Cambodia unions warn of strikes as factories indicate no wage raise

Cambodia's garment factories have indicated they will reject demands for an increase in the minimum wage next year, angering unions and risking upheaval in a crucial economic sector for years dogged by unrest.

A survey distributed among members of the Garment Manufacturers Association in Cambodia (GMAC), which represents the country's more than 500 factories, showed 63% of members want no raise and 26% support only marginal increases of $1-$5.

It comes ahead of talks next month between the government, factories and unions to address demands for a sharp increase from the current monthly $128 minimum to $177 in 2016. A final decision will be made in October.

Any flare-up would be a poorly timed blow to Cambodia, for which garments and footwear orders for brands like Gap, Nike, Adidas and H&M provide crucial jobs and are a key driver of the fledgling economy.

Sustaining the $5 billion sector is a tricky balancing act for Cambodia. Higher wages could placate workers but make the country uncompetitive, while protests by unions risk scaring investors away.

Cambodia's competition is increasing, with Myanmar now receiving the same European Union trade privileges as Cambodia and courting foreign investors with tax breaks and what is likely to be a cheaper workforce.

Factory output remains strong in neighbouring Vietnam, which exported $31 billion in garments and footwear last year and is negotiating a Pacific trade pact that will give it tariff-free access to Cambodia's biggest market, the United States.

Hiroshi Uematsu, head of the Phnom Penh Special Economic Zone, said the wage issue was worrying investors and any increase should be "rational and reasonable".