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Job losses in the garment sector

Job losses in the garment sector

As the garment industry restructures, workers grow uneasy about incomes and job security

Photo by: AFP

A new project aims to improve industrial relations between garment makers and garment workers worried about being laid off.

OVER the past decade, the garment industry has been the main engine of economic growth in Cambodia, accounting for 15% of gross domestic product on average.

The primary stimulus of the garment industry was the Multi-Fiber Arrangement (MFA), a global quota system that governed garment and textile trade for more than 40 years and which guaranteed market access for Cambodian manufacturers regardless of their competitive stance. This quota system expired at the end of December 2004. When the MFA was removed, Chinese garment imports flooded US and EU markets, leading these two countries to impose new safeguard measures in 2005 to limit the growth of Chinese imports. This response gave Cambodian manufacturers some temporary breathing space. EU safeguards expired at the end of 2007 and the US will lift its measures at the end of this year, a change that will likely intensify price competition and make it challenging for Cambodian factories.

Given the significant role of the garment industry in Cambodia, development of the sector is critical.  At present, there are many efforts to improve the industry's competitiveness and modernize it, specifically focusing on raising productivity.  For example, the Garment Industry Productivity Center was created in 2006 with funding by USAID to provide consulting and training on productivity and management for the apparel industry.  Another example is Better Factories Cambodia, a programme managed by the International Labour Organization  to monitor working conditions in factories.  The full impacts of these and other efforts to raise competitiveness and upgrade the industry will likely be felt in the medium and long terms. 

In the short term, casualties will inevitably occur as the industry restructures to build its total competitiveness, which could result in redundancy. As the graph below shows, the percentage of employment absorbed by the garment industry has declined since 2006.  According to the Ministry of Commerce, 62,010 garment workers experienced job loss as of April 2008, which includes workers in factories that permanently closed and those that temporarily suspended operations. This situation could brew a general feeling of uncertainty and fear in workers about their future, causing them to resent employers. This sentiment is clearly visible in the present time; last year alone, there were more than 294,000 working days of strikes, 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. These strikes have been largely unsuccessful for workers; consequently, fuming more anxiety and adversely affecting industrial relations. The fragility of industrial relations is detrimental to the ability of factories and stability of the sector.  

62,100 garment workers have experienced job loss as of april 2008, bre wing a general feeling of uncertainty and fear in workers.

Easing fears

Labor Market Programs (LMP) are a tool to help improve industrial relations and enhance stability in the sector during this restructuring period. LMP can remove workers' fears of income insecurity and make them feel that their employers care about their interests and protection. Additionally, LMP that focus specifically on employment services such as job connection, small business start-ups, and retraining can increase the employability of redundant workers and help protect their livelihoods.

In sum, LMP can lead to 1) better industrial relations, thus increasing productivity; and 2) ensure the stability of living standards during the period of sector restructuring.

Responding to the needs in the short term, the Friedrich Ebert Stiftung (FES) and Cambodia Institute of Development Study (CIDS) launched a project to monitor the impacts of the expiry of the Agreement on Textiles and Clothing and to enhance forward-looking industrial and employment policies that increases stability in the garment industry during the restructuring phase.  The project seeks to enhance the dialogue on LMP to improve industrial relations and ensure social mitigation for redundant workers, and promote industrial diversification to create jobs for the structurally unemployed, especially at the provincial level.

The project is built on a series of focused, progressive policy dialogues with key stakeholders such as government, trade unions, employers, the business community and garment workers. These dialogues aim to build awareness on the role of each stakeholder and help them assume their role to ensure that there is a socially responsible transition. The dialogue process is beginning with two rounds of dialogues at the provincial level in Kampong Cham, Kandal and Kampong Speu provinces, and will conclude with a national stakeholder dialogue in Phnom Penh on November 20 at Sunway Hotel with stakeholders from the international, national and provincial levels. The objective of the national dialogue is to provide a platform for stakeholders at all levels to share information and develop and coordinate a mutually beneficial strategy.  

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