Labor Ministry Says Brands Hold Key to Wages

The minimum wage for garment factory workers can only be raised if international clothing brands sourcing from Cambodia pay more for their products, a Ministry of Labor official said Tuesday.

Khieu Savuth, chief of the Ministry of Labor’s labor conflict commission, laid down the challenge a day after Swedish retail giant H&M announced a push for countries they source from to instate a fair living wage by 2018.

“Even if we tell the garment factories to raise the wage, if the buyers don’t raise the price, how can the factory pay for it?” Mr. Savuth asked.

“Raising the wage for workers depends on the buyers.” H&M, the world’s second-largest clothing retailer by sales, announced Monday on their website that it is launching a plan to enable garment workers, specifically in Cambodia, to receive a “fair living wage” by 2018.

A model factory will be set up in Cambodia so that they can develop pay structures that achieve that goal, H&M said in its statement.

“We believe that the wage development, driven by for example governments in some countries is taking too long, so we want to take further action and encourage the whole industry to follow,” H&M said.

“We are willing to pay more so that the supplier can pay higher wages.”

A “living wage,” as mentioned in the statement, usually refers to an income that is enough for a worker to have his or her basic needs met, maintain good quality of life while being able to save for the future.

The minimum wages in Cambodia currently stands at $80 per month.

Dave Welsh, country head for the Solidarity Center, an affiliate of the U.S.-based American Federation of Labor and Congress of Industrial Organization, said H&M’s announcement is a tacit agreement with unions that the wages in Cambodia are currently not high enough.

H&M’s public pledge could encourage other brands to follow its lead, Mr. Welsh said.

“It makes it difficult for other brands to say, ‘H&M can afford to do so and we can’t,’” he said. “Largely, it’s positive, but the five-year timeline is a bit long. The urgency is now.”

H&M’s announcement comes after an October visit to Cambodia by the firm’s CEO, Karl-Johan Persson, to speak with Prime Minister Hun Sen about an annual wage review for workers.

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