In September 18th 2014, H&M, Inditex (Zara), Primark, and other companies that operate in Cambodia, sent Cambodia’s deputy prime minister a letter clarifying their support in increasing the RMG (Ready-Made Garment) employees minimum wage, in order to support the workers right for fair living. The companies clarified their intentions and their expectation that the Cambodian government will help support and enforce these steps:
“As responsible Business’ our purchasing practices will enable the payment of a fair living wage and increased wages … We also expect government and GMAC to establish processes to ensure all workers receive the new agreed minimum wage by monitoring wage implementation and policing suppliers that fail to meet the new minimum wage level. This will ensure an equal level playing field and create a competitive advantage for the factories that comply with the new minimum wage.”
Cambodia is one of the poorest countries in Asia. In the last decade, however, Cambodia has experienced high growth rates averaging 7.7% a year. A large part of the increase in growth is attributed to the garment industry. This industry alone account for 80% of Cambodia’s total exports ($6.78 Billion in 2013 according to World Bank).
The garment industry in Cambodia provide direct employment to more than 400,000 people in different factories. This supposed to contribute to many Cambodians’ ability to earn a stable salary and support themselves and their families. Most employees, however, experience poor work conditions and earn salaries that do not help them achieve the minimum life conditions they aspire and deserve.
Understanding that they deserve much more than what they are getting, as many other workers in developing countries have already learned in the past, factory workers have started to organize, and since May 2014 have started to strike in demand an increase of the minimum wage from $80 to $100, and recently to $177. One can expect the government would put many resources in securing the garment industry future and supporting its employees, as they are directly responsible to an extremely large amount of the country’s income, but this is not the case. The Cambodian government responded in repression acts and called the army to confront protectors.
The government justified its acts in that increasing the minimum wage will scare off investors and send them to look for other, cheaper markets. However, the government ignored the power of unions, and more importantly the power of the media.
As I mentioned earlier, some companies that control a large amount of Cambodia’s garment factories, have come to the rescue and publicly published their support in the workers. That act stopped the protesting and can potentially result in a positive change to the quality of life of hundreds of thousands of Cambodians.
All these raise important questions in the behavior of governments and corporations and their contributions to the quality of life, and to growth. Are these company more committed to Cambodia’s growth than its own government? Indeed, Cambodia’s level of corruption is one of the highest in the world, as CIA’s analysts indicate. But does it mean that companies actually care more?
If they are committed to their employees’ rights, why are they only now acting? Why they were fine with earning billions of dollars while the simple people, their employees, cannot even support their families?
These recent acts in supporting the increase of the minimum wage provide a very positive public relations to these companies. In 1991, Nike experienced the power of the media, when activists published the wages and poor working conditions in Nike’s factories in Indonesia. It caused a painful headache to Nike’s management and badly effected its image at the time. Moving back to our current situation, the different companies know they can suffer the consequences of bad publicity, especially in the current age of social media, so they are probably acting fast in resolving the problems the Cambodian government is yet to perceive.
These companies have greatly increased their image in the workers, unions, international media, and of course their worldwide customers’ minds. They seem to have stronger power than Cambodia’s government in the future of the country’s economy and they are the ones that dictate policies. Maybe the future growth of Cambodia depends on the financial decisions of H&M.