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Logo of Phnom Penh Post newspaper Phnom Penh Post - Garment industry sees 93 factories close up

Garment industry sees 93 factories close up

091215_09
Garment workers make clothes in a Phnom Penh factory. Nearly 100 such factories have closed in the first 11 months while arbitration cases have risen to 172 over the same period, up from 150 for the whole of 2008, according to Labour Ministry figures.

Over 38,000 people laid off up to end of November, report says

AT least 93 garment and shoe factories were closed in the first 11 months of 2009 at the cost of 38,190 jobs, figures released Monday by the Ministry of Labour and Vocational Training show.

A further 60 factories temporarily suspended operations, affecting 35,337 more jobs, but 55 new factories were also opened, creating 15,173 new positions, show the figures, which were released at the fourth National Conference on Industrial Relations.

Labour Ministry Secretary of State Oum Mean said the closures increased the rate of unemployment in Cambodia, but that around half of the laid-off workers found jobs again in the sector.

“So, the real number of jobless garment workers was less than 30,000,” he said.

Ministry figures show that 516 garment and shoe factories are operating in Cambodia, employing 358,660 workers. Of these, 418 factories are in Phnom Penh, employing 262,320, while the 98 factories in other provinces employ about 96,340 workers.

Oum Mean acknowledged the challenges facing the domestic garment sector in the wake of the global economic crisis, which has seen the country lose market share to its competitors in the key US market, according to the Asian Development Bank and International Monetary Fund.

The conference, which looked at the impact of the global economic crisis on industrial relations in Cambodia, was organised by the Arbitration Council Foundation, set up in 2004 to support the labour dispute resolution work of the Arbitration Council. The body, established in 2003, is independent with quasi-judicial authority.

Foundation Executive Director Sok Lor said there had been a marked rise in disputes between employers and employees this year, especially in the garment industry.

Arbitration cases rise
The Arbitration Council had received 172 complaints from unions and the Labour Ministry already this year, up from 150 last year, Sok Lor said.

“This year, lawsuits have increased a lot compared to previous years, but we have successfully resolved 70 percent of them,” he said. “But, in order to become more successful we need more support from concerned stakeholders like the government, unions, foreign parties, employees and employers.”

Oum Mean said the government was doing all it could to boost the garment sector, but recent reports from the World Bank and IMF suggest it is waging a losing battle.

The World Bank warned in early November that structural weaknesses in Cambodia’s garment sector had contributed to its share of the US market falling from 3.2 percent last year to 2.8 percent in mid-2009.

The IMF also raised the alarm in a report released last week, saying the country’s primary export industry was showing little sign of recovery, and that underlying structural issues – including low productivity, unreliable supply and high cost of electricity, high transport costs and protracted time to market, and lack of vertical integration – have reduced Cambodia’s competitiveness in the region.

Cambodian garment exports to the United States dropped 23.1 percent in the first eight months of the year, according to US Office of Textiles and Apparel statistics, compared with a more modest 14.3 percent drop across all source countries.

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