Cambodiana Hotel, Phnom Penh
December 18, 2006
Excellency Vong Soth, distinguished guests, ladies and gentlemen, good morning. Last year when I addressed this conference I had only been in country for a few months. A good deal has happened since that last meeting—it has been a very eventful year—and there is much for us to talk about. The terrific news, of course, is that the two most unionized sectors in the Cambodian economy led the way in spectacular economic growth. Despite predictions of 2.5% economic growth in 2005, Cambodia's economy as a whole grew by more than 13%, thanks in large part to 13% growth in the garment sector and 16% growth in the tourism sector. While many predicted that the end of the Multifiber Agreement would spell disaster for the Cambodian garment sector, so far Cambodia has turned out to be one of the biggest winners in the post-MFA era. In fact, by some accounts, Cambodia's garment industry has shown the fastest growth of any garment industry worldwide.
In contrast to the massive labor unrest in hotels a few years ago, labor relations in the tourism sector have improved dramatically. While there are a few notable and lamentable exceptions--such as anti-union discrimination at the Grand Diamond City Casino in Poipet--workers and employers in the tourist sector have the most mature and stable industrial relations in the country. Indeed, while the number of collective bargaining agreements is quite low in Cambodia overall, in the last year unions and employers have signed new collective bargaining agreements at three hotels and successfully renegotiated collective bargaining agreements at two others.
In addition, Cambodia's unique industrial relations organizations--the Arbitration Council and Better Factories Cambodia--continue to monitor working conditions and basic labor rights in the garment sector and to provide a labor dispute resolution body that operates free from undue influence and publishes the basis for its decisions. Indeed, both organizations have continued to develop this year, with the Arbitration Council hearing a wider array of labor disputes and Better Factories Cambodia producing innovative videos and a more powerful information management system. These organizations are seen worldwide as models in labor relations, and I'm not just saying that because of the large role the US government has played in their creation and financial support.
To hear this list of accomplishments, it may seem as if Cambodian workers, employers, and government officials can relax, basking in the glow--and dollar signs--of their economic and labor success. Indeed, some workers have told us that they can demand dramatic increases in wages because they believe buyers are deeply committed to supporting Cambodia's excellent working conditions and will remain in Cambodia even if garment prices rise. And yet complacent and overly confident attitudes like this one are the biggest danger that Cambodian workers, employers, and the Cambodian economy faces. I love the theme of this conference, "Working Toward Stronger Workplace Relations", because that is the one of the key tasks that Cambodia faces in the years ahead. Despite impressive economic growth and some achievements in labor relations, Cambodia's future economic performance--and the livelihood of its workers--is tenuous, and building stronger workplace relations is one of the important steps Cambodia needs to take to secure its economic future.
Representatives from 16 garment buyers came to Cambodia two weeks ago to talk about the Better Factories Cambodia program, and over coffee breaks and lunches we asked many of them how competitive Cambodia's garment industry is. They shared with us a number of points that I think we all need to hear.
First, Cambodia's strong reputation for worker's rights is no longer as unique as it once was, and the competitive advantage that Cambodia's well-respected factories once enjoyed has shrunk considerably. Don't get me wrong--Cambodian garment factories absolutely must maintain their high standards if the industry here is to survive. But for many reputable buyers, offering fair and safe working conditions is no longer a competitive advantage for factories, it is a prerequisite to even being considered as a potential supplier. As worker's rights are taken more seriously in garment factories around the world, and as there are more programs in place to monitor factories, buyers now have a long list of factories worldwide that offer safe workplaces and fair wages. It is three other factors: price, quality, and turnaround time, that are the deciding factors in where to order garments, and Cambodian workers, employers, and the government would do well to focus on how to improve Cambodia's competitiveness in these areas.
Second, Cambodia is facing stiff new competition in the garment sector--not so much from China, but rather from Vietnam. While the threat of competition from China has worried many, we believe that much of the shift to Chinese production has already happened. Garment buyers are a risk-averse group who are unlikely to invest too much in any one country, even if it is the world's largest. However, Vietnam has better infrastructure, a more vertically integrated garment sector, and a more educated workforce than Cambodia does, and there is plenty of room for expansion in its garment sector. Just 11 days ago, the US Congress voted to normalize trade relations with Vietnam. And 10 days from now, Vietnam will become a WTO member. The two main obstacles that have been holding Vietnam back economically have now been removed. While recent efforts by the US Congress to place additional scrutiny on Vietnamese textile exports may give Cambodia some breathing room in the short term, Vietnam--and other low-cost Southeast Asian garment producers like Indonesia and the Philippines--remain long term competitors. Now, more than ever, Cambodia's economy--and its workers and investors--cannot afford complacency.
