Win-Win-Win Outcomes for Cambodia

For the Industry

For Workers

For Global Brands

A Groundbreaking Collaboration: In a historic move, manufacturers, brands and trade unions have agreed on the first supply-chain supported collective bargaining agreements. Through the ACT programme, they have jointly developed a supply chain industrial relations framework to improve wages, strengthen industrial relations, and foster a stable and competitive industry.

“ACT in Cambodia brings together all key players—workers, employers, and buyers — to address industry challenges with shared responsibility. This ensures sustainable progress for everyone.”

Julia Bakutis, Senior Sustainability Social Manager, H&M

Cambodia’s First Brand-Supported CBAs

Supply Chain Industrial Relations

Supply chain complexities and entrenched competitive pressures have made voluntary initiatives and attempts by any single stakeholder to achieve sustained wage improvements ineffective and fundamentally limited.

Employers, trade unions, and global brands in Cambodia are addressing these underlying supply chain dynamics through a groundbreaking new structure that strengthens the industry and sets a new standard for growth and sustainability.

This new structure is built on two sets of agreements:

Legally binding brand agreements between global brands and IndustriALL Global Union, where brands are committing to support collective bargaining agreements (CBAs) in their supply chains.
A sectoral CBA framework developed by the Cambodian social partners, setting coherent wage and benefit standards for implementation at factory level.

“Based on more than 20 years of work in this industry, negotiations with manufacturers and suppliers alone have led to little success. That’s why this agreement between IndustriALL and brands is a major breakthrough—it enables collective bargaining and wage increases for workers.”
Athit Kong, President, Cambodian Labour Federation

Binding Brand Commitments: A Transformative Shift

For the first time in the global garment sector, brands have signed legally binding agreements to support factories, workers, and wage improvements.

These binding brand agreements, shaped by trilateral negotiations between brands, employers and trade unions, ensure concrete support for the implementation of collective bargaining agreements in Cambodia.

Key areas of the binding brand agreements:

Country Sourcing Volumes that secure Cambodia’s place as a key sourcing destination and incentivise factories to sign CBAs.
Integration of labour costs into purchasing prices, ensuring wage increases are fully reflected in brand costing structures.
A Skills and Training Fund, enabling factories with CBAs to provide paid training and skill development for workers funded by the signatory brands.

These brand commitments are monitored through external verification and annual third-party reporting and are enforceable through binding arbitration at the International Court of Arbitration in The Hague.

By aligning commercial and labour interests, these agreements establish a new model for supply chain industrial relations and set a blueprint for a win-win-win transformation of the industry.

“IndustriALL is shifting from voluntary CSR to binding agreements to hold brands accountable. Low wages are a known supply chain risk—binding agreements are key to overcoming this.”

Christina Hajagos-Clausen, Director, Textile and Garment Industry, IndustriALL Global Union

Collective Bargaining Agreements in Cambodia’s Garment, Footwear, and Travel Goods Industry

The social partners in Cambodia – the Employers Association and the Trade Unions affiliated to IndustriALL Global Union – negotiated a framework enabling standardised and brand-supported Collective Bargaining Agreements (CBAs) at factory level across the sector.

By engaging global brands and creating a standardised CBA template, the social partners in Cambodia ensure the connection to the binding brand commitments. Consequently all Factories adopting the template CBA benefit directly from the binding brand commitments.

Forming a foundation for sound industrial relations and stable workplaces, the CBAs introduce new industry standards that complement national laws while securing brand support for wage developments that are transparent, accountable, and sustainable. This structure ensures real wage growth for Cambodian garment workers by providing predictable and reliable wage increases negotiated through social dialogue.

Snapshot of CBA Benefits for Workers and Employers:

Guarantees on Freedom of Association
Wage Increases
Special Leave
Maternity Leave
Skills Development
Dispute Resolution Mechanism
Industrial Peace Clause

The CBA process is complementary to national minimum wage increases and builds on the minimum wage process. In line with the ILO recommendations, the CBA wage increases are not based on abstract benchmarks but are established through collective bargaining between the social partners to provide predictable and reliable real wage growth supported through the supply chains of global brands.

By signing the CBA, factories can address the priorities of workers and employers with coherent standards that are complementary to existing national law and secure support through brand commitments. The brand commitments are designed to support labour cost increases through the CBA and the national minimum wage process.

“If living wages is a big apple, workers need a ladder to pick the apple. We are building that ladder. This is the first mechanism that includes buyers in the wage support structure. It is groundbreaking as no one has managed to set anything like this up before”

Athit Kong, President, Cambodian Labour Federation

Win-Win-Win Outcomes for Cambodia’s Garment Industry

By establishing this innovative supply chain framework, the industry in Cambodia is demonstrating global leadership and sets a new benchmark for other countries and industries.

The ACT Cambodia programme is a unique opportunity to achieve win-win-win outcomes for manufacturers, workers and buyers.

The ACT programme represents the first mechanism that directly includes buyers in the wage support structure for Garment workers.
This innovative approach addresses competitive pressures in the supply chain through social dialogue and legally binding accountability.
The CBA and Binding Brand Agreements enhance transparency, accountability, and predictability in managing labour costs for manufacturers.
They also enable manufacturers to uphold the highest standards in compliance with international due diligence regulation, further strengthening the reputation with global buyers.
The brand-supported CBA can ensure stable and productive supply chains, increase wages and benefits for workers while setting agreed mechanisms for dispute resolution and industrial peace.

“The industry once operated on a zero-sum logic. The ACT approach has fostered a win-win-win.”

– Ken Loo, Secretary General, TAFTAC

ACT in Cambodia

A First-of-its-Kind Blueprint for Industry-Wide Change.

By realising brand-supported collective bargaining agreements, the ACT programme in Cambodia is establishing a supply chain industrial relations framework that will become a blueprint for wage negotiations and wage-setting mechanisms in global supply chains. ACT (Action, Collaboration, Transformation) is an agreement between global brands and retailers and IndustriALL Global Union that combines purchasing practices commitments with an integrated industrial relations approach – making ACT uniquely placed to enable collaboration between manufacturers, brands and trade unions and drive transformation and built a future-proof global garment textiles and footwear supply chains.

Legally-binding agreements: Brands have signed enforceable agreements to support higher wages and improved working conditions.

Collective Bargaining Agreements: Employers and Unions have established a template agreement to strengthen industrial peace, improve wages and support skills training.

Brand Commitments: Brands are making commercial commitments on labour costs, sourcing volumes and support for skills training.

Groundbreaking Collaboration: Manufacturers, brands and trade unions jointly developed a supply chain industrial relations framework.

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