Tuesday, December 10, 2013

Improving Labor Conditions Supports Economic Development

The Cambodia Herald, Dec. 8, 2013
By William E. Todd

The Cambodian people should feel proud of the tremendous economic development their nation has experienced in recent years.  Increased foreign investment, improved infrastructure, and a growing middle class are all signs that Cambodia has achieved much and that there is great potential for further economic progress.  As the country’s economy continues to expand, business enterprises from across the globe will look for opportunities in Cambodia, which prompted a reader named Samphey to write, “As a factory worker, I want to know if U.S. companies look at how workers are treated before they decide to do business in Cambodia.”

I can say unequivocally that labor conditions are a critical consideration of U.S. firms looking to invest in Cambodia.  As more U.S. and other international companies explore doing business in Cambodia, there will be increased scrutiny of local labor practices.  This is especially true for companies that demand worker safety, decent wages, and good working conditions as a condition for investment – exactly the kind of reputable companies that Cambodia needs to attract in order to continue building its middle class.  To support economic development in Cambodia, businesses and the government must work together to improve the treatment of and safeguards for Cambodian workers, who are the driving force behind Cambodia’s economic success. 

During my time in Cambodia, I have had many discussions on economic issues witha broad range of stakeholders – foreign companies doing business in Cambodia, local business owners, workers, farmers, union members, and government officials.  Although each of these groups has a different perspective regarding Cambodia’s economic development, everyone appreciates the need to ensure that future growth and foreign investment help the average Cambodian. 
This issue was the primary focus of an excellent discussion I recently had with the new Minister of Commerce, His Excellency Sun Chanthol.  We talked in depth about bolstering Cambodia’s “brand”by having the country set the standard in the region for best labor practices, not just meeting the minimum standards of its competitors.  Exemplary labor practices would not only benefit workers, they would give Cambodia a competitive advantage in attracting new investment and help make it the country of choice for companies looking to open new manufacturing plants.

This is particularly true in Cambodia’s garment sector, which currently employs an estimated 500,000 mainly young women who in turn help support more than 1.5 million family members through remittances home.International garment brands are very sensitive to local labor conditions because customers are increasingly demandingthat the products they buy be made by laborers who are paid a fair wage and work in a decent environment.  Many international buyers rely on the Better Factories Cambodia program, which conducts factory inspections, to ensure that the manufacturers with which they partner have ethical work standards.  Factory inspections and public disclosure of the findings are a powerful tool for increasing transparency and making Cambodia a more attractive place for international brands to do business, which is why the United States is such a strong supporter of the program and welcomes news that progress is being made on an agreement to keep the Better Factories program operating in Cambodia. Many other countries, however, are now also working to develop their own factory monitoring programs – including nearby Burma, Indonesia, and Bangladesh – so buyers have stressed to me the importance of the Better Factories program continuing in Cambodia in order for the country to remain competitive in the garment sector. 

Similarly, I was also pleased to hear recently that the Cambodian government is working with several factories and labor unions on an innovative new approach to guarantee a fair living wage for workers as well as an annual review of wages.  Under this program, participating factories will commit to paying their workers a wage that ensures their basic needs are covered. Factories that undertake manufacturing on behalf of brands like H&M, Gap, and Nike have expressed support for the program, which is sure to play an important role in shaping future discussions on pay for the entire garment sector.

Finally, it is important to keep in mind that companies looking to invest in Cambodia are not just interested in improved working conditions at factories, but they also watch for improved industrial relations among workers, management, and government authorities.  Positive industrial relations help prevent wildcat strikes, work stoppages, and other costly disruptions to business and are another important building block in helping to establish Cambodia as a stable, attractive environment for business.Therefore, I would like to congratulate the Cambodian government on its successful efforts to negotiate an agreement between workers and management at the SL garment factory to end a lengthy strike.  This is a positive development for labor relations in the country and demonstrates that government, management, and labor can work together to find solutions to disputes through compromise and dialogue.

Although the road to growth and economic development is rocky at times, I believe that the Cambodian people have much to be proud of, and the United States has been, and will continue to be, a partner in helping Cambodians achieve their full potential.We are committed to working with the Cambodian government, the local and international business community, and the Cambodian peopleto encourage Cambodia’s continued growth and development and promote economic opportunities for both Cambodians and Americans.

Thank you very much for reading this week’s column.  I look forward to reading your thoughts on this subject and to receiving other comments and questions.  Please write to me in English or Khmer at AskAMBToddPP@state.gov.

William E. Todd is U.S. Ambassador to the Kingdom of Cambodia


Anonymous said...

Sound like Mr. Ambassador is doing Dialectical Behavioral and Motivational Therapy DBMT with Mr. Hun Sen government.
It may work if this government suffers from low self esteem with lack of disorganizational functioning skills, but it would not work if this government having antisociopathic with sarcastic/egocentrism norm.

Anonymous said...

hear it from the ambassador of america. cambodia is not that bad like some biased chart on corruption index reported. mr. todd see cambodia in a different scenerio. i think about the corruption in cambodia, if they enact the freedom of information act, corruption index may be better for cambodia.

more investments is a good sign for cambodia that corruption is discouraged there. gov't of cambodia should always try to do something on report on corruption, make the country better!

Anonymous said...

5:50am, you sounded like you are always against everybody who don't necessarily agreed with your way. you can't agree to disagree? nobody has to go your way all the time, you know!

Anonymous said...

the royal government of cambodia is committed to fighting corruption of all forms. give them credit where it belongs!

Anonymous said...

i think all the western nations ask of cambodia is for cambodia to give its political will for human rights, freedom of expression, freedom of information act to lessen corruption from top down because their contribution is not important since they want to help cambodia to develop and rebuilt.

Anonymous said...

"give them credit where it belongs!"

9:04 AM,

How about I give them middle finger?

It doesn't matter how Ah Hun Shit reduce corruptions, as long as CRIMINAL CPP and its cronies still control judiciary system, fighting corrption is still useless.

Infact, CRIMINAL CPP only fight corruption for the one who get in their way or no money for them, you know it and Ah Chhker Yuon Hun Shit knows it. Stop denying the truth, Vietcong slave!