Logo of Phnom Penh Post newspaper Phnom Penh Post - Garment industry at crossroads

Garment industry at crossroads

Garment industry at crossroads

When Cambodian Labour Confederation president Ath Thorn described Better Factories Cambodia as “powerless” during a forum last week, its new program manager was swift to correct him.


“Sometimes BFC’s reports have too much power,” Jill Tucker told about 100 unionists and workers’ rights advocates who had gathered at the Sunway Hotel for a day-long assessment of the program, which links access to export markets with compliance to labour standards.

She also noted that BFC’s monitors were not as easy to fool as Ath Thorn had implied when he said factory managers “hid under-age workers in back rooms” if they heard that monitors were on the way.

“It is true that BFC has no enforcement power,” Tucker said. “But we are not powerless, and we do detect child labour.”

Pointing to its latest twice-yearly report, released two days before the forum, she noted that when monitors found under-age workers at five of the 300 garment factories BFC monitors, one buyer “immediately shifted out of a factory”.

“It’s not the fault of the factory,” Ken Loo, secretary-general of the Garment Manufacturers Association in Cambodia, insisted.

Factories were being punished for failing to comply with a law that was difficult to perfectly enforce in this country, he said.

Loo suggested BFC’s monitoring could be, in effect, used to blame companies for a widespread social problem they, and BFC itself, could not entirely stamp out.

“If [buyers] see child labour, they withdraw,” he said.

Tucker agreed that it would have better for the buyer to work towards a solution. “Rather than see them cut and run, we’re trying to work with the buyers to prevent this problem,” she said.

The latest BFC report also notes the ease with which identification documents can be falsified in Cambodia, allowing under-age workers to slip through, but it also details the process for dealing with child labour.

Loo referred to this as a “footnote”, which was misleading.

The report  clearly notes the corruption that allows IDs to be fabricated, and describes the process in place for dealing with child labour.

The child is removed from the factory and given vocational training, paid for by the factory. 

The factory is also obligated to offer the child a job when he or she is legally entitled to take one.

Lack of balance?

Loo also pointed to imbalances in global media coverage as a deterrent to sourcing garments in Cambodia.

“Some buyers are reluctant to come to Cambodia due to the high level of media coverage here,” he said.

“A small event at a factory in Cambodia can be blown out of proportion and appear in the Washington Post”, while a riot at an industrial estate in Bangladesh went virtually unreported, he said.

But despite the increase in media coverage of Cambodian garment factories since a spate of mass fainting incidents last year roused reporters’ interest and threatened to revive the “sweatshop” label, the industry is growing fast.

New factories are opening and orders are surging as Cambodia benefits from shift in manufacturing from China.

According to the Ministry of Commerce, the value of garment exports rose to US$3.47 billion during the first 10 months of last year, up 34 per cent over the same period in 2010.

The number of factories with exporting licences had risen nine per cent to 300 during Better Factories’ last reporting period (May 1 to October 31, 2011), it said.

These factories employed more than 345,000 workers, about 90 per cent of them women, BFC said.

An estimated 200,000 more workers are employed in garment factories that supply exporting factories but do not have export licences.

Industry expansion, new labour legislation that will make it easier to unionise, and a tightening labour market was shifting “leverage” in bargaining towards workers, Dave Welsh, country director of the American Centre for International Labour Solidarity, said.

He also saw a “strategic opportunity” for unions and GMAC to work together to push buyers for higher prices, noting that brands “love buying in Cambodia” because of the monitoring by BFC.

Loo said the industry could see “double-digit growth for the next three to five years”.

Relatively low wages were one of the benefits Cambodia offered, he said.

Higher electricity costs, poor infrastructure and lower productivity – the last of which Loo identified as the fault of management, not workers – remained disadvantages for manufacturers here, he said.

A living wage

This week’s People’s Tribunal on the Asia Minimum Floor Wage, Cambodia identified global brands and retailers as being responsible for the low wages paid to garment workers in Asia.

