CAMBODIA: UNIONS THREATEN STRIKE AS GARMENT SECTOR

UNCLAS SECTION 01 OF 02 PHNOM PENH 001827

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EAP/MLS, DRL/IL, EB/TPP/ABT

E.O. 12958: N/A
TAGS: ELAB ECON KTEX CB
SUBJECT: CAMBODIA: UNIONS THREATEN STRIKE AS GARMENT SECTOR
NEGOTIATIONS DRAG ON

REF: A. PHNOM PENH 1693


B. PHNOM PENH 1614

C. PHNOM PENH 1204


1. (SBU) Summary. After more than three hours of discussion on
September 30, the third round of negotiations between unions and
garment manufacturers ended with essentially no progress towards an
agreement. Garment manufacturers agreed to add only 25 cents to
their previously proposed minimum wage of USD 51.75 per month.
Unions privately discussed reducing their demands by USD 3 to USD
73, but eventually put forward only a vague proposal to discuss wage
and bonuses without reference to dollar amounts. The next round of
negotiations will take place on Oct. 13 and 20, and unions have
threatened to strike if a deal is not reached by late October. End
Summary.

24 Dollars Still Separates Unions and Employers
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2. (U) After three rounds of negotiations, about USD 24 per month
still separates the two sides, with unions asking for USD 76 over
three years and employers offering USD 51.75. (Note: The current
minimum wage is USD 45 per month. End Note.) International Labor
Organization Chief Technical Advisor John Ritchotte remarked that
negotiations haven't really started yet as the two sides seem to be
playing a game of "who will reveal their bottom line first?" Many
potentially contentious issues, ranging from proposed increases in
seniority and attendance bonuses to final and binding arbitration
for labor disputes have not yet been discussed.

Union Leaders Split on Strategy
--------------


3. (U) Unions met on October 2 to formulate their new strategy in
negotiating with garment manufacturers. During the meeting, they
requested that negotiating sessions be held October 13 and October

20. If these two rounds of negotiations fail to bring about any
tangible result, they will resort to "other means," which could
include a general strike to start October 30 or later.


4. (SBU) Despite this unified public message, privately labor
leaders within the group of 17 negotiating unions are split over how
to proceed. Chea Mony, president of the influential Free Trade
Union (FTU),noted that the Garment Manufacturers Association of
Cambodia (GMAC) proposal was very close to what FTU had suggested in
June. (Note: In June, following FTU threats to lead a general
strike, GMAC and FTU came close to reaching an agreement on a
minimum wage increase. GMAC offered a USD 7 increase over three
years (USD 2 in the first year, 2 in the second year, and 3 in the
third year) while FTU countered with a more front-loaded USD 8
increase over three years (USD 3 in the first year, 3 in the second
year, and 2 in the third year). End Note.) Mony is anxious for a
more realistic union proposal and is reluctant to call a general
strike. Instead, he told Poleconoff and Labor Assistant, the FTU
would seek to reach agreements with individual factories, and only
consider strikes against specific factories if those efforts fail.



5. (SBU) Other union leaders are less committed to negotiations.
Ath Thorn, president of the Coalition of Cambodian Apparel Workers
Democratic Union, is the main force pushing the unions towards a
possible general strike and has told his union members twice that he
won't compromise with GMAC. Chuon Momthol, president of the
Cambodian Union Federation (CUF),and other pro-CPP union leaders
hope for government intervention. Both Chea Mony and Som Aun,
president of the Cambodian Labor Union Federation and spokesman for
the 17 negotiating unions, have asked the embassy to encourage
unions to be more earnest in their negotiations and to avoid a
strike.

Garment Factories Won't Give In
--------------


6. (SBU) GMAC Chairman Van Sou Ieng has publicly claimed that a USD
63 minimum wage could cause the entire garment industry to collapse.
Vietnam--with higher levels of development, better infrastructure,
lower costs, and a USD 55 minimum wage--would lure factories away
from Cambodia, he said. Ken Loo, Secretary-General of GMAC, told
Poleconoff that GMAC will not respond to the strike threat, as doing
so could set a dangerous precedent for the future. Loo is not
particularly concerned about the threat of a strike, and said that,
if negotiations fail, he hoped the government would intervene before
a strike occurred.

Comment
--------------


7. (SBU) Just as when the FTU threatened to call a general strike

PHNOM PENH 00001827 002 OF 002


in June, GMAC and the unions are engaged in a game of chicken. At
this point a strike is avoidable, but only if both sides make a
genuine attempt to compromise. While the threatened strike was an
attempt to inject some sort of new energy into the stalled
discussions, it seems to have failed. The Embassy will remain
engaged in the issue and will continue to press union leaders, and
particularly Ath Thorn, to adopt a more moderate stance. End
Comment.