Garment factories lost out on some $200 million in profits and another $70 million that should have been invested in production since workers walked out on December 25 in a strike for higher wages, according to Van Sou Ieng, president of the Garment Manufacturers Association in Cambodia.
Speaking at a presentation yesterday in Phnom Penh Hotel, Ieng said that in addition to missed profits, orders will go down 20 to 30 per cent this year, factories will have to rush through shipments to meet deadlines by using expensive air-freight options, and Cambodia will be thought of as high-risk by global brands, which will reduce prices.
“Now the factories are trying to recover from lost production time to deliver, and I am 80 per cent sure that no factory is making money because all will be shipped by air,” said Ieng, who appeared emotional over the crisis. “Over six months or four months, all the factories will lose money.
“[I hope] this year that the buyer continues to place the same quantity of orders – which I doubt,” he said. “In reality they will not do that; we will expect 20 to 30 per cent losses of orders. We might expect some buyers to reduce prices because they can say, ‘I take the risk in a place like Cambodia’, because it is a country of risk – which is happening.”
Until buyers can be given a guarantee of greater stability, prices will remain low, Ieng said.
He was speaking just days after garment workers armed with sticks, homemade weapons and rocks clashed with pro-government security forces outside Canadia Industrial Park in southwest Phnom Penh, leading to the shooting deaths of five protesters and dozens of injuries on Friday. All of those killed worked in Cambodia’s largest manufacturing industry, which accounted for $5.07 billion in exports through the first 11 months of this year. The walkout began after the government raised the minimum wage in the sector to $95, instead of $160 as demanded by unions.
Factories in provinces have reopened, with 80 per cent of workers returning, but some in Phnom Penh were operating with just 30 per cent personnel, according to Ieng.
Despite the disproportionate response from military police during clashes, Ieng pointed the finger squarely at “minority trade unions” for not being satisfied with the minimum wage increase and for stirring up “anarchy”.
Several prominent unions did not return calls seeking comment.
Minimum wage negotiations “should not be held under threat.… That isn’t what a democratic society should accept,” Ieng said, adding workers would lose their jobs if wages rose to $160.
A lack of transparency in company profits, however, does little to back up GMAC’s claims, according to Dave Welsh, country director for labour rights group Solidarity Center (ACILS).
“Doing the simple math, the overall conversion and growth from the industry … show [that] frankly, more than any other industry or at least to the same extent as any other major garment industry, there is room for dramatic improvement and dramatic increase in the minimum wage,” he said. “By GMAC’s own admission, they could absorb 150,000 more workers tomorrow.”
The quasi-governmental committee that sets the minimum wage lacks sufficient input to resolve the dispute, resulting in a flawed process responsible for the rising tensions, Welsh said.
“I don’t think workers left to their own devices find it an ideal way to spend a week facing guns and abuse by security forces. I am sure they would much like the labour law to be applied, and that demands good faith and negotiations industry-wide.”