Cambodian garment trade struggles to get over slump

By Prak Chan Thul

PHNOM PENH, Feb 17 (Reuters) - Cambodia's garment industry, its third-biggest currency earner, shed almost 30,000 jobs in 2009 after a drop in sales to the United States and Europe and could struggle this year, a senior official said on Wednesday.

Oum Mean, secretary of state at the Labor Ministry, said 106 factories had closed in 2009, putting 45,500 people out of work.

On top of that, 66 factories suspended operations, leaving another 38,000 on half pay, after a slump in export orders as shoppers in the United States, Europe and elsewhere cut back on clothing purchases due to the global financial crisis.

However, 48 factories had opened during the year, employing 16,900 people, Oun Mean said. These firms had received permits before the downturn and had taken the risk of continuing with their ventures, banking on an improvement in the world economy.

"In 2010, we suspect garment and shoe production will still be affected," Oum Mean said, adding the industry had 468 factories by the end of last year, employing 330,000 people.

"We just feel happy after hearing information that there's been some recovery in those big countries," he said.

According to data from the Garment Manufacturers Association of Cambodia, the country exported garments, textiles and shoes to the value of $2.3 billion last year, down from $2.9 billion in 2008. More than half of its exports go to the United States.

In recent years the sector has been the third-biggest foreign exchange earner after agriculture and tourism in a country ravaged by civil war in the 1970s but which has achieved some stability over the past two decades.

It accounts for about 16 percent of gross domestic product, so the factory closures will hurt, with a ripple effect in the countryside as the money sent home by garment workers dries up.

The International Monetary Fund forecast in December that the economy would shrink 2.7 percent in 2009 before growing 4.3 percent this year.

The government has offered vocational training to the unemployed, but Oum Mean said some female workers had also turned to the "entertainment industry" -- a euphemism for prostitution. "Some think that these jobs are not good for society," he said.
Chea Mony, president of the Free Trade Union, said some workers had sought jobs in neighbouring Thailand, Malaysia and South Korea.

"Some of the women went to work in night clubs and beer gardens," he said. "Unemployment is a heavy burden for Cambodian women."

(Editing by Alan Raybould)

Over 45,000 Garment Jobs Lost in Cambodia Last Year

2010-02-17
Xinhua

At least 106 garment and shoe factories were closed last year, mostly because of a slump in Cambodia's key export industry, forcing more than 45,000 workers out of employment, local media reported on Wednesday, citing figures from the Ministry of Labour.

Oum Mean, secretary of state at the ministry, was quoted by the Phnom Penh Post as saying that 66 additional factories had suspended operations over the same period, temporarily affecting an additional 38,124 workers.

"At the same time, we also saw 48 new established factories that employed 16,886 workers," he said, adding that the government trained 40,000 unemployed garment workers in agriculture up to October.

The Ministry of Labour said that at the end of September last year, 130 garment factories closed or suspended operations in Cambodia in the first three quarters, meaning an additional 42 factories had shut down from October to the end of December.

Just over 30,000 garment workers were made redundant last year up to the end of September. Evidence so far has suggested that openings and closures were about the same, according to Oum Mean.

However, a representative of the Garment Manufacturers Association of Cambodia (GMAC) said that the sector is far from recovery. GMAC Secretary General Ken Loo pointed out that shipments were still down after dismal figures for the last quarter of 2008.

Cambodia's garment sector is regarded as the first largest earning income for the country's revenue.

Cambodian garment workers face employment crisis

Wednesday, October 07, 2009
Anna Walker
ABC Radio Australia

The United Nations has warned that many of the Cambodians that have lost their jobs in the garment industry this year, might be forced into sex work.

The comments come after Cambodia's Labour Ministry found that between January and September this year, nearly 80 garment factories have closed, leading to more than 20,000 job losses.

Around a third have found work in other factories, but spokesman for the United Nations Inter-Agency Project on Human Trafficking, Lim Pith says many will have no choice but to go into the entertainment or sex industries.

"The first place they go is to the entertainment industry, which I think would be increased from 20% to maybe up to 30% of them have got a job in the entertainment industry," he said.

"In addition to that some of them will go to work in the restaurants and beer gardens."

Earlier this year, the UN released research findings showing Cambodia's garment sector had been the hardest hit by the global economic crisis, and that newly unemployed women in particular were seeking work in brothels, karaoke bars and massage parlours.

