CAMBODIAN UNIONS AND GARMENT FACTORIES AGREE ON

UNCLAS PHNOM PENH 002211 SIPDIS SENSITIVE SIPDIS STATE FOR EAP/MLS, DRL/IL, EB/TPP STATE PLEASE PASS TO USTR FOR DAVID BISBEE COMMERCE FOR ITA/OTEXA LABOR FOR ILAB--CHRIS WATSON AND JONA LAI E.O. 12958: N/A TAGS: ELAB ECON KTEX CB SUBJECT: CAMBODIAN UNIONS AND GARMENT FACTORIES AGREE ON NEW BENEFITS REF: PHNOM PENH 2084 AND PREVIOUS ¶1. (SBU) A coalition of seven garment unions dropped its threat to hold a general strike after they reached a tentative deal with the Garment Manufacturers Association of Cambodia (GMAC). The agreement reached on December 19 -- which is not being disclosed publicly and is subject to agreement by GMAC members -- offers increased seniority bonuses to long-serving garment workers. Currently, garment workers receive a USD 2 per month bonus after their first year of employment at the same factory, and receive an additional USD 1 per month bonus for each subsequent years. However, after five years of employment, the seniority bonus levels off at USD 5 per month regardless of the number of years worked. The proposed deal would extend the additional USD 1 per year of service formula to workers who have between 6 and 10 years of employment with the same company. ¶2. (SBU) Union leaders also asked for an additional USD 1 per month attendance bonus, though GMAC Director Van Sou Ieng thought it very unlikely that his members would agree to this. This proposed bonus would affect all garment workers and act as a quasi-wage increase across the board. GMAC had been very clear following the announcement of the minimum wage that it would not return to the negotiating table and discuss wages -- something the FTU and other unions wanted to do. GMAC said that seniority issues and other benefits could be discussed, but refused to reopen discussions revolving around the minimum wage. ¶3. (SBU) This latest proposed deal, if accepted by GMAC members, is the best the unions could hope for following their poor handling of the minimum wage negotiations with GMAC. After six weeks involving four rounds of intense but slow-moving negotiations between GMAC and a coalition of 17 garment sector unions, the government preempted further discussions and announced an increase in the minimum wage from USD 45 to 50 per month. Although endorsed by pro-government union federations, this move was seen as embarrassing for the union movement as a whole, and independent and pro-opposition union leaders have been attempting to extract additional concessions from GMAC partly in an effort to save face. Increasing the seniority bonus would also provide wage increases to long-serving workers who likely already earn more than the minimum wage. ¶4. (SBU) Although the unions claim that this latest agreement (while still tentative) with GMAC was instrumental in forestalling a planned strike earlier this week, the unions did not have full backing of their membership to support a general strike. The strike was slated to take place on December 18, but an Embassy straw poll of member unions on December 7 indicated that many were not in agreement. Free Trade Union (FTU) President Chea Mony has also told us privately that he faced pressure from some FTU members and leaders to back away from his threatened general strike. Although the tentative deal with GMAC is not everything the FTU might want, it likely represents the best deal that can be obtained and will give the trade federation something to take back to its members. MUSSOMELI