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.

In Southeast Asia, Unemployed Abandon Cities for Their Villages

February 27, 2009
By THOMAS FULLER
New York Times

DON SAO HONG, Thailand — After months of clinging to the hope that Southeast Asia might avoid the worst effects of the global economic crisis, layoffs across the region have gathered pace, governments are announcing sharp falls in economic growth and lawmakers are passing a raft of stimulus packages.

Here in the northeastern corner of Thailand, the unemployed, still paunchy from lives in the big city, have begun to trickle back to their villages.

While the crisis in the West centers on insolvent banks, home foreclosures and swelling unemployment, in Southeast Asia economists predict that one hallmark of the downturn will be the exodus of workers back to the family farm.

“It won’t take them long to lose their bellies,” said Samer Songserm, the 56-year-old wizened headman of this small village who has counted 10 unemployed workers returning from Bangkok over the past two months.

From the bright green rice-terraced hills in Indonesia to this expansive plateau in northeastern Thailand, an exceedingly fertile countryside is a cushion for hard times for Southeast Asia’s 570 million people.

The number of workers returning to their villages, while difficult to measure because many do not report their working status to the government, appears to be accelerating. Here in Ubon Ratchathani Province, Thailand’s fourth largest, officials say 2,187 workers have returned from other provinces and registered as unemployed since November, half of those in February alone.

The crisis is still in its early stages in Southeast Asia. But as conditions worsen, as many economists and governments are forecasting, factory and construction workers, waiters in the fancy restaurants of Bangkok and the chambermaids in Jakarta’s hotels will have little choice but to return to their villages if they lose their jobs. Most countries in the region, including Indonesia, Malaysia, the Philippines, Cambodia and Laos, do not have a national system of unemployment benefits, according to Gyorgy Sziraczki, an economist at the International Labor Organization’s regional office in Bangkok. Other countries, like Thailand, offer modest assistance to the jobless: a maximum of $200 a month for no longer than six months, provided they paid into a social security fund while they were still working.

Laid-off migrant workers in other parts of the world, notably in China, are also reportedly returning home. But one difference for workers in Southeast Asia is that they live in a very accommodating climate.

“Somebody said to me the other day, ‘It’s better to be poor in a warm country than a cold country,’ ” said Jean-Pierre Verbiest, the country director of the Asian Development Bank in Thailand. For this and other reasons, returning to one’s traditional village in the countryside is a sort of “social safety net,” Mr. Verbiest said, although he is not sure what the scale of the exodus will be because links to the countryside are weaker than they once were.

Economists are predicting that millions of workers will be unemployed as the economies of Thailand, Singapore and Malaysia contract this year, and the Philippines and Indonesia grow at sharply reduced levels. Thailand, which is highly dependent on exports, is among the worst hit in the region, with its economy shrinking 6 percent in the last quarter of 2008 alone.

When regional leaders gather this weekend for the summit meeting of the Association of Southeast Asian Nations at Hua Hin, a beach resort south of Bangkok, the economic downturn is expected to dominate discussions.

The leaders are putting into effect a “charter” intended to help guide the region toward an economic bloc similar to the European Union. They are expected to reaffirm their commitment to abolishing trade barriers by signing free trade agreements with Australia and New Zealand. And finance ministers have committed in principle to back up each other’s currencies in case they come under strain or attack.

Yet there appears little the leaders can do to mitigate the dramatic drop in demand for computer parts, shirts, rubber and palm oil — all exports that helped Southeast Asian development in recent decades and sent millions of people from villages into swelling cities.

In the case of Thailand, government stimulus measures could pump around $5 billion to $8 billion into the economy, said Supavud Saicheua, the managing director of Phatra Securities in Bangkok. But the loss in exports, he said, will be “two to three times what the government can spend.”

Mr. Supavud predicts that the crisis could keep 1 million Thais out of work in a nation of 65 million.

Workers who have already returned home say they are happy to be back with their extended families but frustrated that they cannot find new jobs.

“When you compare comfort, it’s better here,” said Paisarn Sansiri, 42. “But we have no money.”

Mr. Paisarn left his job at a Japanese-owned factory because the management stopped giving out overtime — 15-hour workdays that had provided him with a big enough paycheck, about $370 a month, to pay for life in Bangkok for him and his wife.

For the first time in a decade, the extended family is all living under one roof: Mr. Paisarn, his daughter, grandchildren and his wife and her parents. He spends his days burning logs to make charcoal in the backyard; he looks after the water buffalo and fishes in a pond hidden behind a rubber plantation. The family has stocks of rice from the December harvest and a couple of motorcycles to get around.

“I miss my job,” he said. “I’m bored with having no money.”