Finally, while labor relations are no longer enough to save Cambodia's garment industry, they are enough to sink it. Garment buyers care deeply about delivery time and brand reputation. In US and European markets, to display Christmas goods a week too late or a lovely ensemble without all its component parts is to lose millions of dollars. And in a world where the media is hungry for scandals and a small number of very vocal activists care deeply--and very admirably--about working conditions worldwide, even an isolated labor scandal is enough to cost a clothing company tens of millions of dollars, and to cost a country like Cambodia its economic growth. Thus an overriding concern of garment manufacturers is managing risk--and particularly the risk of delays and of bad press. Cambodian employers, government officials, and workers need to understand that excessive or violent strikes and cases of anti-union discrimination or harassment have the potential to scare off buyers, and could hurt workers and factory management alike.
One of the things several buyers told us about increasing labor unrest in Cambodia was, "Well, at least it's not Bangladesh." That's true. Bangladesh has suffered immense strikes and violent clashes, with catastrophic economic and political consequences. Fortunately, Cambodia's industrial relations are in a far better state. Yet the year as a whole has been a disappointing one for industrial relations, and it doesn't take problems on the scale of Bangladesh to hurt the garment sector. From March to May we saw unprecedented levels of labor unrest at garment factories. In May alone, more than 87,000 working days were lost to strikes--a level more than four times greater than in previous years. Most strikes in Cambodia are illegal, and violence--by workers, factory management or security guards, and police--marred many of these strikes. At Bright Sky Garment Factory, to name one of many trouble spots, a garment worker was shot in the stomach and others were beaten following a confrontation between workers and anti-riot police. And some buyers have told us that during this period of intense labor unrest, they started diverting orders from Cambodia to other countries.
In addition, both workers and employers sometimes side-step the arbitration process. Unions charge that employers are increasingly using the court system to harass workers, accusing workers of crimes such as destruction of property--charges which may or may not be warranted--and then using payoffs and influence to ensure a favorable verdict. At Genuine Garment Factory, workers illegally blockaded factory gates to prevent merchandise and materials from leaving the factory. In retaliation, factory management charged three union leaders with highly suspect allegations of human confinement, and for the first time a Cambodian court handed down felony convictions for union-related activities. In another unfortunate first this year, several unions ignored return to work orders from the Arbitration Council, defying the only dispute resolution body in the country where workers can be assured of getting a fair shake.
And finally, garment sector-wide labor negotiations, which started off with such promise, ended miserably. For the first time, Cambodia's politically charged and often fractious unions set their differences aside and negotiated as a group. But the unions began with unrealistic demands and both unions and GMAC showed little willingness or ability to compromise. And just as the unions and garment factories prepared for one last chance to reach an agreement, the government preempted the negotiating process to set the minimum wage at $50 a month.
Eleanor Roosevelt, the American human rights and international cooperation advocate, once said, "In the long run, we shape our lives, and we shape ourselves. The process never ends until we die. And the choices we make are ultimately our own responsibility." Today, Cambodia is shaping its economic life, and the choices that the government, workers, and employers are making are their responsibility. At the basis of many of Cambodia's labor problems is a nearly universal failure to take Cambodian labor law seriously. Better Factories Cambodia has found that 80% of garment sector strikes fail to comply with pre-strike legal requirements, which include a 7 day notification period and secret ballot vote. Surely if unions routinely complied with these requirements they would be less likely to rush to strike. By the same token, anti-union discrimination and harassment is far too common, and can come from either factory management or rival unions. Cambodian workers and factory managers both need to reaffirm their own commitments to upholding the labor law before they accuse others of breaking it. Similarly, the Cambodian government needs to increase its efforts to enforce the labor law, and to ensure that labor-related court cases are decided fairly.
Ultimately, Cambodia's workers, employers, and government all share the same goal: a healthy Cambodian economy which provides reasonable profits to investors and jobs with fair wages and working conditions to employees. The economic success of 2005 shows us that this goal is attainable, but let me remind you that it is not assured. Only by consistently acting in a mature and responsible way can unions, management, and government create a path to labor stability and prosperity.
Thank you.
In contrast to the massive labor unrest in hotels a few years ago, labor relations in the tourism sector have improved dramatically. While there are a few notable and lamentable exceptions--such as anti-union discrimination at the Grand Diamond City Casino in Poipet--workers and employers in the tourist sector have the most mature and stable industrial relations in the country. Indeed, while the number of collective bargaining agreements is quite low in Cambodia overall, in the last year unions and employers have signed new collective bargaining agreements at three hotels and successfully renegotiated collective bargaining agreements at two others.
