Recession shows need for Cambodian garment factories to diversify – UN agency

UN News Centre

27 April 2010 – The global downturn has shed light on the need for Cambodian garment factories to both expand and diversify their markets to include those in Asia to reduce reliance on those in the United States and the European Union, according to a new report by the United Nations labour agency.

Nearly 90 per cent of the 66 factory managers surveyed reported having been adversely affected by the economic crisis, listing falling export orders, heightened pressure to reduce prices and the increased cost of inputs as the three main pressures they are facing.

The report by the International Labour Organization (ILO) said the recession has also exposed the need to look into boosting domestic demand for Cambodian garments.

The industry is almost entirely owned by foreigners and is export-oriented, and factories hire, on average, 700 workers and specialize in one of the following areas: T-shirts, jeans, pants, sportswear, underwear and pyjamas.

The ILO found that production-level workers have borne the brunt of job losses, while managers and other non-production staff have not been as severely affected.

A study released earlier this year found that factory closures or cutbacks due to reduced orders have forced many garment workers out of a job, with one in 10 unemployed workers having lost their positions two or more times last year and most still looking for work.

Today’s publication reported that only 5 per cent of factories exporting their products have provided assistance – in the form of counselling and help in securing new employment – to the workers they terminated.

It also pointed out the renewed urgency now for Cambodia to “develop a reliable and cost efficient electricity supply, for the benefit of all businesses,” including the garment industry, since high power costs are impeding the regional competitiveness of its garment firms.

Cambodia's Garment Workers Hit by Recession

By Ker Yann, VOA Khmer
Video Editor: Manilene Ek
10 November 2009

Over the last decade economic growth has helped lift Cambodia out of its poverty. The signs were everywhere; bustling construction sites around Phnom Penh ; young workers filing into factories, filling orders for eager clients abroad.

More than 400,000 jobs in the textile industry fuelled the hopes of many young women whose earnings in the city helped support their extended families in the countryside.

Ny Sopheak: "I worked in the packing section of a textile factory. I earned sometimes $60 a month from the factory work and I sent $10 a month to my father."

But that factory, like dozens of others, has now closed. The global recession scared investors and shut down factories.

Twenty-three-year-old Ny Sopheak, like 50,000 other Cambodians, recently lost her job in the garment industry.

This in a country where not having a job can mean not eating, or perhaps just having one meal a day.

Ny Sopheak: "Since I don't have enough food I feel so weak and I often get sick."

Today Ny is sharing one egg and some rice with her roommate, Horn Devy who also lost her factory job. That's one egg between two people. Horn feels she can't go on much longer.

Horn Devy: "It's very difficult. It's a hard life, living in a small room like this."

Horn is only 15 years old. She was sent to work to help out her family, small time farmers and basket weavers who can't make ends meet.

Horn's mother says she worries about her, so young, and away from the family. Even so, she wanted Horn to earn money, so that her brothers can finish school.

But having lost her job, Horn has gone from providing for her family to becoming an extra burden. Asked how she feels about this, she says,

Horn Devy: "It's hard to say. I am starving. When you have no food it's very difficult to feel anything."

Her story is unusual because of her young age, but all over Cambodia's capital there are women who are falling into abject poverty as they lose their jobs in the textile factories.

Meanwhile, thousands of factory workers have turned to the streets to pressure the government to guarantee their jobs, their incomes, and their access to food.

And while Cambodia has been hard-hit, other countries are worried too. Guaranteeing the availability of food for everyone is now an urgent issue for governments across Asia-Pacific.

Many governments are now looking at how to invest in agriculture, to stem tide of migration towards the cities, and to help make food more affordable.

But textile factories too, are needed. If they keep closing, experts worry that much of the progress achieved in places like Cambodia, in education, in economic development, and in human rights, could be at risk; and with it the future of the entire generation.

Recession threatens families [-There's a recession in Cambodia after all?]

Fourteen-year-old bookseller Vichet waits for customers along the riverside on Tuesday. (Photo by: Sovan Philong)

Wednesday, 26 August 2009
The Phnom Penh Post Staff

Layoffs among parents augur a rise in child labour: experts.