Mr Pith says the large number of Cambodians out of work has also driven wages down.

"Probably because [employers] have more people who want jobs, [employees] have to work longer hours in order to get money and also we see that the wage they receive from their work has decreased."

Shrinking economy

The International Monetary Fund has predicted Cambodia's economy will shrink by 2.75 per cent this year.

The Garment Manufacturers Association of Cambodia agrees with the IMF's figures.

The Association's Secretary General Ken Loo says the industry's shrunk by around 25 percent since the middle of last year.

He says garment factories have relied too heavily on the United States market and are now having to look elsewhere.

"Approximately three quarters or 70% of our exports go to the USA...now if you look at countries like Vietnam or Bangladesh they have a good mix - it's about fifty fifty between Europe and the USA,

So I think our factories here are starting to look to other areas, newer markets. Europe, Japan, Canada, China would be another alternative that we are looking at," he said.

Stiff competition

Mr Loo says stiff competition from abroad is contributing to Cambodia's garment industry crisis.

"For example, our costs are relatively high as compared to our competitors like Vietnam and Bangladesh," he said.

"We have too many unions within each factory which result in many walkouts and strikes and leads to confusion to management who don't know who to negotiate with."

"We also have infrastructure gaps whereby for example the price of electricity is double that of our neighbours. "

Mr Loo says the industry is well aware of the problems it faces, but says the economy is something over which Cambodians have no control over.

"I don't think that there's anything the government can do per se...we just have to wait for the economy to recover and hopefully then these people can come back and reopen their factories."

The garment industry is Cambodia's largest source of income, providing 80 percent of its foreign exchange earnings and employing an estimated 350,000 people last year.

20,000 garment workers lose jobs in Cambodia

Monday, October 05, 2009
AFP

PHNOM PENH — The global economic downturn has forced at least 20,000 workers to lose their jobs in Cambodia's garment industry this year, a labour ministry report showed Monday.

Between January and September, 77 factories were closed across the country resulting in the loss of 30,617 jobs, according to the report obtained by AFP.

Although 40 new factories opened in same the period and created more employment, more than 20,000 job losses remained, it showed.

Another 53 factories also suspended operations during the period but about half have reopened.

"The closure of the factories is due to fewer purchase orders," Oum Mean, secretary of state at the Ministry of Labour, told AFP.

"We can assume that this has been caused by the global financial crisis because the consumption in big countries has declined and this made some factories receive no purchase orders," he said.

In the face of shrinking demand from the US, the largest importer of Cambodian-made garments, the government is seeking new markets for textiles in Asia and Europe, Oum Mean added.

Cambodia's garment industry is the impoverished country's largest source of income, providing 80 percent of its foreign exchange earnings and employing an estimated 350,000 people last year.

The International Monetary Fund said last month that Cambodia's economy will contract 2.75 percent this year as the global economic crisis takes its toll.

130 garments factories closed down in Cambodia this year [-Is this "just another number" as Hun Xen claimed?]

Oct 1, 2009
DPA

Phnom Penh - The Cambodian government said 130 garment factories have closed so far this year as the global economic crisis continues to depress demand for the kingdom's key export earner, local media reported Thursday.

The Labour Ministry said the closure rate of one factory every second day has cost more than 60,000 jobs so far in an industry that is one of the country's economic mainstays.

Ministry figures showed that 30,000 workers have lost their jobs this year following the permanent shuttering of 77 factories. The temporary closures of another 53 factories mean a further 30,000 workers are currently out of work.

Against that, 40 new factories opened this year creating almost 10,000 jobs.

A Labour Ministry official told the Phnom Penh Post newspaper that those factories which had suspended operations would resume if and when they received new orders.

'Only purchase orders can help garment factories in Cambodia resume their production and face the effects of the global economic crisis,' the official said.

Kaing Monika, business development manager at the Garment Manufacturers' Association of Cambodia (GMAC), an industry body, said the closures had made 2009 a particularly difficult period.

GMAC has almost 300 member factories producing garments locally.

'Only those factories which are supported by significant international buyers have survived and managed to continue producing through this hard time,' he said.

Weak international demand for garments in key Western markets is one reason Cambodia's economy is expected to shrink this year. The International Monetary Fund last week became the latest multilateral body to predict that the kingdom's economy will shrink when it forecast a contraction of 2.75 per cent for 2009.

That was even more pessimistic than the Asian Development Bank's prediction released in September of a 1.5-per-cent contraction.