In addition, Cambodia's unique industrial relations organizations--the Arbitration Council and Better Factories Cambodia--continue to monitor working conditions and basic labor rights in the garment sector and to provide a labor dispute resolution body that operates free from undue influence and publishes the basis for its decisions. Indeed, both organizations have continued to develop this year, with the Arbitration Council hearing a wider array of labor disputes and Better Factories Cambodia producing innovative videos and a more powerful information management system. These organizations are seen worldwide as models in labor relations, and I'm not just saying that because of the large role the US government has played in their creation and financial support.
To hear this list of accomplishments, it may seem as if Cambodian workers, employers, and government officials can relax, basking in the glow--and dollar signs--of their economic and labor success. Indeed, some workers have told us that they can demand dramatic increases in wages because they believe buyers are deeply committed to supporting Cambodia's excellent working conditions and will remain in Cambodia even if garment prices rise. And yet complacent and overly confident attitudes like this one are the biggest danger that Cambodian workers, employers, and the Cambodian economy faces. I love the theme of this conference, "Working Toward Stronger Workplace Relations", because that is the one of the key tasks that Cambodia faces in the years ahead. Despite impressive economic growth and some achievements in labor relations, Cambodia's future economic performance--and the livelihood of its workers--is tenuous, and building stronger workplace relations is one of the important steps Cambodia needs to take to secure its economic future.
Representatives from 16 garment buyers came to Cambodia two weeks ago to talk about the Better Factories Cambodia program, and over coffee breaks and lunches we asked many of them how competitive Cambodia's garment industry is. They shared with us a number of points that I think we all need to hear.
First, Cambodia's strong reputation for worker's rights is no longer as unique as it once was, and the competitive advantage that Cambodia's well-respected factories once enjoyed has shrunk considerably. Don't get me wrong--Cambodian garment factories absolutely must maintain their high standards if the industry here is to survive. But for many reputable buyers, offering fair and safe working conditions is no longer a competitive advantage for factories, it is a prerequisite to even being considered as a potential supplier. As worker's rights are taken more seriously in garment factories around the world, and as there are more programs in place to monitor factories, buyers now have a long list of factories worldwide that offer safe workplaces and fair wages. It is three other factors: price, quality, and turnaround time, that are the deciding factors in where to order garments, and Cambodian workers, employers, and the government would do well to focus on how to improve Cambodia's competitiveness in these areas.
Second, Cambodia is facing stiff new competition in the garment sector--not so much from China, but rather from Vietnam. While the threat of competition from China has worried many, we believe that much of the shift to Chinese production has already happened. Garment buyers are a risk-averse group who are unlikely to invest too much in any one country, even if it is the world's largest. However, Vietnam has better infrastructure, a more vertically integrated garment sector, and a more educated workforce than Cambodia does, and there is plenty of room for expansion in its garment sector. Just 11 days ago, the US Congress voted to normalize trade relations with Vietnam. And 10 days from now, Vietnam will become a WTO member. The two main obstacles that have been holding Vietnam back economically have now been removed. While recent efforts by the US Congress to place additional scrutiny on Vietnamese textile exports may give Cambodia some breathing room in the short term, Vietnam--and other low-cost Southeast Asian garment producers like Indonesia and the Philippines--remain long term competitors. Now, more than ever, Cambodia's economy--and its workers and investors--cannot afford complacency.
Finally, while labor relations are no longer enough to save Cambodia's garment industry, they are enough to sink it. Garment buyers care deeply about delivery time and brand reputation. In US and European markets, to display Christmas goods a week too late or a lovely ensemble without all its component parts is to lose millions of dollars. And in a world where the media is hungry for scandals and a small number of very vocal activists care deeply--and very admirably--about working conditions worldwide, even an isolated labor scandal is enough to cost a clothing company tens of millions of dollars, and to cost a country like Cambodia its economic growth. Thus an overriding concern of garment manufacturers is managing risk--and particularly the risk of delays and of bad press. Cambodian employers, government officials, and workers need to understand that excessive or violent strikes and cases of anti-union discrimination or harassment have the potential to scare off buyers, and could hurt workers and factory management alike.
One of the things several buyers told us about increasing labor unrest in Cambodia was, "Well, at least it's not Bangladesh." That's true. Bangladesh has suffered immense strikes and violent clashes, with catastrophic economic and political consequences. Fortunately, Cambodia's industrial relations are in a far better state. Yet the year as a whole has been a disappointing one for industrial relations, and it doesn't take problems on the scale of Bangladesh to hurt the garment sector. From March to May we saw unprecedented levels of labor unrest at garment factories. In May alone, more than 87,000 working days were lost to strikes--a level more than four times greater than in previous years. Most strikes in Cambodia are illegal, and violence--by workers, factory management or security guards, and police--marred many of these strikes. At Bright Sky Garment Factory, to name one of many trouble spots, a garment worker was shot in the stomach and others were beaten following a confrontation between workers and anti-riot police. And some buyers have told us that during this period of intense labor unrest, they started diverting orders from Cambodia to other countries.
