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As Cambodia Grapples With Forced Labor, Investors Urge Stronger EU Action

As attention to forced labor—and the legal consequences thereof—continues to mount, the Cambodian government has moved to reassure representatives from the American Apparel & Footwear Association and VF Corp. that it will improve its ability to crack down on offenders through new procedures and mechanisms, including some that will target subcontractors.

In a video conference covered by the Phnom Penh Post last week, Ministry of Commerce Secretary of State Sok Sopheak said that authorities are paying close attention to concerns raised by the trade group and The North Face owner. He said the Southeast Asian nation convened an inter-ministry commission to tackle the issue in 2011 before expanding the scope of the committee’s work in 2020 through the addition of senior members from the Ministry of Interior, Ministry of Trade, and Ministry of Labor and Vocational Training. The same year, they opened a special investigation into the suspected use of forced labor, which is illegal in the country.

Cambodia is obligated to abide by national and international laws,” Sopheak said. “The commission has also been disseminating national and international regulations relating to the use of forced labor to factories and enterprises in order to avoid the violation of the law by the private sector, which leads to fines, sanctions and damage to the interests of factories, enterprises and the reputation of Cambodia.”

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Labor-rights groups have long documented rampant labor rights abuses in both export-oriented factories and subcontractor factories in Cambodia. The litany of violations includes forced overtime, lack of breaks, denial of sick leave, use of child labor and union-busting to circumvent collective bargaining. Female workers, they say, are also likely to face pregnancy-based discrimination, sexual harassment and denial of maternity benefits. Retaliation is a common result of speaking out.

“Cambodia enacted a strong labor law in 1997. But its enforcement remains abysmal, in large part due to an ineffective government labor inspectorate,” Human Rights Watch wrote in a 2015 report. While Better Factories Cambodia, a third-party monitor that focuses on factories with export licenses, helps “fill the monitoring gap,” it cannot replace a strong labor inspectorate. Some of the worst working conditions in Cambodia, it said, are in smaller factories that lack such licenses and serve as subcontractors for their bigger export-oriented counterparts, meaning that they frequently fall through the cracks.

A worker-centered approach

While efforts such as the European Commission’s proposal to ban products made with modern slavery are an “essential step to eliminating forced labor around the world,” according to a group of more than 80 investors, they can be further strengthened by incorporating a worker and remedy-centered approach.

“We are heartened that the EU has finally taken this critical step to implement legislative and regulatory efforts to eradicate forced labor violations from its borders,” Anita Dorett, director of the Investor Alliance for Human Rights, a “collective action platform” that represents nearly $12 trillion in assets under management in 20 countries, said Tuesday. “As a coalition of investors who are actively engaging companies on business and human rights issues, we believe this legislation must also be centered on protecting workers, and for that reason are urging the adoption of several recommendations we believe will improve the regulation.”

The EU’s proposal should also include mandatory human rights due diligence, complementary to the forthcoming Corporate Sustainability Due Diligence Directive, that requires complete supply chain traceability and public disclosure, the investors said.

“We expect the proposed regulation will align with and build upon the requirements of the CSDD and the due diligence process of the UN Guiding Principles on Business and Human Rights to ensure that companies are able to identify and eradicate forced labor abuses tied to their products,” said Yumi Fujita, engagement specialist, sustainable investing, at Dutch asset management firm Robeco. “To that end, companies must be required to map and disclose all their suppliers and business partners—not only in their respective supply chains but through their entire value chains. This last requirement is not currently included in the proposed regulation.”

Any proposed regulation, the investors added, should go beyond product-based bans and address systemic forced labor patterns across an entire producer, manufacturer or importer. Where state-imposed forced labor occurs, bans tackling these high-risk geographies and groups of products should also be imposed.

“As the lasting impacts of the Covid-19 pandemic remain, and armed conflicts and climate change create unprecedented risks of modern slavery, it is essential that the EU adopts an ambitious proposal that demonstrates global leadership in addressing modern slavery meaningfully,” the investors added.

Meanwhile, the Council for the Development of Cambodia has approved a handful of new Chinese manufacturing projects, totaling roughly $16 million in registered capital, that are expected to create 3,054 new jobs, the Phnom Penh Post reported Monday. These include Dazhengxuan’s facility in Phnom Penh’s Dankor district that will make raincoats, curtains, tablecloths and other items, Xin Yuan Cheng’s shoe parts factory in Kandal province, and Xu Wei’s garment factory in Phnom Penh’s Por Sen Chey district.

Speaking to the outlet, Cambodia Chamber of Commerce vice-president Lim Heng said that preferential trade arrangements offered by the EU and the United States, as well as bilateral deals with China and South Korea, have been attracting new investors to nearly every sector, including garments.

But trade relationships, particularly the loss of some EU benefits under the Everything But Arms scheme due to human rights violations, could also be to blame for the factory closures and suspensions that have plagued Cambodia since the start of the pandemic, causing more than 50,000 garment workers to lose their jobs, according to Radio Free Asia.

In response, Cambodia’s National Employment Agency, under the Ministry of Labor, held a career expo in the province of Kampong Speu earlier this month to field applications for jobs at five new factories. The plan is to hire at least 5,250 people, it said in a statement.

Kem Sopeng, a union member who was laid off from his job last year, told Radio Free Asia’s Khmer Service that he won’t be applying for any of those positions. He said that the new factories aren’t stable and will likely not respect workers’ rights.

“The working conditions in garment factories have not improved over the past 10 years,” he said. “I just made enough to get by. If I couldn’t work, I would starve. The work is just enough to live another day.”