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Cambodia: Strikes Cost Apparel Industry $270 Million

As civil strife stubbornly resists efforts at a compromise between the Cambodian government and garment factory workers incensed over their low wages, the economic losses continue to pile up. By at least one estimate, the damage done could total as much as $270 million.

The chairman of the Garment Manufacturers Association in Cambodia (GMAC), Van Sou Ieng, contends that Cambodia’s garment industry is hemorrhaging money, both from the loss of clothing sales and the loss of foreign capital being withheld from investors grown wary from the country’s persistent unrest. Ieng calculates that as much as $200 million in clothing sales has been squandered and another $70 million in forfeited investment.

The economic damage is all the more worrisome since Cambodia is heavily dependent upon its garment sector, which accounts for more than 80 percent of its commercial industry. In the first eleven months of 2013, it earned $5.1 billion exporting garments, a 22 percent increase over last year. The industry employs more than 300,000 workers, more than 90 percent of them female.

Also, much of the growth of Cambodia’s garment manufacturing is underwritten by an influx of foreign investment, which has flooded in from Australia, England, India, Japan, Korea, Malaysia, Singapore, China, Taiwan and the U.S. China alone sent the nation $121 million in 2013.

While initially peaceful, the protests have devolved into chaotic spasms of violence between throngs of demonstrators and increasingly agitated police.  The civil discord grew out of rampant dissatisfaction with the new minimum wage recently approved by the Cambodian government, thought by many labor activists to be unacceptably low.

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Initially, the Labour Advisory Committee reported a $15 increase in monthly wages, effective April 1, 2014. Under the newly accepted plan, the minimum wage will rise incrementally over the next five years, lifting it from its current $80 per month to more than  $160 per month. In 2015, the monthly minimum wage is set to increase again by $15, then by $16 in 2016, $17 in 2017 and, finally, $17 in 2018.

However, the streets were overrun by a deluge of flummoxed factory workers, furious over what they considered to be a stingy  increase. Tens of thousands of workers launched an organized march on December 24, shutting down factory production and halting transportation. In an attempt to placate the demonstrators, the Cambodian government offered to raise the wages by an additional 25 percent to $100 per month, effective sometime in February, instead of the original proposal of $95 per month.

The Cambodian government finally resorted to threats, warning demonstrators to suspend their protests and return to work, or suffer legal action. Ken Loo, Secretary General of the Garment Manufacturers Association in Cambodia, said, “We are asking the unions to respect the law.” Shortly thereafter, police opened fire into a crowd of hundreds of protesters, killing four and injuring many more.

The Cambodian government still stubbornly refuses to adjust its minimum wage proposal or participate in further negotiations. Labor activists have seemed equally intractable, refusing to revise their demands.

Up until now, labor activists have appeared immune to persuasion. Pav Sina, president of the Collective Union of Movement of Workers, said, “Workers will continue with their protests because the new increase isn’t much different from the previous offer. We call on the government to find more mechanisms to increase workers’ wages to a suitable level.”

However, there is some recent evidence of a general cooling of the labor movement’s hot anger and an openness to compromise. Last Saturday, a massive protest planned for Sunday was called off by its organizers after the government threatened a swift and severe response. According to spokesperson for the political opposition party sponsoring the demonstration, “The Cambodia National Rescue Party would like to inform all national compatriots that the party will suspend the (planned) protest.”