Cambodia Holiday Policy Hampers Competiveness
A fragile country can’t afford such largesse
The Cambodian government just released its official list of public holidays for 2016, beating past years’ record by increasing the number of public holidays for 2016 to be 28 days notwithstanding when holidays fall on a weekend (Saturday-Sunday) the following Monday is off as compensation.
Add to that mandatory annual leave of 18 days, people basically work fewer than 10 months a year in a country where productivity is lowest among the region and minimum wages (applicable only in the garment Industry) kept rising due to social pressure from mainly Donors and NGOs.
2009 Chart of Public Holidays Comparison in the region:
Only Thailand more public holidays. By contrast, the United States has just 10 paid holidays and no guaranteed annual leave.
How does such amazing number of public holidays impact upon Cambodia’s economy?
With 28 paid public holidays, this is an invisible 13th month pay.
It will increase manufacturing production costs as working during holidays requires paying double normal rate wages. With the world’s economy entering a downturn and Cambodia’s neighbors signing free trade agreements with the United States and the European Union and the Trans-Pacific Partnership appearing increasingly likely to be ratified in the next few days, it raises the possibility that Cambodia’s multinationals in the garment industry could and relocate to more competitive countries including Myanmar and Vietnam. Some foreign friends holding senior positions in logistics companies currently working in Cambodia have been already head-hunted to move over to Myanmar starting next year.
Workers, including office employees, tend to work at a slower pace before long holiday periods Khmer New Year, the King’s Coronation, Pchum Ben and the Water Festival.
The implementation of the Asian Economic Community, due before the end of 2015 although it is certain to be delayed, can be expected to cause a “brawn drain” from Cambodia as lower-income workers migrate to other ASEAN members where doing the same job gets them paid much more. This may alleviate somewhat the expected loss if manufacturing jobs in Cambodia’s garment and footwear sectors.
Additional bonus: They can save money while working overseas and learn more advanced skills which they may not be exposed to like operating a tower crane.
As for “brain drain” this won’t happen immediately, as our education standard is still no match to produce high-caliber services workers. Instead, a reverse “brain drain” will happen: Middle level management level staff being recruited from other ASEAN member states to come work in Cambodia due to the local pay is being denominated in USD since it’s a dollarized economy.
David Van is a member of CAMPRONET, a platform of Cambodian Professionals from all backgrounds