Cambodia Investment Review
The Cambodian government has announced a new monthly minimum wage of $208 for workers in the garment, footwear, and travel goods sectors, which employ close to 1 million people across the country. The 1.96% increase from the current $204 will take effect on January 1, 2025, as confirmed by the Ministry of Labor and Vocational Training.
This decision follows discussions by the National Council for Minimum Wage, which initially proposed setting the minimum wage at $206. However, the final figure was raised by an additional $2 under the direction of Prime Minister Hun Manet, reflecting the government’s ongoing effort to improve workers’ living standards while maintaining the competitiveness of Cambodia’s key export industries.
Additional Benefits to Support Workers
In addition to the minimum wage, workers in these sectors will receive supplementary benefits, including a $10 monthly bonus for regular attendance and an additional $7 per month to assist with transportation and rent. These fringe benefits aim to enhance the workers’ ability to manage daily living expenses alongside their base wages.
The garment, footwear, and travel goods industry remains a critical pillar of Cambodia’s economy, consisting of approximately 1,538 factories and branches that collectively employ around 913,000 workers. As the largest foreign currency earner for the country, the sector’s contribution to the economy is significant, generating billions of dollars in exports annually.
According to the General Department of Customs and Excise, Cambodia exported $6.24 billion worth of products from this sector during the first half of 2024, marking a 16.4% increase compared to $5.36 billion during the same period in 2023. The consistent growth of the sector highlights its resilience and its vital role in Cambodia’s economic landscape.
The wage increase comes amid growing calls for better labor conditions and pay, both domestically and internationally. Cambodia, like other countries in the region, faces pressure to ensure that workers receive fair compensation without undermining the global competitiveness of its manufacturing sector. By adopting a modest but steady wage increase, the government seeks to strike a balance between the needs of workers and the industry’s sustainability.
Potential Impact On Production Costs
Labor groups have acknowledged the wage rise but note that the increase may not fully address the rising cost of living in urban areas such as Phnom Penh, where many workers are concentrated. At the same time, industry leaders have raised concerns about the potential impact on production costs, as the sector grapples with global economic pressures and increasing competition.
Despite these challenges, Cambodia’s garment industry continues to play a key role in supporting economic growth, job creation, and foreign trade. The government remains focused on ensuring that the sector remains competitive while working to improve the living standards of its workforce.
As Cambodia approaches 2025, all eyes will be on how the wage increase affects both the livelihoods of nearly 1 million workers and the broader performance of the industry in the global market. The government has expressed its commitment to fostering collaboration between industry leaders, labor representatives, and international partners to ensure sustainable development and competitiveness in the coming years.