A STEEP decline in Cambodia's garment exports for the month of July has forced officials to reassess the strength of the global economic downturn and its impact on the country, as child welfare experts warn that the Kingdom's most vulnerable citizens - its children - may have the most to lose.

Official figures released Tuesday showed a 26.4 percent plunge in garment exports for July compared with a year ago and a 17.5 percent slide from June, - the latest in a series of grim economic indicators that prompted an admission by the head of the Cambodian Economic Association that the worst of the crisis could still be ahead.

Standing in the path of that slide, says Bill Salter, head of the International Labour Organisation's subregional office in East Asia, are Cambodia's children.

"The trend threatens to push 200,000 people back into poverty and erect new financial obstacles in front of children trying to access education," Salter said Tuesday during the launch of a national workshop studying the impact of the global economic crisis on child labour.

An estimated 40 percent of children aged between 7 and 17 years are currently engaged in some form of child labour, the group ChildFund Australia said in June.

Child labour rising

ILO officials said earlier this year that the number of children working in hard-labour conditions in Cambodia had grown from an estimated 250,000 in 2002 to about 300,000 this year.

The government has acknowledged the risks facing children, especially as families dependent on the garment sector - the Kingdom's largest industrial employer - suffer job losses or salary cuts that could prompt them to pull children out of school and into the workforce.

Cambodia's garment sector, which accounts for about 90 percent of the Kingdom's total exports, has borne the brunt of an economic downturn that can be linked directly to the rising numbers of children being forced into work, the ILO's Salter said, as cash-strapped families increasingly view education as a financial burden.

Veng Heang, director of the Department of Child Labour within the Ministry of Labour, said the link between the global crisis and child labour was no surprise.

"We knew that the economic crisis would impact children," he said Tuesday, adding that a rise in instances of child begging, scavenging and domestic labour would not be unexpected.

Warnings over deteriorating child welfare came amid protests by thousands in the garment sector over slashed pay.

More than 70,000 garment workers have been laid off since the crisis began, industry analysts say, with another 100,000 under threat in the next two years.

Nearly 3,000 employees at the Sky High Garment Factory in Daun Penh district went on strike on Monday to protest drops in their salaries, inadequate working conditions and unexpected work stoppages.

Year 2009 in Cambodia: the year of recession? [... not according to Dr Hun Xen and his CPP comrades]

Pailin (Cambodia). 19/01/2008: Cassava roots harvest. Even if the agricultural sector seems to be less hit by recession, the prices of some products, like cassava root, are getting lower. (Photo: John Vink/ Magnum)

12-03-2009
By Laurent Le Gouanvic
Ka-set

After economic growth soared into record double-figures, one may wonder whether Cambodian economy is about to suffer its first recession in 2009. This is what economists at the International Monetary Fund (IMF) fear in their conclusion released on March 6th after having carried out a week-long mission in Cambodia to assess the impact of the crisis on the Kingdom. Although they might be alarmist, the many revisions made to economic growth predictions [see also ‘Spotted on the Web’ 24/02/2009] were until now rather weighted by recommendations emphasizing the assets of the small Asian state. This time, discussions became slightly heated and experts at the IMF confessed it straight out: they will not answer for any prediction from now on as there is increasing uncertainty as to the future of Cambodia’s economy. Facing the situation, the few recommendations issued by the IMF or the Asian Development Bank (ADB), who held a forum at the beginning of this week in Manila, seem, above all, to show the helplessness felt by many developing countries such as Cambodia.

Recession: a word and an evil that were still unknown yesterday

“Recession”. Who would have thought that only a few months ago, the word would appear in the Cambodian economic language, which focused until now on “growth”, “development” and “expansion”? The team of IMF experts came especially from Washington to visit Cambodia from February 25th through March 4th and took care of not using that particular scary term, but the conclusion they reached is no less explicit: according to the team’s projections, the Cambodian Gross Domestic Product (GDP) should fall by about 0.5% in 2009, compared with the previous year’s GDP.

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