Cautious Praise For Pension Scheme

While some in the business community have welcomed a government plan to launch a pension scheme for the private sector next year, a leading manufacturer’s group said it could be a burden to factory owners especially in the garment industry.

Prime Minister Hun Sen said garment and footwear industry workers will receive retirement benefits 2019. KHMER TIMES / SUPPLIED

Prime Minister Hun Sen laid out the scheme at a meeting with thousands of workers from the garment and footwear industry on Sunday, saying all workers would get retirement benefits from 2019.

In Channy, president and group managing director of the locally owned ACELDA Bank welcomed the plan but said the bank already had an internal scheme for its staff who retire. “Many other middle-income countries already have a pension fund scheme,” he said. “I think it is right that the government decided to start the scheme in the private sector. It proves that the government is taking care of employees.”

Channy said his employees pay a small amount from their salary. The bank contributes the same amount to keep as a fixed bank deposit with interest. “Once they retire or move to work at other places, they can withdraw that money,” he noted. “I am happy to see that the government is introducing a scheme for the private sector. It is easy for us to comply with the government’s scheme.”

Kaing Monika, deputy secretary-general of Garment Manufacturers Association in Cambodia (GMAC) which represents more than 500 factories employing more than 700,000 workers, also welcomed the scheme but said it would be another burden to the industry’s owners since the government just gave other benefits to workers.

“If we look at our economic growth, it allows us to think about the pension fund policy which many other developed countries have implemented for a long time because it is social protection,” added Monika. “With proper implementation, it’s a good social protection scheme which benefits the citizens. This is new for Cambodia but not in other developed countries. The stage of Cambodia’s economic development is allowing us to move in that direction. But if we look at the garment and footwear industry, it will be a bit tough for us because we recently increased the minimum wage of workers,” he said.

Monika said he hoped the government would be able to find alternatives to make the garment sector more competitive. “Other sectors like banking and insurance may be able to afford it [pension scheme] easily. We need a little breathing space,” he said.

Prime Minister Hun Sen said that under the scheme workers who retire can still get 80 percent of their salary. David Van, executive director of Deewee Management Consultants said that in other countries, to build up employees’ pension funds, both employees and employers must contribute monthly to the pool. This means a cost to employers in contributions to the employees fund while employees get a lesser net amount as salary as their contribution is deducted from their gross salary.

This article was originally published in the Khmer Times. [democracy id="44"]