We spoke to Virak Nuon who leads Digital Wage Initiatives at Better Factories Cambodia, the International Labour Organisation, and has overseen the implementation of digital wage payments in Cambodia to learn how businesses can successfully roll out wage digital payments.

Issues encountered: 

• Lack of internal buy-in or the know-how to make the transition: Limited ATMs / cash counters and high payroll transaction fees, which oftentimes resulted in workers having difficulties in accessing their wages. This delayed the decision by employers to make the transition. 

• Limited financial and digital literacy: leading to low trust, fear of deductions or financial losses, and slow adoption of available digital financial services among the target group.

  ---

For more on digital wage payments, see Garment Sector Wage Digitization: A Practical Guide Global Brands and Buyers.

Better Factories Cambodia’s approach

Steps needed for responsible implementation:

1. Go slowly: It’s important to take a step-by-step approach to the transition to avoid chaos, a loss of trust, and disappointment as workers start to receive their wages in their digital account for the first time. 

This approach allows factory management sufficient time to support workers, learn about the process and identify key areas for improvement before scaling up for more workers. 

2. Provide support to workers: The fact that workers received wages digitally does not guarantee that they could benefit from digital wage payments. It’s crucial to ensure there is enough support at the start, during, and after the wage digitisation process.

3. Protect vulnerable workers: This is vital for workers (particularly vulnerable workers) and workers with low literacy skills to make sure they are not left behind in the process or exposed to risks of financial losses brought about by digital payments. 

4. Involve worker representatives and trade unions: Social dialogue between employers, worker representatives/trade unions not only helps to ensure support from workers but also to provide a platform to gather concerns and understand the needs of workers regarding the choices of financial services and relevant support.

5. Protect workers against financial fraud: Stakeholders should also be more vigilant about a growing number of financial products and services that might expose workers to digital fraud, financial losses, or violations of their data privacy.

Ensuring the rights and interests of workers are protected

Trade Unions play a critical role: For this transition to take place responsibly, engagement with trade unions and workers is essential. Trade unions play an important role to influence and support the process. 

Trade Unions can help by:

1. Engaging with employers in the planning stages.

2. Consulting and negotiating with employers in choosing financial services that are suitable for workers.

3. Disseminating relevant information to workers about the risk and benefits of digital wages.

4. Monitoring and collecting workers’ feedback and concerns related to receiving digital wages.

5. Working with the employer to address concerns and make improvements.

About Virak Nuon

Virak Nuon is leading Digital Wage Initiatives at Better Factories Cambodia, the International Labour Organisation. 

He is a former project manager of UNDP, a SEA Manager at adidas Sourcing, an Enterprise Advisor ILO/BFC. Virak extensively worked and engaged in improving working conditions in global supply chains, youth entrepreneurship, workforce skill development, social protection, and decent work in both formal and informal economic settings. 

About Better Factories Cambodia Wage Digitization Programme

Better Factories Cambodia, in collaboration with the ILO’s Global Center on Digital Wages for Decent Work, has centred its approach around building partnerships, increasing capacity, and raising awareness on the benefits and risks of digital wage payments with local partners. 

More specifically, the project has provided technical and guidance support to TAFTAC and factories, developed the capacity of local partners to support factories and workers.

It adapted a comprehensive ILO Financial Education Training Module, and provided training-of-trainers to local trainers on financial education aimed at increasing in-country resources to support financial literacy efforts in the sector and beyond.