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16 Aug 2023

Meng Seavmey, Cambodianess

Cambodia: Factory suspensions & shutdowns on the rise, with garment workers laid-off or temporarily suspended, amid reduced orders

"Factory Closures and Suspensions on the Rise", 16 August 2023

Since the year started, factory suspensions and shutdowns have kept increasing across the country, with garment workers being laid-off or temporarily suspended, leading them to rely more and more on unstable and temporary jobs to try to make ends meet.

According to data collected by the Center for Alliance of Labor and Human Rights (CENTRAL), at least 20,000 workers have been suspended or laid off from February to July, said Khun Tharo, the organization’s program manager.

While the number of layoffs has been on the rise since early 2023, it gained pace in the weeks prior to the general election, which took place on July 23, according to Tharo. In some of Cambodia’s biggest factories, up to 20-to-30 percent of the workforce has been laid off, and workers say they have lost 25-to-30 percent of their income compared to 2022.

...Say Sokny, the vice president of the Free Trade Union of Workers of the Kingdom of Cambodia (FTUWKC), said the situation is getting more serious than it was earlier this year because more factories have started to suspend operations.

Some factories the union is involved with are planning to cut down working hours due to a decrease in orders, affecting nearly 5,000 workers, she said.

A factory in Kampong Chhnang province has been suspended since June and will not resume its activities before September while two others in Phnom Penh have had to stop operating on Fridays and Saturdays until the end of the year, according to the data Sokny sent to Cambodianess on Aug. 11.

Prior to ceasing activity or suspending operations, factory owners have to let the Ministry of Labor and Vocational Training know about the situation so that compensation schemes for workers can be set up.

“[But] some factories did not follow the conditions required by the Ministry of Labor when they laid off or suspended the workers,” said Tharo, from CENTRAL.

Based on a dedicated cash relief scheme that started in April to support laid-off workers from the garment industry, suspended workers receive $70 monthly, of which $40 come from the government and $30 from the employer. The base salary in the industry is $200 per month in 2023...

...garment exports went down 18 percent in the first half of 2023, compared to the same period last year.

Additionally, at least “15 factories have requested to suspend operations or close lately,” said Ath Thon, president of the Cambodian Labor Confederation (CLC)...

One of the reasons that stand behind these continuous layoffs is the decline in orders from the U.S. and the European Union (EU) – Cambodia’s two biggest export destinations – because of the growing inflation in the West caused by the invasion of Ukraine by Russia.

Say Sokny of FTUWKC said the suspension and closedowns take root in the instability in demand and supply caused by the two major crises the world has been through since late 2019 – the COVID-19 pandemic and the war in Ukraine.

The loss of some trade benefits with the U.S. and the EU doesn’t help the industry to export its products either. While the Everything But Arms (EBA) trade preference from the EU was partially lifted in August 2020 for “serious and systematic violation” of human and labor rights principles, Cambodia’s access to the US Generalized System of Preferences (GSP) was suspended in December that same year.

“The matter is getting more concerning, and the number [of closures] will increase if the related problems are not addressed,” Sokny said.

Khun Tharo from CENTRAL said the decrease in orders might also have been triggered by the unclear political situation following the national election...

These continuous disruptions in workers' employment are having a direct impact on their livelihood, recalling that workers in the garment industry...

While many Cambodian households have taken a loan from a microfinance institution, the decrease in income caused by the continuous stop-and-go of garment factories makes it hard for them to pay back their debt on time.

“As a civil society group, [we call on] the government to set out a clear method in responding to the EU’s statement and decision [to partially lift the EBA trade preference],” Tharo said.

A factory worker in Pursat province...has been suspended twice since the beginning of the year...

But the factory announced the suspension was due to a lack of orders and did not inform the workforce about a potential date of returning to work, he said.

While his employer has already given him the $30 monthly compensation he is owed as per the compensation scheme, the worker said he has not yet received the $40 from the ministry...

“The main issue is to repay the loans because both my wife and I got suspended and lost our stable incomes,” he said. While he had hoped to find a job in the construction industry, he had to change his plans as building sites came to a standstill due to the village's economic downturn.

“I am currently finding snails and fish to sell, which does not profit much. But it is at least enough for the children’s expenses at school,” he said.