Minimum Wage Compliance Report in Cambodia

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Summary:

Almost half of the respondents reported earning less than the legal minimum wage. Around 56 per cent of the underpaid are male, mostly working in construction, machine maintenance and repair, and agriculture. Poorly paid females mostly work in restaurants, beautician services and agriculture. Three out of four poorly paid men are between the ages of 20 and 40 years old, for women this portion is six out of seven. Underpaid workers have low education, amongst men six out of seven, amongst women nine out of ten. A breakdown per region and occupation reveals that elementary occupations have the highest percentage of non-compliance with minimum wage all over the country, regardless of region.

Cambodia's first offline Wage Indicator salary survey was taken in March and April 2011 in Phnom Penh and the provincial towns of Battambang, Kampong Cham, Sihanoukville and Siem Reap. A total of 1,500 workers declared their monthly wages. The survey covered 10 occupations: drivers, construction workers, agriculture workers, restaurant workers, tourism-related, beautician services, teachers, public administration, food manufacturing & sales, and machine, maintenance & repair services.

Minimum Wage Compliance in Cambodia

Since there is currently (2011) only one minimum wage in Cambodia, set for the garment, textile and shoe industry, this report uses this rate as the benchmark and henceforth refers to it as the "minimum wage". It amounts to US$ 61 per month for a full time worker, or US$ 0.29 per hour.

Underpaid Workers

Results show that more than half of Cambodian workers are paid under the minimum wage, men slightly more often than women. These men predominantly work in construction, machine maintenance and repair, and agriculture. The underpaid women paid females mostly work in restaurants, beautician services and agriculture. It is not just the young who fall in this group: the large majority of the underpaid are between 20 and 40 years of age. As a rule they are poorly educated. The unskilled workers are evenly distributed all over the country but primarily find employment in agriculture, construction and restaurants.

Regional Wages

A somewhat deeper regional analysis reveals that next to the unskilled workers in agriculture, construction and restaurant (non-compliance regardless ranging from 72% to 93% of respondents), skilled agricultural, forestry and fishery workers as well as craft and related trades workers also had a high rate of underpaid worker in each location. In contrast, professionals, technicians and associate professionals and managers had relatively smaller non-compliance rates.

PDF Page 6, Figure 1: Percentage of Workers who earn below the benchmark per occupation

Education and Underpaid Workers

There is a positive correlation between education level and wages - the higher the education, the better the wages. In practically all occupations, workers with a higher education earned more than those with low education. This is especially evident in the service and sales occupation where high educated workers earn 2.7 times what low educated workers do. Similarly, managers with high education are paid 2.2 times than those with low education.

Working Conditions

Employments contract are relatively rare in Cambodia. Only one in three respondents had a written employment contract. Of this minority two thirds are permanently employed, the rest temporary. A 60 percent majority of all respondents had no contract whatsoever. Four out five respondents reported that they received their last wage late. For three out ten workers wages are not stable, but vary from month to month.

Working Poor

Two out of ten earn below the national poverty line (2500 KHR or US$ 0.63 per person per day in 2010 prices). These working people are so poor that they cannot meet their basic needs. Taking the internationally set poverty line of US$ 1 per day, then 26% of respondents are poor - 27% of males are working poor and 24% of female. The prevalence of the working poor is highest in Sihanoukville, with 36% of workers living on less than USD 1 per day, and lowest in Phnom Penh (12%). Working poor is defined as individuals who maintain regular employment but remain in relative poverty due to low levels of pay.