VZCZCXRO2184
PP RUEHCHI RUEHDT RUEHHM RUEHJO RUEHNH RUEHPOD
DE RUEHPF #0662/01 1310928
ZNR UUUUU ZZH
P 110928Z MAY 07
FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHDC PRIORITY 8417
INFO RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY
RUEHXI/LABOR COLLECTIVE PRIORITY
RUEHC/DEPT OF LABOR WASHINGTON DC PRIORITY

UNCLAS SECTION 01 OF 02 PHNOM PENH 000662 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS, DRL/ILCSR--MARK MITTELHAUSER 
LABOR FOR ILAB--BILL BRUMFIELD, CHRIS WATSON, JIM SHEA, 
ZHAO LI, AND JONA LAI 
STATE PLEASE PASS TO USTR--DAVID BISBEE 
 
E.O. 12958: N/A 
TAGS: ELAB ECON PGOV PHUM CB
SUBJECT: CAMBODIA:  PROPOSED NIGHT SHIFT WAGE DECREASE 
RANKLES UNION 
 
 
¶1.  (SBU) Summary.  Prime Minister Hun Sen has asked the 
National Assembly to lower night shift wages from 200% of 
daytime pay to 130%.  A vote is expected on May 17, and the 
Free Trade Union (FTU), a large and vocal group loosely 
allied with the opposition Sam Rainsy Party, has vowed to 
launch a general strike if the measure passes.  The Prime 
Minister's decision comes after several failed attempts to 
negotiate a lower night shift wage.  The FTU appears to have 
little support for their general strike threat, but may still 
attempt some sort of protest on their own.  Garment factory 
owners strongly support the measure, which they believe could 
create 50,000 to 60,000 jobs in Cambodia's largest industry. 
End Summary. 
 
Prime Minister Proposes Lower Night Shift Wage 
--------------------------------------------- - 
 
¶2.  (U) Prime Minister Hun Sen recently asked the National 
Assembly to amend the Labor Law to set the rate for work 
performed between the hours of 10 p.m. and 5 a.m. at 130% of 
normal wages.  The current Labor Law, adopted in 1997, is 
unclear on the issue of a night shift wage, specifying only 
that overtime work performed at night should be paid at 200% 
of the regular wage.  The law does not specify what wages 
should be paid for regularly scheduled work at night, but in 
the wake of confusion about the issue, the Ministry of Labor 
issued a sub-decree (prakas) in 1999 declaring that all 
nightwork should be paid at double the usual rate.  (Note: 
The International Labor Organization has told us that typical 
night shift rates in the region are 130 to 150% of daytime 
wages.  End Note.) 
 
¶3.  (SBU) In practice, most industries ignore the night shift 
subdecree and pay workers the same or slightly elevated 
rates.  In the garment sector, where foreign buyers force 
strict observance of labor standards, only a few garment 
factories currently operate a night shift due to the high 
labor cost.  The Garment Manufacturers Association of 
Cambodia (GMAC) estimates that only 10,000 of Cambodia's 
330,000 garment workers are night shift workers.  One of the 
few factories to operate a night shift, Bright Sky, closed 
its night shift in October 2006 after repeated violence and 
labor unrest among night shift workers. 
 
Night Shift Wages Long Contentious 
---------------------------------- 
 
¶4.  (SBU) The Prime Minister's action comes after several 
unsuccessful attempts to negotiate a night shift wage.  In 
2003, the Labor Advisory Committee, a tripartite body, agreed 
to a 130% rate.  However, the contradictory sub-decree was 
never revoked, and when one factory attempted to institute a 
130% rate, garment buyers insisted that the 200% rate 
specified in the sub-decree be followed.  Starting in 2004, 
the ILO facilitated negotiations between unions and employers 
on night shift wages, and all parties accepted 130% as the 
new rate.  However, final negotiations were conducted during 
Cambodia's clamp down on civil society leaders in late 2005, 
and FTU president Chea Mony was in Europe avoiding an arrest 
warrant at home.  Chea Mony reversed his Vice President's 
decision and pulled the FTU out of the agreement upon his 
return to Cambodia in early 2006.  The issue remained 
moribund until February 2007, when a proposal by employers 
was brought before the Eighth Private Sector Working Group, 
an ostensibly tripartite body charged with labor issues.  The 
government co-chair of the group reportedly entertained the 
employer-sponsored proposal but refused to consider union 
demands related to health insurance, transportation and meal 
allowance. 
 