Garment Sector in Danger: Manufacturers [... Why worry when Comrade Keat Chhon claimed that Cambodia's economy will increase by 7%?]

By Kong Sothanarith, VOA Khmer
Original repoort from Phnom Penh
12 June 2009

At least 100,000 factory workers have felt the pinch of the global economic crisis, with 60,000 losing their jobs, the Garment Manufacturers Association said Friday.

Orders are down, and Cambodia lacks competitiveness with its neighbors Bangladesh, China, Indonesia and Vietnam, Van Sou Ieng, head of the association, told reporters.

Manufacturers are facing pressure from unions to increase wages, as the crisis has cut the overtime hours many workers have come to rely on.

The garment sector is one of the chief engines of the Cambodian economy, but its main target is the US and European markets, which have been hard hit by the economic downturn.

No strike under Hun Sen's rule; Only pro-CPP unions are invited to meet Hun Sen

PM warns against strikes

Wednesday, 22 April 2009
Written by Sam Rith
The Phnom Penh Post

Says further disruptions could lead to employment losses.

PRIME Minister Hun Sen on Tuesday urged 3,500 garment workers to resolve labour issues through peaceful means including legal arbitration, warning that strikes and demonstrations could lead to further job losses in the troubled garment sector, which has contracted substantially since the onset of the global economic downturn.

In a speech at a meeting hall in Kandal province's Takhmao district, Hun Sen also said he had instructed the Ministry of Labour to organise training courses for garment factory workers who had lost their jobs and were looking to transition to other careers, said union officials who attended the speech.

Some 50,000 Cambodian garment workers have lost their jobs since June 2008, according to figures provided by Ath Thorn, president of the Cambodian Labour Confederation (CLC). Ath Thorn estimated that 60 to 70 percent of those workers had returned to their home provinces after being laid off, while 10 to 20 percent had found new garment factory jobs or other jobs. The remaining workers had started their own businesses, he said.

Van Sou Ieng, president of the Garment Manufacturers Association of Cambodia, told the Post last month that 70 garment factories had closed since last August and that 51,000 garment workers had lost their jobs or seen their contracts suspended.

Sem Sokha, a secretary of state at the Ministry of Social Affairs, said Tuesday's gathering of 28 unions was convened to mark International Labour Day, which is observed on May 1.

Ath Thorn, who did not attend, criticised the government for allegedly inviting only pro-government unions, a charge to which Sem Sokha declined to respond.

Ath Thorn said the six CLC unions along with the Free Trade Union of the Workers of the Kingdom of Cambodia and the Cambodian Independent Teachers Association would attend an alternate gathering in front of Wat Botum on May 1.

"We plan to have 2,500 workers, including garment, tourism, construction and other workers, coming from the provinces and cities throughout Cambodia to meet on International Labour Day," he said.

He said the demonstration's organisers planned to submit a petition enumerating several requests, including for the establishment of a labour court as well as a requirement that garment factories give severance pay to their employees when they close.

"WE WILL HAVE MORE DIFFICULTY in MAKING DEMANDS IN THE INTEREST OF WORKERS."

Ath Thorn said the workers will gather in front of Wat Botum at 8:30am on the morning of May 1, at which time the petition will be read by union leaders. They will then proceed to the Council of Ministers to file the petition, then walk to the site near Wat Lanka where trade unionist Chea Vichea was assassinated in 2004. Then they will walk to the National Assembly building to file the petition there as well.

Bargaining position

Ath Thorn said there was some concern on the part of union leaders that the economic downturn had weakened their bargaining position with factory owners.

"As a result of the global economic crisis, we will have more difficulty in making demands in the interest of workers, including higher salaries and improved working conditions," he said. "Companies have been more likely to ignore our demands."

But he said this would not discourage them from demonstrating because "there are big problems in Cambodia" and "the government has to solve them".

Minimum living standard wages should be between $87 to $113 per month

17 March 2009
By Ky Soklim
Cambodge Soir Hebdo
Translated from French by Tola Ek
Click here to read the article in French

This estimate was provided by economists from the Cambodia Institute of Development Study (CIDS) based on a salary survey in the garment sector. This result could lead to demands to be made by workers who are not keen estimate their own needs on this issue.

The results of the CIDS survey, which was published on 16 March, indicate that the average salary amounts to only $67 per month, and that these average wages would increase to $79 with overtime work. “According to our study, the minimum salary should be between $87, at the low end, and $117 at the high end,” the survey authors indicated.

