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Logo of Phnom Penh Post newspaper Phnom Penh Post - Govt to offer $1m in loans to laid-off garment workers

Govt to offer $1m in loans to laid-off garment workers

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Financial package – which offers loans at 1.5 percent interest – will come with certain conditions for unemployed workers, says Labour Ministry

Photo by:

Tracey Shelton

Garment workers strike outside a Phnom Penh factory in this file photo. Laid-off garment workers will be offered a total of US$1 million in concessionary loans to help start up new businesses.

THE Ministry of Labour announced Tuesday that it has earmarked US$1 million in financial aid for garment workers made redundant by the downturn in the sector, enabling them to apply for small loans to help them kick start small businesses of their own.

The micro-loans will be available to laid-off workers who complete short vocational training courses organised by the ministry, labour officials said.

Heng Suor, administrative and financial director at the Labour Ministry, said workers would be lent between $100 and $1,000 at an interest rate of 1.5 percent per month if they present a clear plan for their business, a certificate issued by the ministry and at least three references from other workers.

"We hope that workers will be able to increase their income through our loans ... and we hope that they will become independent in their living," he said, adding that the loans would be available from September.

He said that local villagers would benefit from these small businesses, too, as they will gain access to more local services.

Last month, the Cambodian government provided $7 million in special scholarships to provide short vocational training courses to 40,500 garment workers who had lost their jobs at garment factories, helping them to retrain themselves during the economic downturn.

According to ministry reports, 10,000 of the 40,500 workers were trained in skills such as make-up art, radio and television repairs, mechanics and weaving. The rest have been trained in agricultural skills.

Som Aun, president of the National Federal Chamber of Unions of Cambodia, which represents a total of 190,000 garment workers, said Tuesday that the act of financing garment workers to run new businesses and abandon their jobs in the garment sector could be a step towards improving workers' lifestyles.

"I think the fund is of great importance to help workers in the garment sector, but the Ministry of Labour must try its best to get those workers to learn skills that respond to the needs of the present job markets," he said.

However, Chea Mony, president of the Free Trade Union of Workers of the Kingdom of Cambodia, was less optimistic, saying that corruption would prevent the government's financial support plan from fully benefiting workers.

"I believe that the workers will receive at most only 30 percent of the total for their new businesses, and the other 70 percent will go into the hands of corrupt government officials," he said. "In my opinion, the $1 million that the government plans to lend to workers is a figure only."

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