When the cost of labour started to rise in China a few years ago, many manufacturers thought it would be a smart move to decamp to smaller Southeast Asian countries such as Cambodia where wages were a lot lower and the pro-business government made it easy for them to set up shop.
Many Cambodian workers and trade unionists had other ideas however and they are now threatening widespread industrial action unless the country's minimum wage is increased from the current, less than subsistence, level of US$61 per month to between US$120 and US$150 per month.
Trade unionists pointed out that wage levels in neighbouring countries were increasing rapidly and that Cambodian workers deserved a better deal too. The national minimum wage in Thailand has just been increased by more than one third to 300 Baht (about US$10) a day, or about US$250 per month. In Vietnam too, the minimum wage for private sector workers has been increased by one third this year to about US$110 per month in major urban areas such as Hanoi and Ho Chi Minh City. One of the reasons given by the Vietnamese Ministry of Labour, Invalids and Social Affairs for increasing the minimum wage was that the previous rate only covered about 60 percent of the cost of living for factory workers. And this is precisely the reason why Cambodian workers and trade unionists are demanding a substantial wage hike too. Many Cambodian workers cannot even afford to buy decent food and get the nutrition they need for a day's work on the production line, as evidenced by the numerous incidences last year of employees fainting at their work station.
Poor pay and working conditions have been the focus of numerous strikes in Cambodia over the last few years and workers have often demonstrated remarkable determination and solidarity in their fight. Last November, for example, workers at a South Korean-owned garment factory on the outskirts of Phnom Penh went on strike demanding the reinstatement of three trade union representatives who were dismissed for allegedly stealing T-shirts. Workers have not always been successful in their protests, largely because the trade union movement in Cambodia is divided between unions affiliated to the ruling Cambodian People's Party, which are more sympathetic to or even blatantly in favour of management, and the truly independent unions which actually represent the workers. Union activists are also subject to routine intimidation and threats of violence. Nonetheless, worker activism is clearly increasing in Cambodia and strikes and protests will remain a regular occurrence until wages and working conditions are significantly improved.
And Cambodia is certainly not the only low-wage country in Asia where workers are demanding a better deal. In Bangladesh, site of a horrendous factory fire that killed 112 workers on 24 November last year, workers and trade unionists are also saying enough is enough. Bangladesh's National Garment Workers Federation (NGWF) announced on 9 January a program of mass action unless the owner of Tazeen Fashion was arrested for his role in the factory fire. Speakers at a rally in Dhaka also called for proper compensation to be paid to the victims of the fire and their families and for immediate improvements to be made to factory safety in the country.
No winners in the race to the bottom
Manufacturers are slowly beginning to understand that wherever they go in the search for cheap and compliant labour, workers will not remain cheap and compliant for very long. In China, factory bosses, and the international brands that bought from them, enjoyed a remarkable golden period of two decades or more during which hundreds of millions of impoverished rural labourers moved from their villages to the coastal provinces of Guangdong, Fujian and Zhejiang in search of jobs in factories and construction sites. The flood of new migrants meant wages stayed low and workers had little recourse if they were cheated out of their hard-earned pay or denied compensation for an accident. But about five years ago, the migration began to slow and the demand for factory workers started to exceed the supply. Employees gradually became aware of their new collective bargaining power and started getting bolder. They demanded not just what they were owed but what they fundamentally deserved – decent pay for decent work.
This new generation of migrant workers were generally better educated and more aspirational than their parents. Many did not see themselves as migrants at all but as ordinary workers hoping to earn a decent living, buy their own place, get married and settle down in the city. However, for those working long hours on the hot and dusty factory floor, even these modest dreams were beyond their reach. As a result, workers in factories across the country went on strike, demanding not just higher pay but better welfare and social security, safer working conditions and the right to be treated with dignity and respect; to be seen as human beings and not just units of production.
As we have seen, some manufacturers responded to this sea change by closing down their factories in China and moving production to places where production was cheaper. Many more however stayed in China and many of them are now reaping the benefits, especially those who were willing to listen to their employees' demands and reach a compromise agreement with them. These factories have often been rewarded with a happier, more stable and more productive workforce that sees the benefit of investing in their workplace rather than viewing it simply as a short-term option, a place to make a little money before moving on. For example, once a long running dispute at the Citizen Watch factory in Shenzhen was resolved through collective bargaining, the factory workers readily agreed to work extra shifts to make up production quotas affected by the strike. In response, management treated the entire 1,000-strong workforce to a banquet at a four star hotel in Shenzhen to thank them for their efforts.
Many of those manufacturers who relocated to inland China or to other Asian countries are now beginning to realise that while labour costs may be cheaper, their employees are not as content or as productive as those in the factories of southern China. Businessmen in Phnom Penh complained to the Financial Times last week that factories were operating at 80 percent of the efficiency of those in China, the country lacked skilled workers and managers and the electricity supply was expensive and unreliable. And there are already signs that the massive influx of foreign-owned manufacturers into Cambodia over the last three years has led to labour shortages in some areas. Business owners say overall wage bills, including overtime and bonuses, are already going up to between US$110-US$130 a month for factory workers, compared with just US$85-US$100 in 2010. And the pressure from workers for higher basic wages will keep on building.
Perhaps those manufacturers who relocated to Cambodia and Bangladesh to escape the higher costs of doing business in China should learn from those who stayed behind; those who were willing to sit down with their employees in collective bargaining to discuss how to make things better for both sides. Instead of racing even further to the bottom, surely the time has now come for everyone, manufacturers, buyers and consumers, to accept that no matter where they are employed in the world, all factory workers deserve decent pay for decent work.