, and civil society members. Such communication can help improve working conditions and make Cambodia’s garment and footwear industry even more competitive in the region. The World Bank just raised Cambodia’s economic status to lower middle income. The rise of ASEAN’s economic engine will continue to increase competitiveness. In this climate, it is essential more than ever to promote respect for workers’ rights, better industrial relations, conducive working conditions, equitable benefit sharing, and peaceful labor dispute resolutions for Cambodia to succeed. Thank you.