International Labour Organisation paints pessimistic picture of economic downturn’s effect on Cambodian industry in new report released this week

Photo by:

Heng CHIVOAN

Workers make garments in a factory outside of Phnom Penh. The ILO said the garment industry will likely see high unemployment as overseas demand for clothing drops as a result of the global downturn.

FEELING the slump

The ILO report forecasts a difficult 2009:

• GDP growth 5.1pc

  down from 6pc in 2008

• FDI to decelerate 0.9pc
• 2.5pc fall in exports

  $75m loss in export revenue

• Job losses

  25,600 construction jobs and 19,000 jobs in garment

  sector to be lost

• More than 1.5 million affected
• Tourism growth to drop

  5.5pc growth, down from 15.7pc in 2008

Source: ILO

ALMOST 500,000 Cambodians have been affected by the global economic downturn, with another one million expected to feel the effects in 2009, according to a new report by the International Labour Organisation.

A report made public on Thursday is the third in a string of bleak economic assessments released this month, along with that of the World Bank and the International Monetary Fund.

The ILO offers new figures on the employment implications of the crisis, while reinforcing sectoral assessments by other multilateral agencies.

Among the ILO's starkest predictions are 19,000 job losses in the garment sector and 25,600 in construction. On the bright side, the report expects 12,698 jobs to be absorbed in tourism and 203,200 in agriculture.

Cambodia's narrow export base has made the country especially vulnerable, says the ILO. In 2008, garments made up 94 percent of the Kingdom's exports, with 67 percent going to the hard-hit US market and 22 percent to the European Union.

The ILO predicts 5.1 percent growth in gross domestic product in 2009 - 0.3 percent above the International Monetary Fund estimate, which is expected to be cut later this month. Foreign direct investment will decelerate 0.9 percent in 2009, mainly due to the slowdown in China and South Korea.

"The main sources of FDI are from countries heavily impacted by the financial crisis," says the report.

The ILO urged strong government action to cushion the effects of the crisis including establishing a central job information system, an unemployment program and a multi-sector trade union.

Sukti Dasgupta, specialist on employment and labour market policies at the ILO said that female garment workers and migrant workers will be especially hard hit by the slowdown.

"Cambodian GDP depends heavily on exports and FDI, and now this has been affected, so there will be more unemployment and poverty," she said.

"Textiles and clothing, construction, tourism, and real estate are the most affected sectors by the global finance crisis because of the high concentration of FDI and dependency of foreign markets for garment export," said Kang Chandararot, director of Cambodia Institute for Development Study.

Workers in the garment sector are the most heavily impacted.

Government response

Cambodia's Labour Ministry says it is doing all it can to cushion the effect of the crisis. Sath Samoth, undersecretary of state at the Ministry of Labour, said that the government is working closely with NGOs and other institutions to find work for the unemployed.

"Workers in the garment sector are the most heavily impacted, and we are trying to find money to train them to do other work in other sectors because we want them to return home with at least one more skill besides garments," he said.

"The government will try its best to cope with this problem, but we have limited resources and a small budget.

"We will seek help from the World Bank and UNDP, but there is not much we can do if thousands of workers lose their jobs at once," he said.

Chea Mony, president of Free Trade Union, said that about 40,000 workers will lose their jobs by April due to factory closures.

"These people will have no choice but to return home to stay and work with families while waiting until opportunities arise," he said.