Will the Trade Union Law Advance Industrial Policy Goals?

This Op-Ed appears on the Cambodia Daily on 19 April 2016 issue. 

After years of preparation, consultation and debate, Cambodia’s Trade Union Law is finally expected to be enacted. As the legislation is proceeding to the king for promulgation, it begs a legitimate question as to whether the new law will further the vision of the government in attaining economic and social progress for Cambodians as set forth in the Industrial Development Policy 2015-2025.

The Trade Union Law introduces significant changes to the current regime of industrial relations -- that is, the working relationship between employers and their employees. One of the most notable changes relates to collective bargaining criteria and processes as a measure to rectify and enhance the current industrial relations structure -- one that has made some progress, yet continues to be marked by illegal wildcat strikes and allegations of labor standard violations.

Under the new legislation, a duly formed trade union with “most representative status” will have greater ease to initiate and engage in collective bargaining -- basically a process of negotiation between a group of employees and their employer to determine wages and working conditions. Most representative status is a formal status accorded by the government to a trade union having met a required level of representation of employees within the enterprise. Under the new law, a trade union is eligible to obtain such status if its membership is comprised of at least 30 percent of the total employees within the enterprise, a threshold significantly reduced from the prior minimum threshold of greater than 50 percent representation.

As a result, if the new most representative status threshold is utilized effectively, Cambodia’s industrial relations system may see a paradigm shift: a change from the current industrial relations system imposed by national labor legislation to a regime governed by collective bargaining led by employers and trade unions themselves. Moreover, the legislative policy facilitation could trigger more intense interest and efforts in collective bargaining, and as a consequence cause an increase in the volume of collective bargaining agreements, which exist at a negligible 5 percent of enterprises.

If the overall experience of collective bargaining in countries such as Australia, Britain, Sweden and the U.S. is any indication, the shift to a bargaining-based industrial relations structure has the potential to lead to greater stability and peace in the Cambodian industrial relations environment. 

Yet, in the near term, how to embrace and transition to the new paradigm may present a serious challenge to industrial relations actors that extend across employers, trade unions, the government and other stakeholders.

The current industrial relations context is marked by adversarial, conflict-oriented dynamics between workers and management, and competition among trade unions. The Ministry of Labor has registered over 3,300 local unions, with multiple unions operating in a single enterprise having become the norm. And coupled with an overarching lack of knowledge, capacity and confidence in collective bargaining on the part of both trade unions and employers, any shift in the current paradigm could cause Cambodia to experience unintended turbulence in the industrial relations environment. Already, nearly all labor strikes in Cambodia are unlawful to the extent that they fail to follow to prescribed procedural requirements set out in the law. But the number and duration of wildcat strikes could escalate, deepening levels of distrust between employers and trade unions. To mitigate possible harm will require a transition strategy that has the participation of all concerned industrial relations actors.

However, as the modern history of Cambodia’s industrial relations has revealed, the country’s labor market generally has not organized itself efficiently, at least not without planned interventions by the government. It may therefore be prudent, if not essential, for the government to take an active role in coordinated efforts to develop and execute a transition strategy that has the active participation of employers and trade unions.

The transition strategy should be aimed at facilitating collective bargaining and reorientation of industrial relations norms toward collaboration and problem-solving dynamics. This could entail an introduction of collective bargaining guidelines that emphasize a clear scheme of agreement-making; streamlined and transparent mechanisms for registration and monitoring of collective bargaining agreements, including by the government’s labor inspectors or other actors, or even employers and workers themselves; and finality for dispute resolution supported by the national Arbitration Council. 

At the heart of the early stage of such a paradigm shift should be a clear role for the government, not only as an arbiter to uphold and enforce laws and labor agreements, but also as educator and facilitator to help enterprises and their workers understand the advantages of bargained-for agreements and how to go about efficiently and effectively reaching such agreements. Of course, once such agreements are executed, the government must enforce the contracts in relation to both employers and trade unions in an equal fashion -- a critical component that has been much desired and, if ensured, would instill significant positive energy in the Cambodian industrial relations structure.

The passage of the Trade Union Law is not a goal in itself. If the legislation is to contribute to lowering unlawful labor strikes and industrial unrest, and upgrading the productivity and life quality of Cambodian people as aspired to in the Industrial Development Policy 2015-2025, it will necessitate the effort of all industrial relations actors, including the government as a facilitator – in devising, shaping and executing the near-term transition strategy to enable the Cambodian industrial relations system to progress toward a mature, sustainable one that employers and trade unions can advance by themselves.

Sok Lor is managing director of law and policy firm Sok Xing & Hwang