Cambodian Economists Warn $250 Minimum Wage Demand Poses Risk of Factory Closures

Cambodian economic experts have sounded the alarm, warning that the demand to raise the minimum wage to $250 per month is "excessive" and poses a risk of factory closures due to escalating labor costs. This demand could lead to factories relocating to neighboring countries with lower wage levels. Dr. Ki Sereyvath, an economic expert, pointed out that a minimum wage of $250 is excessively high if the increase is not considered alongside labor productivity, factory capacity, and investment conditions. "I understand that the demand for a minimum wage of $250 is a level that will cause all factories and enterprises to close their doors due to excessively high labor costs," he stated. Furthermore, Dr. Sereyvath explained that neighboring countries that produce garments, such as Myanmar, Bangladesh, Sri Lanka, Pakistan, and Vietnam, could attract factories by offering lower wage levels compared to Cambodia. He specifically noted that in comparison with Vietnam, many regions outside Ho Chi Minh City have wages lower than Cambodia. Dr. Hong Vannak, another economic expert, emphasized that wage negotiations should be based on concrete evidence from both parties, considering inflation, workers' living expenses, and employers' capacity. "Wage setting must also consider the actual situation of factories, production costs, transportation, logistics, supply chains, and raw material costs to find an appropriate wage level," he added. These expert opinions come at a time when a small number of trade unions are campaigning for a base wage of $250 for 2027. The tripartite negotiation mechanism has already held five rounds of discussions.