¶5.  (SBU) On May 5, the FTU announced plans to call a general 
strike if the proposed amendment passes.  In a meeting with 
Poleconoff and Labor Assistant days before their 
announcement, current FTU President Chea Mony said that the 
reduction in night shift wages was a "bad omen" for unions 
and that the union movement would die if night shifts were 
widely introduced.  Chea Mony stated frankly that while he 
was publicly pressing for night shift wages to be 140% or 
150% with compensations for lodging and transportation, his 
real goal was to prevent the establishment of more night 
shifts.  He worried that at a 130% wage, factories would 
switch large numbers of their workers to night work to take 
advantage of cheaper and more reliable electricity.  He 
believes that night shift workers are more often the targets 
 
PHNOM PENH 00000662  002 OF 002 
 
 
of violence -- both robberies on the way home and labor 
violence at factories -- and fears that labor disputes that 
occur on the night shift will be unaddressed by the Ministry 
of Labor's labor conciliators, who do not want to work at 
night.  In contrast, at the same meeting, Rong Chhun, Chea 
Mony's close ally and the head of the Cambodian Confederation 
of Unions--an alliance of FTU and the teachers' union CITA -- 
told Emboffs that the CCU did not object to adjusting the 
night shift rate, but wanted a higher wage and provisions to 
provide for the safe transport of workers. 
 
Reduced Night Shift Wage Likely to Create Jobs 
--------------------------------------------- - 
 
¶6.  (SBU) Responding to the threatened general strike, the 
Prime Minister used a May 8 graduation speech to caution 
against any attempts to block the legislation, claiming that 
the new rate would boost employment by 200,000 and increase 
garment factory orders by USD 2.6 billion per year.  GMAC 
Secretary-General Ken Loo offered more conservative numbers, 
 
SIPDIS 
predicting the creation of 50,000-60,000 more garment factory 
jobs over the next six months.  Loo explained that this 
increase would not come from factories introducing a third 
shift, but rather from factories starting a second shift. 
Cambodian labor law allows up to two hours of overtime per 
day, effectively creating a standard 10-hour workday in 
garment factories.  Most factories have avoided creating a 
second shift because both shifts could not have regularly 
scheduled overtime without incurring the steep night shift 
pay requirements.  Loo predicts that under a lowered night 
shift rate, many factories will add a 7 p.m. to 3 a.m. shift, 
with two hours of regularly scheduled overtime lasting until 
5 a.m. -- a relatively safe time in early-rising Cambodia for 
young, female factory workers to be returning home. 
 
Little Support for General Strike Threat 
---------------------------------------- 
 
¶7.  (SBU) While pro-government unions and garment factories 
have predictably endorsed the night shift proposal, it is 
noteworthy that FTU's typical allies are distancing 
themselves from the union's stance.  Politically independent 
trade union Coalition of Cambodian Apparel Workers Democratic 
Union (CCAWDU) also opposes the reduction in night shift 
wages and spoke out against the measure at the Eighth Private 
Sector Working Group, but has said that they will not join 
the general strike.  CCAWDU President Ath Thorn has said that 
the group may issue a statement condemning the measure if it 
is passed.  Mu Sochua, the Secretary-General of the 
opposition Sam Rainsy Party, who is normally outspoken in 
favor of workers' concerns, was quoted in the press as saying 
that she recognizes that 200% is an "undue burden" for 
employers, and committed only to presenting workers' views 
during the National Assembly debate. 
 
Comment 
------- 
 
¶8.  (SBU) The FTU seems to be picking a fight it has little 
chance of winning.  In May 2006, the FTU threatened to hold a 
general strike over the minimum wage--a more meritorious 
issue given that the rate had not changed in five years 
despite significant inflation.  After achieving moderate 
success in raising the minimum wage rate by 11%, the FTU 
would now be hard pressed to find many workers willing to 
demonstrate on behalf of their few overly compensated sisters 
working at night.  By threatening a general strike now, 
particularly after backing off of a similar threat last year, 
FTU president Chea Mony has pushed himself into a corner and 
risks being seen as a paper tiger if he does not follow 
through with the strike.  In reality, Chea Mony is 
increasingly frustrated with labor politics and has told us 
several times that he wants to leave his post as FTU leader 
but is constrained by the lack of a successor. 
MUSSOMELI