The event was organised by the advocacy group Asian Floor Wage Campaign, which describes itself as laying “a floor under the race to the bottom, and [seeking] to end wage competition in Asia and the extreme exploitation of women workers”.

It notes that the global garment industry has consolidated but workers remain fragmented.

As a result, regional co-operation between unions is key to preventing buyers using the threat of shifting orders from countries where wages are rising, it says.

AFW delegate Anannya Bhattacharjee said Cambodia’s minimum wage (excluding the $5 health bonus added last month) was just 22 per cent of the campaign’s minimum.

Bhattacharjee said the price paid to manufacturers must include a labour cost, and that this must be a living wage.

Global brands and retailers had access to two worlds, she noted. In one they sell to consumers who can afford high prices; in another they source garments “where wages are low”.

She also pointed out that prices paid to manufacturers were decreasing, and that if they increased the prices paid to their suppliers, workers could benefit.

“The responsibility [for paying a living wage] is with the brands and retailers because they have access to high-end consumers,” she said.

Bhattacharjee and other labour advocates, however, spoke little about differences in electricity costs, infrastructure and productivity levels throughout the region, or how these affected wages.

Jeroen Merk, a representative of the Clean Clothes Campaign, said one of the tribunal’s aims was to point out “the contradiction between what the buyers say to consumers and the reality of life on the factory floor”.

“What they have been doing so far is not enough,” the Dutch activist said.

Their “race to the bottom” had been pushing prices down for 20 years, Merk said.

He also noted a “common interest between the manufacturers and the workers”. Both were being squeezed by buyers, he said.

Buying hypocracy

Loo was more blunt in his assessment of buyers’ commitment to complying with labour laws and international standards.

“The buyers are hypocrites,” he said.

“They say they want compliance but during the financial crisis [2008, 2009] orders fell 20 to 25 per cent in Cambodia. In Bangladesh [where compliance levels are far lower] export figures remained pretty constant.”

The minimum wage in Bangladesh is about US$45 a month, compared to $66 here (including the health bonus).

Many Bangladeshi factories did not even pay the minimum wage, labour advocates said.

Still, its garment exports dwarf those from Cambodia.

“You tell me why they are sourcing more in Bangladesh. That’s what we are asking,” Loo said.

“Compliance costs money. If it is so important, then everyone needs to share the cost.”

Loo and the labour advocates both singled out H&M.

Loo said it alone was willing to pay for compliance. “H&M is the only buyer that is willing to pay more for compliance.

During the crisis, they were the only buyer to increase orders from Cambodia,” he said.

The Swedish brand, however, was criticised by the Clean Clothes Coalition for failing to participate in the tribunal.

GMAC also skipped the event, which concludes tomorrow with recommendations from a panel of judges.

“A tribunal implies that someone committed a crime,” Loo explained last week.

“If they don’t change the name, we won’t attend.”

Better Factories Cambodia, meanwhile, is expanding to cover footwear makers as well as the supply factories that supply apparel exporters.

“In footwear, we hope to do what BFC did in garments 10 years ago,” Tucker said.

It was in the process of hiring three new monitors and at the same time seeking to become less reliant on monitoring, she said.

“We’re trying to get more information from factories without having to go there.”

The methods for doing this will be disclosed in the coming months, Tucker said, hinting that they might include text messaging from garment workers.

“We’re exploring options to both keep BFC credible and protect the industry,” she told the Post.

“The garment industry is vital to this country. BFC needs to be ahead of the curve in finding ways to protect workers.”

A variant of the BFC, Better Work, is being introduced in countries, including Vietnam, Jordan and Indonesia.

In these countries, it is a voluntary program.

Here, all factories that export must register with BFC, whose monitors use checklists of about 500 items to gauge compliance with labour laws and standards.

One item missing is transportation to and from factories.

One labour leader noted during last week’s forum on Better Factories that workers “are loaded in trucks like animals”.

“They are treated like pigs,” he said.

“Why isn’t BFC monitoring this? This is a cause for alarm. There have already been accidents.”


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