According to the survey, a factory worker spends $57 per month for personal needs, $15 for her family, and she would save $7. The survey, which was conducted between December 2008 and January 2009, is based on a sample of 350 factory workers, 91% of whom are women.

However, due to the current financial and economic crisis, the ministry of Commerce and the GMAC indicated that more than 50,000 garment workers lost their jobs.

Cambodian garment exports fall 27 per cent

Mar 12, 2009
DPA

Bangkok - The value of Cambodia's garment exports in January was 27 per cent lower than in the same period last year as demand in the United States and Europe slumped, national media reported Thursday.

Garment exports were worth about 246 million US dollars in January 2008 but had dropped to about 177 million in the first month of this year, according to figures released by the Ministry of Commerce.

Exports to the United States dropped by about 35 per cent while exports to Europe were down by about 10 per cent.

Garment manufacturing, Cambodia's only significant export industry, has been the hardest hit sector in the developing country's economy during the global financial downturn, with more than 30 factories closing so far this year.

More than 30,000 garment factory workers lost their jobs in the past 12 months, according to a World Bank report released Sunday.

Economic crisis disastrous for world's poor [... but not in Cambodia, according to Dr Hun Xen]

March 10, 2009
ABC Radio Australia

The global financial crisis is fast becoming a disaster for the world's poor.

The World Bank has released a dire forecast for the international economy, saying it will shrink for the first time since World War two. It says falling trade will hit the East Asia region the hardest, with developing countries facing possible catastrophe. It means more poverty and hardship with governments likely to be starved of money. But there are a few glimmers sunshine in the gloom.

Presenter: Karon Snowdon
Speakers: Richard Martin, Managing Director of IMA-Asia; Ashok Sharma, the Asia Development Bank

Click here to listen to the audio program (Windows Media)

SNOWDON: The latest World Bank report is grim reading. The global economy will shrink for the first time since World War Two and trade will experience its biggest fall in eight decades. The greatest losses will be in East Asia. As if to highlight the speed of the turnaround - Japan the world's number two economy also just recorded its first current account deficit in 13 years. At almost two billion dollars in the red it's a massive fall from the 18 billion dollar surplus for the same period last year.

Richard Martin, Managing Director of IMA-Asia agrees the world faces recession.

MARTIN: We're expecting a contraction for the whole global economy of around one to two per cent this year. Most of that is going to occur in the northern hemisphere, but it will not miss Asia. Asia is still going to do better but the financial crisis we saw last year in the northern hemisphere becomes Asia's manufacturing crisis this year. And it'll certainly pull growth down in the region.

SNOWDON: The World Bank says developing countries, previously on the sidelines, could be facing crisis, especially where poverty is already high.

The most concern is for the poor in Africa but Asia is not immune. This latest report comes on top of one in February saying 53 million more people could be trapped in poverty as a result of the global slowdown. The examples are mounting...more than half a million jobs were lost in India in the last three months of 2008. Cambodia has lost 30,000 jobs in the garment industry, its only significant export.

The Bank says governments of developing countries could face the additional problem of not being able to raise money and experience a funding gap of between 300 and 700 billion US dollars as export income disappears. It says they'll face a credit squeeze as rich nations suck up scarce finance.

Ashok Sharma from the Asia Development Bank told Stephen Long some government bonds - that's the way governments raise money - will have no buyers.

SHARMA: In fact even in Germany which has about the most liquid bond market two bond issues of ten years have failed in the market so you can imagine what will happen to emerging countries.

SNOWDON: Richard Martin from IMA-Asia says Eastern Europe is in real trouble but the picture is more mixed in Asia.

MARTIN: The big picture is right now we have a US government rapidly ramping up its deficit and pushing up public debt towards 70 per cent of GDP. By contrast the picture across in Asia is we have China with relatively low levels of public debt 24-25 per cent of GDP and plenty of scope to fund its deficit out of its domestic market. And that's what makes people confident China will pull off quite a big fiscal stimulus this year. Elsewhere it's a bit patchy in the region. Most of Asia if we exclude Japan has done an excellent job of reducing public debt in the eleven years since we had the Asian crisis. So a lot of Asia or a fair amount of Asia is in a position to apply a fiscal stimulus now. And in that favourable group you'd put the two city states of Singapore and Hong Kong, Korea, Taiwan would fit in there, Australia and New Zealand will fit in there. Now the countries not in a position to do it are Vietnam, India, Philippines and Indonesia, though those last two seem to be getting through ok on their fiscal management.