Although this is the hot and dry season in northeastern Thailand, there are still plenty of year-round crops — gourds, beans, coconuts and bananas among them — that thrive with little rainwater. Farmers raise chickens and cows, and dig fish ponds behind their homes that fill up with rain or groundwater. They feed the fish by turning on a light near the pond, attracting bugs to the light’s reflection on the surface of the water. Thailand’s king, Bhumibol Adulyadej, has long encouraged such self-sufficiency.

A Thai saying about the bounty of the countryside goes: “In the water, there are fish; in the field, there is rice.”

Yet life back in the countryside is cutting short the dreams of many here to pull themselves out of poverty. And losing work in Bangkok also sometimes brings shame. Ekalak, 24, returned to his extended family from a factory job in a Bangkok suburb. He told a reporter he did not want to give his full name because he would be embarrassed if people in his factory recognized him.

He sleeps in the same room as his grandmother and is now helping build a house for his aunt, a lottery ticket seller, next door.

Like Mr. Paisarn, he left when his factory eliminated overtime, reducing his salary to about $115 a month. “I would have had only debt if I stayed,” he said.

Cambodian Garment Workers Face Poor Prospects [-Will Samdach "Hanoi PhD" keep on denying this looming economic crisis?]

The Whtex Garments factory in Phnom Penh, Cambodia, employs about 1,300 workers and mainly makes underwear. More than 90 percent of its products goes to the U.S. But orders are off about 30 percent in the past few months as U.S. buyers scale back, and that has workers worried. (Michael Sullivan/NPR)

February 10, 2009
By Michael Sullivan
National Public Radio (USA)

Click here to listen to the audio program in English

The impoverished Southeast Asian nation of Cambodia is another victim of the global economic slowdown.

Two-thirds of Cambodia's export earnings come from the garment industry, which employs about 360,000 people — almost all of them women. Most earn less than $100 a month. But in a country as poor as Cambodia, every little bit helps.

Now, even that little bit is under threat.

Even makers of such seemingly recession-proof garments as underwear are feeling the pinch.

Take, for instance, Whtex Garments in Phnom Penh. Six months ago, the factory had more than 500 workers in the packing department alone, manager David Teo says. Now, there are fewer than 300.

Whtex Garments supplies underwear for Wal-Mart, Kmart and Disney, among others. Teo says more than 90 percent of his production goes to the U.S. But orders in the last few months, he says, are down 30 percent.

Six months ago, the factory packed more than 100,000 pieces a day.

"Now, we hardly pack 60,000, 70,000 a day," he says. As for the future, Teo says that he doesn't know what will happen next month — and everyone is worried.

It's repetitive, mind-numbing work. And it doesn't pay much, either. Workers here bring home between $70 and $100 a month — with overtime. Nobody pretends to like the job, but many are grateful for it.

Pou Chan Thon, 28, has been working at the Whtex factory for three years and says she is worried about losing her job. Her parents are farmers, and she sends them about $30 a month. Without that money, she says, they literally couldn't survive.

A few miles away, Sin Sary, 23, irons and folds track suits at Global Apparels. There are more than 3,000 workers at this factory, which manufactures sports clothes for Adidas and Puma.

I'm worried, the young woman says, because there are rumors going around that the factory will be closed or suspend production for a time. She says she doesn't know what she or her family will do if she's laid off.

But she better start thinking fast. Management hasn't told the workers yet, but about 800 are to be furloughed for the next two months, maybe longer. And these two factories aren't isolated examples.

Van Sou Ieng, chairman of the Cambodian Garment Manufacturers Association, says factories are losing orders from a host of U.S. companies — among them, Gap, Levi's, Wal-Mart and Nike. "Everywhere, actually," he says.

He says about 90 factories have already closed or curtailed production in the past few months, and he predicts another 30 will close by the end of March.

But union leader Chea Mony is skeptical. He says unscrupulous manufacturers are using the crisis as an excuse to close factories and move them elsewhere — without compensating workers.

Van Sou Ieng admits a handful of manufacturers have done just that — but only a handful, he says.

Meanwhile, economist Kang Chan Dararot worries about what will happen next. The Cambodian economy, he says, simply can't absorb those now being laid off from the country's two biggest industries.

"Poor families [are] very deeply involved in these two sectors — construction and garment industry. And now, so many people have been laid off. There [are] very grave prospects for … 2009," he says.

It's a future that may involve risky choices for laid-off workers desperate for cash.

Some out-of-work garment workers are already finding their way into karaoke parlors and go-go bars.

On a recent night, two young women working at a go-go bar in Phnom Penh say they were laid off last month. They haven't told their parents — and don't plan to, either. They are hoping to make enough working at the bar to continue sending money back home.

Many in Cambodia believe there will be more women in the same situation if garment orders are reduced further. Some worry the entire industry may be at risk if buyers — and manufacturers — decide to go elsewhere, like Bangladesh, where prices and wages are lower and labor standards weaker.