The upcoming Minimum Wage Law is likely to be adopted in a sector-by-sector basis, with construction and hospitality being the first industries affected by the new legislation, Cambodian Federation of Employers and Business Associations (CAMFEBA) president Van Sou Ieng revealed during a meeting with executive members of the private sector last Friday.
“The Minister told me that it will go by sector. It’s not like tomorrow we will have a minimum wage for every sector. They are planning to do it stage by stage,” said Van Sou Ieng, who is also chairman of the Garment Manufacturers Association in Cambodia (GMAC), during the CEO Lunch Meeting on “The Development of Cambodia’s Minimum Wage”, an event organised by CAMFEBA to discuss the zero draft of the Minimum Wage Law.
“They are looking for sectors that are already organised, with associations and representatives; sectors that are mature and will be able to negotiate a minimum wage. The starting point will be the construction industry and then hospitality. These are the sectors that will be included in the next few years,” he added.
Despite the fact that the minimum wage in Cambodia has only been applicable to the garment and footwear sectors, it has always been seen as an important indicator of wage levels to other sectors of the economy.
With recent pressure to consider national minimum wages and minimum wages in other industries, the Ministry of Labor and Vocational Training (MoLVT) announced earlier this year the development and implementation of the Minimum Wage Law, which aims to formalise the procedures and processes of the minimum wage negotiations in all sectors.
The MoLVT also announced recently that a new minimum wage of $153 per month, excluding mandatory allowances, will come into effect on 1 January 2017. This is an increase of $13 compared to the previous monthly amount.
Private sector’s input
During the meeting on Friday, executives representing companies from a wide range of sectors were asked to provide input into the zero draft of the law, which CAMFEBA shared among its members earlier this month. It was generally agreed that the law still requires a considerable amount of work to rid it of vague wording that could lead to ambiguity in its interpretation.
The general consensus was also that some articles, as they stand, could prove detrimental to the interests of employers. “Some articles are particularly concerning,” said Matthew Rendall, senior partner of legal firm ZICOlaw. He was referring to Article 16 of the draft, which says that “no one besides the National Council on Minimum Wage can conduct a study related to minimum wage, except if there is approval from the Minister of the Ministry in charge of Labour.”
The National Council on Minimum Wage is a body envisioned in the new law that will be in charge of conducting scientific studies on tasks related to minimum wage and providing recommendations to the MoLVT. As per the current draft, it will be composed of 48 members – 16 representatives from employers’ associations, 16 employee’s representatives and 16 representatives of the government.
To advise this body and provide input from the private sector, CAMFEBA is now working on the creation of a minimum wage business group composed of members of the employers’ federation.
Event panelist and CAMFEBA vice-president Sandra d’Amico called for unity and coordination within the private sector to guarantee the new law represents employers’ best interest. She called on attendees to make sure every sector of economic activity is represented in their planned business group.
“I ask you to get involved because you know your sector best and what’s needed for a successful future,” she said.
National or sectoral?
D’Amico also expressed CAMFEBA’s position on whether the new minimum wage should be the same across all industries, or whether it should be different depending on sector or geographic location.
“As CAMFEBA, we favour a sectoral law,” she said, adding that CAMFEBA will lobby against a national, or blanket, minimum wage that covers every sector.
Cambodia has yet to ratify the International Labour Organisation’s Minimum Wage Fixing Convention of 1970 (No 131), a convention that mandates signatories to establish a minimum wage system covering all groups of wage earners.