Cambodia’s new trade union law fails to address familiar problems for factory workers. While relations between the ruling party and the opposition deteriorate, Cambodia’s labour practices remain poor with risk of violent protests highly possible.
Following eight years of drafting, this April the Cambodian National Assembly and the Cambodian Senate passed a controversial trade union law to regulate some 3,400 trade unions in the country. The new legislation has drawn a wide range of criticisms both from domestic and international trade unionists as well as human rights groups.
The most contested issues concern clauses that exclude informal workers and public servants from the scope of the law. Furthermore, the law requires unions to disclose their finances to the government, and it increases the minimum threshold of workers required for union formation from 10 percent to 20 percent for a given factory.
Finally, workers who have been abused or mistreated at work must ask permission from their factory owners prior to stage a protest, and they can be arrested for disrupting production. Union leaders and human rights activists argue the new law makes it much harder for unions to form and more difficult for workers to strike.
The Minister of Labour, Ith Sam Heng, defended the new trade union law, claiming it “would bring stability and bigger investments.” The ruling Cambodia People’s Party (CCP) with the backing of the factory owners have long blamed the trade unions for poor relations, and condemned strikes have dented the performance of some sectors.
For a good twenty years, Cambodia has been exhibiting high growth, especially due to the garment industry, which employs 700,000 workers and churns out $7 bn per year. However, factory workers are often subject to exploitative practices and harsh working conditions such as overcrowded factories, violence at the workplace, harassment, short term contracts, and few or no breaks. With the help of trade unions, workers have frequently been striking for higher pay and better working conditions.
New trade union law fails to address old problems
Recently, the staggering growth of the garment industry has diminished. Further foreign investment is needed to sustain growth, but frequent strikes – almost a daily phenomenon – deter businesses from investing in Cambodia. The new trade union law does not address the long-standing issues in the sector, which heightens the risk of violent protests.
Nothing in the new law improve on the harsh working conditions and abuse. Weakening the power of labour groups and restricting industrial action is hardly a sustainable solution. It robs workers of the only vent for frustration available to them.
The situation is even worse due to the macroeconomic environment. Businesses are under pressure to cut costs by keeping wages low, since the appreciation of USD (Cambodia is heavily dollarised) and rising competitiveness in neighbouring countries such as Myanmar and Vietnam erode profits.
However, persistent low wages coupled with widening inequality is an accelerator for social unrest. The current wage-setting mechanism, run by the Labour Advisory Committee (LAC), is not representative, since many of the trade unions affiliated with the opposition party are not part of the LAC. Therefore, strike is often the only channel for weak trade unions to make their demands heard.
Labour relations in Cambodia are heavily politicised
While the CCP-led government is backed by garment factory owners, the opposition Cambodia National Rescue Party (CNRP) has a large support base of garment workers. This gave the CNRP 2.9 million votes and 55 seats in Parliament following the July 2013 general election. The trade union law is passed at a time when political disputes between the two sides have heated up.
Cambodia saw a brief period of political stability after the opposition party ended a 10-month parliamentary boycott following the ruling party’s agreement to electoral reforms, and a new election law passed in March 2015. Political instability has risen since late 2015.
Hun Sen, Prime Minister of Cambodia
Prime Minister Hun Sen is feeling threatened by the oppositions’ significant support from the garment workers. Tolerance to dissent has decreased, and political violence against the opposition is rising.
Two CNRP MPs were attacked by government supporters in October, coinciding with the CNRP deputy leader, Kem Sokha, being voted out by the ruling party as the first vice president of the National Assembly. Later in November, a Cambodia court issued an arrest warrant for the CNRP-leader Sam Rainsy over a seven-year-old defamation case.
Strikes amid political conflict have turned violent previously. The new law provides the government with an extra tool to crack down on opposition affiliates with clauses that are open to politically motivated interpretation.
Business needs to be aware of potential operational and reputational risks
A more inclusive wage-setting mechanism and improving working conditions would be a more sustainable solution for solving the issue of frequent industrial action. Meanwhile, the possibility of strikes and riots will remain high for the foreseeable future, and companies need to be aware of potential operational risks.
In addition, customers are becoming more aware of the labour situation in Cambodia as more domestic and international NGO’s are closely monitoring it. Foreign businesses will have to take appropriate measures to mitigate reputational risk.
