Cambodian Prime Minister Hun Sen has warned an “unreasonable” increase in the minimum wage could drive companies into bankruptcy and out of the country.

Addressing garment workers in a speech in the country’s capital Phnom Penh last week, the premier warned of the impacts to increasing the minimum wage, saying employers would not continue to stay in the country if it continued to increase.

“Employers won’t stay if the price of labour is expensive. There’s no way they could endure to stay if the minimum wage continues to increase. Be reasonable for your employers because if they go bankrupt, they will move to another location,” he reportedly told those assembled.

Clothing and textile worker unions and employers accepted a minimum wage of US$170 for 2018 in January, with the review system used by the industry now being enshrined in the law.

Cambodia’s Labour Ministry and relevant parties started talks on the minimum wage for 2019 earlier this month, according to a report published by the Khmer Times.

“All parties have to use social criteria such as family status, inflation rates, living expenses and economic criteria” when determining what the new wage should be,” the publication quoted a ministry announcement as saying.

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“The economic criteria includes productivity, the country’s competitiveness, labour market conditions, profit margins and the poverty level,” it added.

The minimum wage for garment, textile and footwear workers was set at US$170 for 2018.

Hun Sen added the Ministry of Labour, unions and employers must work together to come up with a reasonable minimum wage agreement for 2019, noting that companies often bear the financial burden when they are forced to increase workers’ wages.

Last month, a two-day workshop was held in Cambodia as part of global union IndustriAll’s living wage campaign in association with the German political foundation Friedrich Ebert Stiftung (FES). The event saw garment union members meet in a bid to develop and agree on joint demands and strategy for national sectoral bargaining in the apparel and footwear sector.