People’s Tribunalon

Asia Minimum Floor Wage, Cambodia

Presentation: Mass Faintings and Cambodias wage development

Presented by Bent GehrtWorker Rights Consortium

Faintings overview

• Since June 2010 there have been at least thirty-four separate incidents of mass fainting by workers in sixteen garment and footwear factories in Cambodia. In total, almost 2400 workers have fainted

• Most recent incident occurred in January 2012.

Monthly fainting incidences

Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-120

100

200

300

400

500

600

Potential causes

• Chemical Exposure• Excessive Overtime• Excessive Heat and Inadequate Ventilation• Restrictions on Toilet Access• Other Occupational Safety and Health Hazards (poor ergonomic quality of the chairs with which workers are provided, inadequate lighting, unsanitary toilet and facilities, and excessive noise levels)

• Lack of Access to Adequate Healthcare • Psychological Factors(Collective Panic and Work-Related Stress)

• Malnutrition

Mass Psychogenic illness?

Management believes the cause of the fainting is that the workers didn’t get sufficient food (report page 2)

Mam Vannak, Secretary of State at the

Ministry of Labor

Minimum wage and Inflation 2000 - 2012

Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Inflation %* -0.8 0.2 0.1 1 3.9 6.3 6.1 7.7 25 -0.7 4 6.4 5.6 3.6

Minimum wage** 45 45 45 45 45 45 50 50 56 56 61 61 66 66

Development of the real wage (fall in percentage)

0.0 -0.8 -0.6 -0.5 0.5 4.2 -0.1 5.6 1.9 21.5 13.9 17.2 15.8 20.3

What the minimum wage should be just to catch up with inflation

45.0 44.6 44.7 44.8 45.2 47.0 49.9 53.0 57.1 71.3 70.8 73.7 78.4 82.8

* Source: IMF World Economic Outlook ** Source: Prakas 17, 724 and 32

Potential Fainting Threshold?When the real wage decrease by more than 14% from the 2000 wage

Workers income and expenses• Wage in 2011 61 USD/ month

• Rent and utilities: 8 USD/month• Remittance 17 USD/month• Personal expenses 5 USD/month

• Remaining for food 31 USD/month or 1 USD per day (4000 Rial)

(Breakfast: 1000, Lunch 1000 and dinner 2000)

LunchThe 500 Rial soup

How is it possible to sell a vegetable soup for 500 Rial (12 US cent)

• Food prices are high. For instance Chicken costs 21.000 Rial per kg and cabbage costs 2300 per kg.

• Recipe for cheap soup:– Approach vegetable vendors in the evening to buy the

vegetable that will become unsellable due to impending rot the following day and buy these at discount.

– Add tiny amount of protein in the form of small fish or chicken carcasses.

– Add plenty of water

Vegetables at the market

Soup Sample

Lunch Calories

• Soup: average weight: 200 gram• Average calories 76 Kcal/ 100 gram• Rice Average weight: 250 gram• Average calories: 168 Kcal/ 100 gram

• Total Calories: 2x76 + 2.5x168 = 572• Total Calorie needs 2200/3 = 733• Deficit = (161)

Breakfast Rice 200 gram = 336 KcalPork (estimated) 50-60 KcalTotal (including vegetables) approximately 400 Kcal

Deficit: 733 – 400 = (333)

Workers who live at home

• Eats better food as they eat breakfast and dinner at home.

• Eat fruit more often as they have fruit trees in the garden

• Spend 2000 Rial for lunch• Unless they are really broke, they never eat the

500 Rial soup as it “does not give them strength”

• No one in the sample group had fainted

Conclusion re faintings

• Strongly related to the reduced real wage of the workers.

In particular there has not been a proper correction for the high inflation of 25% in 2008.

• 5 USD health allowance insufficient in correcting the fall of real wages

Is a higher wage affordable?Comparing: Zongtex Garment Mfg vs Beauty Apparel

Zongtex Garment• Key buyer is Global Gold (Derek Heart), which is

sold at Kohls Department store and Kmart – in other word cheap mass retailers.

Beauty Apparel• Key buyers are Adidas and Gap

1410 Broadway Floor 8New York, NY

• Adidas 2010 revenue was 11.99 Billion Euro according to Wall Street Journal

• Adidas Workplace Code of Conduct re Wages & Benefits“Wages must equal or exceed the minimum wage required by law or the prevailing industry wage, whichever is higher”

Wage comparison

Zongtex Garment Mfg Wages are 63 to 68 USD per month

Beauty ApparelWage is 61 USD per month

Adidas said its factory workers earned […] considerably more than the minimum wage (Guardian, February 2).

Doing just fine: Brands profits after taxin millions of USD

• Source: Marketwatch, Wall Street Journal

2006 2007 2008 2009 2010

Adidas 483 551 642 245 567

Gap 778 867 967 1100 1200

Nike 1490 1880 1490 1910 2130

Puma 263 269 233 80 202

Comparing Cambodia and Vietnamminimum wages (2005 to 2012) USD/month

2005 2006 2007 2008 2009 2010 2011 20120

10

20

30

40

50

60

70

80

90

100

CambodiaVietnam (Hanoi+HCMC)Vietnam (2nd tier cities)

Vietnam expects higher export of major products

• The country's textile and garment sector attained an export turnover of over 14 billion USD in 2011, enjoying a trade surplus of 6.5 billion USD.

• Le Tien Truong, Deputy Chairman of Vietnam Textile and Garment Association and deputy general director of Vietnam Textile Corp. (Vinatex), explained that the healthy market forecasts and the confidence gained from customers were the main reasons behind the high export growth of textiles and garments last year.

Source: http://www.vtgvietnam.com/marketnews_detail.asp?serno=311