Labour standards are just one issue facing industry, GMAC says
THE International Labour Organisation (ILO) has urged garment-sector stakeholders to work together to boost productivity and reduce industrial disputes to ensure the industry’s survival in the face of slumping export orders.
In a report on labour-standard compliance released Wednesday, the organisation noted that compliance levels had remained high despite “some areas of concern”, even in the face of increased pressure on factories due to the economic crisis.
It cited Ministry of Commerce data that showed 70 factories had been closed and approximately 70,000 jobs shed in the year from October 31, 2008, but noted that losses had been mitigated to some extent by new factories opening. ILO monitoring visits suggested net job losses were 48,000 over the period.
“The global financial crisis has significantly impacted Cambodia’s garment industry, resulting in layoffs and a number of factory closures,” the report concluded. “Now more than ever, industry partners must focus on increasing productivity and preserving industrial peace in order to ensure the industry's continued success, and to strengthen the industry post-crisis.”
ILO Training Specialist Catherine Vaillancourt-Laflamme said the ILO’s Better Factories Cambodia programme had played a leading role in the development of the sector in Cambodia over the last decade, but that labour standards are just one of the factors that international buyers take into account when placing orders in a country.
Cost of products, productivity, quality of production, lead time, and the ease of doing business in the country also matter, she said.
“One has to acknowledge that there are structural problems in the industry, and those have been there for many years. The current economic crisis has only brought them to the forefront,” she said. “In looking to make Cambodia more attractive to investors, the way forward is absolutely not to backtrack on the progress made in terms of labour compliance, but to look at the other aspect of the production, roll up our sleeves and address those. The time is now.”
Other issues critical
Garment Manufacturers Association of Cambodia Secretary General Ken Loo acknowledged the role of the ILO in putting Cambodia’s garment sector “on the map” with buyers, but said compliance with labour standards is no longer a critical issue for the sector, especially when compared to issues such as high electricity and transport costs and relatively low productivity.
“In Washington, from the feedback I received, the message is very clear that everybody understands that compliance alone is not going to keep the industry thriving, as recent evidence suggests,” he said, referring to a recent Cambodian delegation that travelled to the US seeking duty-free access for the Kingdom’s exports to the world’s largest economy.
The International Monetary Fund said in a report released last week that the sector was showing little sign of recovery after export orders dropped 23.1 percent over the first 8 months of the year.
It blamed underlying structural issues – including low productivity, unreliable supply and high cost of electricity, high transport costs and protracted time to market, and a lack of vertical integration – for reducing Cambodia’s competitiveness compared with other garment-producing countries in the region.