VZCZCXRO1924
PP RUEHCHI RUEHDT RUEHHM RUEHJO RUEHNH
DE RUEHPF #1827/01 2790912
ZNR UUUUU ZZH
P 060912Z OCT 06
FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHDC PRIORITY 7422
INFO RUEHXI/LABOR COLLECTIVE PRIORITY
RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY

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 
--------------------------------------------- -- 
 
¶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.