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Logo of Phnom Penh Post newspaper Phnom Penh Post - Nation wakes up to slowdown

Nation wakes up to slowdown


Officials are quickly realising Cambodia is not immune to the global economic upheavel and are brainstorming ways to save jobs in the key garment, construction and tourism industries


A motorcycle repairman sleeps through the afternoon as he waits for customers in Phnom Penh in this file photo. Joblessness is going to become an increasing problem for Cambodia as the effects of the global financial crisis start to bite, affecting mainly low-income workers, especially in the garment and construction sectors.

THE effects on employment of the global economic slowdown in the garment, tourism and construction sectors are a big concern for Cambodia, but it is not time to sound the alarm bell yet, analysts say.      

"It is not only a huge concern for unemployed workers, but even workers who still have jobs," Kang Chandararot, director for the Cambodia Institute of Development Study, told the Post Wednesday.

"There is no system to help the jobless, so in the meantime, whoever loses their jobs, they will have to find jobs by themselves," Kang Chandararot said.

Cambodian unemployment has been affected indirectly by the world financial crisis, which has led to a slowing of the macroeconomy that will be felt in 2009 and 2010.

"It makes enough sense that Cambodia's GDP would go down to around seven percent this year and even lower in 2009," Kang Chandararot said.

This situation could brew a general feeling of uncertainty and fear in workers.”

According to a CIDS study, data shows that the percentage of total employment absorbed by the garment industry has declined since 2006. The Ministry of Commerce figures show 62,000 garment workers have experienced unemployment since July 2008, including workers in factories that have permanently closed or temporarily suspended operations.

"This situation could brew a general feeling of uncertainty and fear in workers about their future," said Kang Chandararot.

But, he added, labour market programs are a tool to help improve industrial relations and enhance stability in the sector during this restructuring period.

"Labour market programs can remove workers' fears of income insecurity and make them feel like their employers care about their interests and protection," a CIDS release said.

Long-term impact

Cheath Khemara, a senior labour officer for the Garment Manufacturers Association of Cambodia, said the financial crisis will seriously affect the garment and textile sectors in coming years.

"Once Korean investors are affected by the financial crisis, so will be Cambodian garment factories, which are mostly operated by Korean business people," he said. "It is difficult for us in terms of protecting jobs and creating jobs for people."

Cambodia's garment sector employs a total of 350,000 people, mostly young women from the countryside. Cambodia exports 70 percent of its garment products to the United States, where the financial crisis first erupted before spreading to Europe and Asia.

Officials blame strikes as a major factor in the slowdown of purchasing by buyers.

Union disputes

The number of strikes have increased 37.5 percent in the first seven months of 2008 to 66 strikes, resulting in 169,439 working days lost, in which workers sought to gain income and job security through demands for higher wages, entitlement payments, non-discrimination against union members and rehiring of retrenched workers.

"Those strikes have been largely unsuccessful for workers, and consequently, more anxiety, adversely affecting industrial relations and undermining the capacity of factories and the stability of the sector," the CIDS release said.

Other sectors such as construction have also been severely affected by the crisis, in which 30 percent of a total 50,000 workers were laid off this year.

But the director of the Construction Department under the Ministry of Land Management and Construction, Lao Tip Seiha, told the Post recently that there was growth in the construction sector because of political stability and consistent economic growth.

"There are more jobs for Cambodian people working in the construction sector every year," he said.

He confirmed that there are 45,000 to 50,000 people currently working in the construction sector.

Tourism relatively safe

Ho Vandy, president of the Cambodian Association of Travel Agents, said that the financial crisis would definitely affect the tourism industry but was not likely to lead to any layoffs.

"We are worried about it, but we will come up with a strategy to keep tourism growing as usual by reducing the prices of services," he said.

"I have already had a discussion with the private sector to reduce the price of package tours and also urged airline companies to reduce the price of tickets, and will request the government to reduce the price of petrol," he said.

Representatives from the private sector and the tourism industry are scheduled to negotiate with the government on November 21 to come up with a strategy aimed at preventing unemployment in the tourism sector.

Additional reporting by Soeun Say



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