U.S. Downturn Dragging Globe Into Recession [-Cambodia has lost 30,000 jobs in the garment industry]

World Bank Predicts Economy Will Shrink for First Time Since 1940s

Monday, March 9, 2009
By Anthony Faiola
Washington Post Staff Writer

The world is falling into the first global recession since World War II as the crisis that started in the United States engulfs once-booming developing nations, confronting them with massive financial shortfalls that could turn back the clock on poverty reduction by years, the World Bank warned yesterday.

The World Bank also cautioned that the cost of helping poorer nations in crisis would exceed the current financial resources of multilateral lenders. Such aid could prove critical to political stability as concerns mount over unrest in poorer nations, particularly in Eastern Europe, generated by their sharp reversal of fortunes as private investment evaporates and global trade collapses.

In its report, released ahead of a major summit of finance ministers in London this week, the World Bank called on developed nations struggling with their own economic routs to dedicate 0.7 percent of the money they spend on stimulus programs toward a new Vulnerability Fund to help developing countries.

The report predicted that the global economy will shrink this year for the first time since the 1940s, reducing earlier estimates that emerging markets would propel the world to positive growth even as the United States, Europe and Japan tanked. The dire prediction underscored what many are calling a mounting crisis within a crisis, as the downturn that started in the wealthy nations of the West washes over developing countries through a pullback in investment, trade and credit.

"We need to react in real time to a growing crisis that is hurting people in developing countries," World Bank President Robert B. Zoellick said in a statement. Action is needed by governments and multilateral lenders "to avoid social and political unrest."

The report said that 94 out of 116 developing countries have been hit by economic slowdowns. The World Bank projected that the economic crisis will push around 46 million people into poverty in 2009 through job and wage cuts, as well as declining flows of remittances, the money that foreign workers send to their families. Net private capital flows to emerging markets are plunging, set to fall to $165 billion this year -- or 17 percent of their 2007 levels. Falling demand in the West is sparking the sharpest drop in world trade in 80 years, sending sales of the products and commodities of poorer nations spiraling down, the report said.

That decline is touching off a wave of job losses. Cambodia has lost 30,000 jobs in the garment industry. In India, more than half a million jobs vanished in the last three months of 2008, including cuts in the gems, jewelry, auto and textile industries, according to the World Bank.

As a result, the report estimates that at least 98 countries may have problems financing at least $268 billion in public and private debt this year. It noted a worsening in market conditions could raise that figure as high as $700 billion. Additionally, only one quarter of vulnerable developing countries, the World Bank said, have the ability to launch their own stimulus programs or to independently finance measures such as job-creation or safety-net programs.

To help them, multilateral lenders will need to dig deep. The World Bank remains well financed and is positioned to almost triple spending to $35 billion this year. But it warned the scope of the need in the developing world will exceed the combined ability of major multilateral lenders, and it called on governments in major nations and the private sector to pitch in more.

For instance, its sister organization, the International Monetary Fund, recently received $100 billion more from Japan, but is still asking more affluent nations to come up with an additional $150 billion to replenish its rapidly diminishing funds. While the World Bank aims to reduce global poverty largely through long-term projects in the developing world, the IMF is charged with offering bigger, more immediate bailouts to countries on the verge of economic collapse. The list of countries fitting that description has soared in recent months.

In November alone, the IMF parceled out $50 billion to nations in crisis -- the most the institution has ever spent in a single month. With more nations, particularly in Eastern Europe and Central Asia, facing serious trouble, the IMF is preparing to hand out tens of billions more. It is hoping to raise more funds from Western nations and other cash-rich countries such as China and those in the Middle East.

The concern now, however, is that the scope of the crisis may be so vast that even an extra $150 billion may not enough. Some fear that nations in Western Europe such as Austria, Ireland and Spain -- believed to have graduated from IMF lifelines decades ago -- may soon require bailouts, taking funds that would have been spent on poorer nations. It could also prove difficult to raise more money from hard-hit countries including the United States and Britain, where politicians and citizens may decide that charity begins at home.

"I'm worried about what happens when you see that a Greece or an Ireland that might need bailouts," said Simon Johnson, an MIT economics professor and former IMF chief economist. "Where is the money going to come from?"