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Competition is tough: GMAC

Factory workers assemble garments at a facility in Phnom Penh’s Por Sen Chey district last year.
Factory workers assemble garments at a facility in Phnom Penh’s Por Sen Chey district last year. Vireak Mai

Competition is tough: GMAC

A report released yesterday by the Garment Manufacturers Association of Cambodia claims that the Kingdom is having difficulties competing against its neighbours due to low productivity, increasing wages and labour strife.

According to GMAC’s own statistics, the Cambodian garment sector’s productivity is only 60 per cent of China’s garments sector, compared to 80 per cent for Vietnam and Indonesia.

Bangladesh, at 50 per cent, scored lower.

“Low productivity and ever higher wages will be a real challenge to the industry here as overseas buyers are becoming more discerning about productivity and competitiveness when they choose where to source their products,” said GMAC’s secretary-general, Ken Loo, in a statement.

Loo added that low competitiveness in garments was in large part due to unions’ “impunity”.

“For competitiveness, the greatest threat is that trade unions are being allowed [to operate] with impunity,” he said, citing trade union resistance to changes on the shop floor, along with rival unions outbidding each other’s demands within a single factory.

However, William Conklin, country program director of the AFL-CIO’s Solidarity Center, said the competitiveness of Cambodia’s garment industry was not under immediate threat, citing a recent report from the International Labour Organization.

“It seems that’s what you’d expect [GMAC] to say, they’re trying to keep wages down,” he said.

“As everyone saw in the recent ILO report, [Cambodia’s] output is actually increasing, this despite the relatively large jump in wages this past year.”

Last month, the ILO released its first quarterly Cambodia bulletin, saying that the first quarter of the year had seen solid growth in the garment sector, despite the minimum wage increase to $128 which went into effect this January.

The ILO reported that garment and footwear exports for the first three months of 2015 totalled $1.5 billion, up 10.6 per cent relative to the same time last year, while factory openings exceeded closings by 16.

“What that bulletin shows is that in the first quarter of 2015, the industry appears to have continued to perform solidly, with exports increasing, employment growing, and a net increase in the number of factories in operation,” said the ILO’s chief technical advisor on labour standards in global supply chains Matthew Cowgill.

Cowgill declined, however, to draw any further conclusions from the data.

“We also do not speculate about the possible future outcomes for the industry.”

According to GMAC’s report, while exports to the EU have grown thanks to a zero-tariff scheme during the first quarter of 2015, exports to the United States are down 8 per cent.

GMAC said it was working to improve the sector’s productivity, although some issues still need added assistance.

“GMAC is developing an extensive training program for workers that will help improve productivity and modernize the industry but we need more work from other stakeholders on issues like electricity prices and transport infrastructure,” Loo stated.

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