Bike
firms saddle up on low Cambodian
wages By Michelle Tolson
PHNOM PENH - Cambodia's export business is
in the process of changing due to shifts in
manufacturing in Asia. A business publication in
the country has reported unexpected growth in the
"machinery and transport equipment" sector and
speculated it was as "probably bicycles". But when
Cambodia jumped into the top 10 exporters of
bicycles to the European Union in 2012, it
prompted the European Bicycle Manufacturers'
Association (EBMA) to investigate.
In
2011, 366,000 bikes were exported from Cambodia to
the EU but "in the first half of 2012 the country
managed to almost triple its bike export to the
EU. Cambodia's exports totaled close to 520,000
units in the first six months of 2012 compared to
140,000 in the same period of 2011," according to
Bikeeu.com.
The EBMA discovered that
bicycle companies had moved their
production to Cambodia from
Thailand and China, citing increased expenses. The
move is estimated to save 14% on taxes. A
favorable scheme is in place for least developed
countries (LDCs) under the Generalized Scheme of
Preferences known as the Everything But Arms (EBA)
agreement. The EBA allows countries ranked among
the 48 LDCs to export products duty-free to the
EU, except arms and ammunition.
Introduced
at the beginning of 2011, it ushered in a surge of
53% in export growth to European countries that
year, making the EU Cambodia's second-largest
export partner after the US, according to local
business reports.
Increasing expenses in
China and Thailand have been attributed in part to
rising wages. The minimum wage in Thailand was
recently raised to 300 baht per day (US$10) and
salaries in China in this business have risen to
US$400 per month. By contrast, minimum wages in
Cambodia are set at just $61 per month.
Strongman and A&J - listed as a
subsidiary of Atlantic Cycle Co - was reported to
have originally opened their factory in Cambodia
in 2005. A government website listing investments
into the country shows three bicycle factories in
the "Tai Seng zone" in the Svay Reing province -
A&J, Atlantic Cycle Co and Smart Tech - and a
fourth bike factory, Best Way Industry, in the
"Manhattan zone" in Svay Reing.
The
special economic zone, according to a USAID
report, offers pro-business perks to investors, a
quick turnaround on red tape, low taxes, low
wages, ease of doing business and a "young and
educated" population. The report listed 1,500
workers in the bicycle industry. The minimum
monthly salary then for factory work was $60 a
month, or $0.33 per hour, which would necessitate
working six days per week to make $60 monthly.
Dated 2008, this shows that wages have not risen
in four years.
Local media recently
revealed that a minimum wage increase for garment
factories was in the works due to a labor
shortage. Manufacturing overall has been shifting
from China and Vietnam to Cambodia, and there are
not enough workers in this country. The social
affairs ministry has called for a wage increase
but asked unions to agree on an amount - with
suggested salaries ranging from $93 to $150 per
month.
Bicycle factory workers face
similar labor issues to garment workers. Srun
Srorn, activist and non-governmental organization
consultant, explained how factory workers live on
wages which amount to just $2 per day.
Workers pool money and share a single
meal. "Usually they do this: four friends times
500 riels [$0.12] equals 2,000 riels. Then they
eat some food, which costs 500 riels or less.
Usually the maximum is 5,000 riels for three or
four people."
Some factories include a
meal stipend with the monthly salary. Workers have
short meal breaks and eat from vendors located
just outside the factory gates. Some employers
include a transportation stipend. There is no
public transportation system in Cambodia,
requiring workers to pay for motorbike taxi rides,
which cost $0.50 to $1.
In mid-December
2012, local media reported 1,000 workers at a
Smart Tech bike factory in Svay Ring went on
strike to raise their salary. Two months earlier,
another strike had been reported at A&J.
Mount To la, a lawyer at the labor program
of the Community Legal Education Center, said he
assisted the workers with legal advice. He said
they were not part of a union but had organized
the strike on their own. "They are not advised by
anyone but we would give legal assistance and
advice."
Better Factories, an
International Labour Organisation program, was
created to help factory workers but at this time
only assists garment factories, according to a
spokesperson contacted by IPS.
IPS spoke
with Nhanh Kosol, one of the workers, about the
strike. Kosol said that their wage is still just
$61 a month but the factory had agreed to a
transportation subsidy of $13 per month and
overtime pay. They can work overtime between two
hours and five hours a day, depending on the
factory. Overtime of five hours earns an
additional $3.
He thought the bike factory
was "not too bad, because I have a job. The
working conditions are some days good, and some
days bad, but the salary is not sufficient to
support living and everything is always going up
[in price]." In his two years working there, the
workers have gone on strike two or three times -
"It can help, but not too much".
Bike EU
listed the per unit price imported from Cambodia
as about 200 euros (US$270). The US has also
recently had an upsurge in imports in bikes from
Cambodia, according to foreign trade statistics.
In 2009, $2.06 million worth of goods were
imported from Cambodia under the label "toys,
shooting and sporting goods, and bicycles". In
2010, the amount tripled to $6.8 million and by
2011 it was $10.3 million.
When asked how
much he thought the bikes he helped make sold for,
Kosol said workers thought between $1,400 and
$3,000, the low end of which is 25 times his
monthly salary.
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