Cambodia’s Garment Industry Rollercoaster

By Peter Ford

February 22, 2015

News for the vital industry has been decidedly mixed of late. 

Travel in any direction from Phnom Penh, Cambodia’s capital, and it is not long before you reach the clothing and footwear factories. Lining the national highways, these buildings – often resembling warehouses in both size and architectural merit – house up to 600,000 workers, predominately young women. Time your trip for the beginning or end of a shift, and the sight of thousands of these women crammed into open top cattle trucks starkly highlights both the youth of the workers, and the huge numbers involved in this industry.

The importance of the garment industry to Cambodia’s economic output is clear: $5.7 billion in clothing and footwear was exported last year, and is a major factor in the country’s official zero percent unemployment rate. Yet despite this it can sometimes feel as if garment workers never catch a break. Stories featuring the Kingdom’s seamstresses in the past few years have covered mass fainting, mass strikes, and the police shooting of five workers. Indeed, positive stories are hard to find.

In the past few months, though, there have been a number of developments.

The announcement in November 2014 that the minimum wage for garment and footwear workers would rise 28 percent to $128 a month was a rare piece of good news for workers. Facing strong resistance from employers and the government alike, the increase served as a strong reminder of the importance of the sector to the government, not to mention the power of the unions involved. The recent tightening of union registration laws might be a sign of just how strong this message was.

While this was a significant increase, it fell far short of the $160 demanded by the unions, and has done little to quell the underlying anger, as the sporadic subsequent strikes have shown.

Also in November was the widely reported broadcasting of a Norwegian reality TV show titled Sweatshop.Three young fashion-obsessed Norwegians (one admits to spending $600 a month on new clothes) travel to Cambodia to briefly experience the daily realities of the people making their clothes. Subtitled “this is what happens when you send three young Norwegians abroad,” it provided classic emotive material, with smiles and naïve comments slowly replaced with copious tears and comments on social injustice.

Of course, the show offered little new to the debate on the rights of workers or to the situation in Cambodia, but it did directly target the H&M demographic, who are the main consumers of the “disposable” fashion that drives the global garment industry. It remains to be seen whether this will lead to greater understanding and action regarding the realities of consumerism in developed countries – and the generation of Southeast Asian youth required to feed it.

Some more good tidings for garment workers arrived this week with news of discounts on water and electricity bills and a bipartisan plan for rent controls, which would tie rents for garment workers to inflation. Sam Rainsy, leader of the opposition Cambodian National Rescue Party (CNRP) party and a vocal supporter of the strikes last year, also spoke of his wish to see the minimum wage increase again this year to $160, far sooner than the government’s 2018 promise.

Long Shadow

This is undoubtedly good news for the beleaguered workers, but a long shadow was again cast over each gain this week.

Recently released Ministry of Commerce data shows that garment industry growth has continued its downward trend, shrinking to only four percent in 2014. Compare this with the 35 percent growth of only a few years ago. With the 500 or so factories in Cambodia reporting reduced orders, blame from management has predictably fallen on the wage protests and strikes, which they claim has damaged buyer confidence. With the $128 minimum wage now double that of competitor Bangladesh, the sector’s ability to compete regionally has been questioned.

The slowing growth means less overtime, which many workers rely on to supplement their earnings. Compounding the problem is the fact that the wage increase, which took effect on January 1, 2015, was met as expected with raised rents and food costs. These two events have effectively negated any practical improvement in the workers’ financial situation.

However, it can be argued that if the slowdown in industry growth is not in fact a result of the strikes but some other factor (the downward trend began before the strike action and shootings), then the workers would be far worse off financially than they are. This should be seen as a positive consequence and justification for the struggles, with the more realistic minimum wages at the very least providing a buffer at this time of economic and sector uncertainty.

What Next?

With positive results coming alongside sobering economic data, what, if anything, do these recent events suggest for the rest of 2015, and where does this leave Cambodia’s garment workers?

With national elections not due until 2018, it is unlikely that this year will see a repeat of the direct agitation and debate between the political parties over the minimum wage demands that characterized 2013 and 2014. But if the CNRP, a major ally of the garment unions, is able to prod the government into action on behalf of the workers, as the recent utilities and rent announcements suggest, then that will certainly be judged a continuing success.

Less clear is the prospect of justice relating to the fatal shooting last year of five protesting workers. The pace of Cambodia’s legal system is typically glacial (unless the government wants it otherwise), and there has been no apparent movement in the case. This uncertainty and inaction makes the possibility of a possible repeat event very real, and does nothing to improve relations between the strikers, the factory owners, and the government.

What can be said with certainty is that with Cambodia’s growing population, and a job market still overwhelmingly linked to manual labor, there are few alternatives for the garment workers. Stories ofindentured slavery faced by Cambodians in Thailand’s fishing industry certainly seem to reinforce this fact. With little diversification of industry on the horizon, the best they can hope for domestically is more support from the government in terms of minimum wage increases and living costs. It is unlikely, but not inconceivable, that programs like Sweatshop have any effect on consumers, which might drive improvements in wages and conditions from the other side.

A positive conviction against those responsible for the shooting last year, or even an official acknowledgement of error, would add more strength to the protesters’ demands. However, with mass fainting attributed to working conditions still occurring, the likelihood of more strikes and protests for 2015 is high. What this will mean for Cambodia’s garment industry, and its workforce, remains to be seen.

Peter Ford is a public affairs intern at Extraordinary Chambers in the Courts of Cambodia.