In addition, both workers and employers sometimes side-step the arbitration process. Unions charge that employers are increasingly using the court system to harass workers, accusing workers of crimes such as destruction of property--charges which may or may not be warranted--and then using payoffs and influence to ensure a favorable verdict. At Genuine Garment Factory, workers illegally blockaded factory gates to prevent merchandise and materials from leaving the factory. In retaliation, factory management charged three union leaders with highly suspect allegations of human confinement, and for the first time a Cambodian court handed down felony convictions for union-related activities. In another unfortunate first this year, several unions ignored return to work orders from the Arbitration Council, defying the only dispute resolution body in the country where workers can be assured of getting a fair shake.
And finally, garment sector-wide labor negotiations, which started off with such promise, ended miserably. For the first time, Cambodia's politically charged and often fractious unions set their differences aside and negotiated as a group. But the unions began with unrealistic demands and both unions and GMAC showed little willingness or ability to compromise. And just as the unions and garment factories prepared for one last chance to reach an agreement, the government preempted the negotiating process to set the minimum wage at $50 a month.
Eleanor Roosevelt, the American human rights and international cooperation advocate, once said, "In the long run, we shape our lives, and we shape ourselves. The process never ends until we die. And the choices we make are ultimately our own responsibility." Today, Cambodia is shaping its economic life, and the choices that the government, workers, and employers are making are their responsibility. At the basis of many of Cambodia's labor problems is a nearly universal failure to take Cambodian labor law seriously. Better Factories Cambodia has found that 80% of garment sector strikes fail to comply with pre-strike legal requirements, which include a 7 day notification period and secret ballot vote. Surely if unions routinely complied with these requirements they would be less likely to rush to strike. By the same token, anti-union discrimination and harassment is far too common, and can come from either factory management or rival unions. Cambodian workers and factory managers both need to reaffirm their own commitments to upholding the labor law before they accuse others of breaking it. Similarly, the Cambodian government needs to increase its efforts to enforce the labor law, and to ensure that labor-related court cases are decided fairly.
Ultimately, Cambodia's workers, employers, and government all share the same goal: a healthy Cambodian economy which provides reasonable profits to investors and jobs with fair wages and working conditions to employees. The economic success of 2005 shows us that this goal is attainable, but let me remind you that it is not assured. Only by consistently acting in a mature and responsible way can unions, management, and government create a path to labor stability and prosperity.
Thank you.
3 comments:
With all the stern warning from Ambassador Mussomeli about Cambodia economic future, Cambodia must seek other avenue beside holding on to garment and tourism sector for economic growth and Cambodia must pursue the use of more high technology and diversify their knowlegde base and start moving into bio-tech, pharmacuetical,manufacturing, information technology, mining, power plant electricity generation ...it is fucken endless possibility!!But how can Cambodia move into more specialize field if AH HUN SEN Vietcong slave kept destroying Cambodian educational system by promoting the selling of certification in Dogtor Degree(Phd)and Bull Shit Degree(B.S), which he got one himself!
This is what happen when AH HUN SEN kept listening to the Vietcong master!!!!!It seems that the Vietcong have all the fucken solution to all Cambodian problem because they can't afford to be like Cambodia and they have no other choice except to promote a good educational system !!!What the Vietcong learned is no different than that from the rest of the world and it is a fucken common knowlegde!!!
For example! People have been building car for over 100 year now! So know how to build a fucken car should be a common knowlegde in 2006! People know the Earth is round or egg shape for more than 100 years and this is a fucken common knowlegde!!...
AH HUN SEN Vietcong slave has the responsibility to educate Cambodian and how can he if he can't even educate himself! I say overthrow this mother fucker from power!!!!
This is NOT a warning from Ambassador Musomelli. He just trying to open up the officials corrupted mind to see what are they doing wrong in the society. I am glad the US is more outspoken than the other embassies in Cambodia.
He is so right about those idiots that is raping Cambodia right now. They needs to respect the Citizens and working for the country.
To 7:05AM
Oh? If this is not a warning why did Ambassador Joseph A. Mussomeli talk with ugency? Isn't it in American interest to have dirt poor Cambodian people have some jobs otherwise American wouldn't accept 90% of Cambodian garment export! Soon Cambodia will loose the garment export to Vietname thank to AH HUN SEN for destroying Cambodian educational system and all the fucken corruption still going on right now!!
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