Skip to main content

Cambodia Factory Dispute Heats Up; Brands and GMAC Protest New Auditing Practices

Cambodia is fast becoming a cautionary tale regarding the reform of labor conditions in developing countries. Last month, Better Factories for Cambodia (BFC), an auditing organization sponsored by the United Nations, announced a new, aggressive initiative to publicly list the factories that fail to meet their stringent requirements for safety.

The BFC currently conducts safety audits of garment factories in Cambodia and sells them to businesses who do or potentially would contract with them. It also makes public a report that summarizes the prevailing factory conditions in Cambodia but has always refrained from naming names.

But now, the BFC intends to take its inspections process a few steps further, publishing the names of factories that repeatedly fail a strict regimen of assessment that considers fifty-three different categories of appraisal. The BFC estimates that fifteen of the roughly 450 factories it currently oversees would qualify for that level of public disclosure.

Some retailers that do business in Cambodia were quick to endorse the new BFC measures. A spokesperson for Wal-Mart said, “We know that transparency is vital to make progress in improving factory conditions throughout the global supply chain, and can only be accomplished by working with stakeholders across the industry.”

Other retail companies have been less enthusiastic, openly expressing concern that the BFC’s new self-assigned role affords it too much power, violates pre-existing trade arrangements with Western brands and could counterproductively makes matters even worse. A group of some of the biggest companies that contract business in Cambodia–the Gap, Nike, Puma, and Levis Strauss among them–have taken to candidly voicing their objections. H&M reported that its policy is to continue to use factories that suffer from compliance issues as long as their is a demonstrated effort to resolves them in the proximate future. Spokesperson Andrea Roos said, “H&M is aware of the challenges the factories in Cambodia face.”

Related Stories

Many worry that such an uncompromising approach could undercut future incentives to improvement and hurt innocent workers. Sat Samoth, undersecretary of state at Cambodia’s Labor Ministry, complained the public disclosures would violate the existing relationship between the UN International Labor Organization and Cambodia, impinging upon the nation’s sovereignty. He also claimed the program would be counterproductive: “If we disclose the names of the factories, and then the buyers stop purchasing the products, what will happen to the workers? They will lose their jobs.”

On the other side of the coin, David Welsh, Cambodia director for the Solidarity Center, a non-governmental group linked to the AFL-CIO labor union, said that such resistance on the part of retailers and factory owners amounts to a “de facto admission that they either can’t or won’t monitor what’s going on in their factories and an admission that presumably, they suspect what’s going on doesn’t meet international labor standards.”

The secretary general of the Garment Manufacturers Association in Cambodia (GMAC) angrily denounced the plan as “vigilante justice.” He argued that any practicable solution to Cambodia’s labor conditions had to be “demand driven.” He said, “Consumers talk, talk, talk. But at the end of the day, they just buy the cheapest thing on the shelf.”

Recently, GMAC has escalated its rhetoric, urging factory owners to refuse access to either the BFC or representatives from the International Labor Organization’s unless accompanied by government officials.

Ken Loo, secretary-general at the GMAC, said, “BFC has gone beyond its mandate. Their job is to monitor and report, not to enforce; that is the government’s job. And now they are going ahead and trying to implement new practices without involving two of the three stakeholders. We feel like it is being shoved down our throats.The only mechanism we have to express our displeasure is to call on factory owners to demand that the government and GMAC are involved whenever Better Factories comes for an inspection.”

Adding fuel to an already hot fire, last February Stanford Law School researchers released a report that actually implicated the BFC in contributing to workers’ woes. The study stated the organization’s lack of transparency, and general ineffectiveness, actually made it easier for factories out of compliance to conceal their violations. In essence, the researchers argued the auditor stands in dire need of an audit of its own.

Recently, Cambodia’s garment factories have suffered under the weight of heavy criticism for inadequate structural stability and safety. A recent report issued by the BFC purports to show that general condition of these factories has markedly declined since 2011. This is especially striking since the same study detected improvement int he eight years prior to 2011.

Jill Tucker, Chief Technical Advisor of BFC, said “Some of the non-compliance may be attributed to the industry’s rapid growth since 2011. Still, all stakeholders need to take stronger steps to halt the downward trend. If not, Cambodia runs the risk of forfeiting the advantages that accrue to a reputation for decent working conditions.”

Tucker went on to stress the study’s empirical rigor: “While 25 percent of the factories featured in the report are new, having had only one assessment, more than half have been monitored by the BFC at least five times. These factories have had many opportunities to correct areas of non-compliance.”

The BFC report discovered that more than 15 percent of the factories surveyed failed to maintain unlicked emergency doors during normal working hours, that 45 percent did not fulfill their legal obligation to conduct fire drills every six months and that 53 percent had key fire exits illegally obstructed.

Part of Cambodia’s problem has been accommodating breakneck economic growth, saddling it with inordinate pressure to absorb more business before its infrastructure can catch up to the new demand. Between 2012 and 2013, Cambodia increased the number of its factories by a hefty 8 percent to 412. This is partly due to the changing topography of sourcing created by the increasing expensiveness of China, once a prime destination for retailers and brands looking for bargain manufacturing.

Still, Cambodia continues to show signs of steady improvement in other areas. For example, minimum wage was recently raised $14 to $75, from $61. According to the BFC, a $5 health care allowance per worker was also instituted as part of the same legislation.