Wednesday, May 13, 2009

Worldwide Financial Crunch Hits Cambodia's Garment Industry


A young Khmer woman is at work at her machine in a garment factory in Prasat Village, Viheathom Commune, Cambodia.

Photo © John Brown All Rights Reserved

There are roughly ONE HALF BILLION people in the world that exist on one dollar a day or less so the 200 mostly young people working in a Chinese owned fabric factory in Prasat Village, Viheathom Commune, Cambodia have it a bit better. Nevertheless, fabric manufacturing is a process with limited labor costs and the Prasat Village factory workers prove the point by spending 11 hours a day standing at machines while earning about $50 USD per month. Most of the laborer's farm families didn't have the funds for schooling them beyond the 8th grade, so that's where their formal education ended.

Despite these facts, the Prasat Village workers have it easy when compared to thousands of industry workers in Phnom Penh where, as many manufacturing areas in Thailand, Vietnam and elsewhere, workers are housed in dormitory like structures where they share rooms while working six days a week.

With wages in China now rising close to 25 percent a year in several industries, the so-called "China price" for a growing list of goods, particularly low-tech products, is no longer a bargain. Rural villages throughout China are running out of young workers to send to factories and ages are rising more than 10 percent a year for many assembly-line workers according to an article written by Keith Bradsher that appeared in the June 17, 2008 edition of the International Herald Tribune.

The factory investments shifting from China to elsewhere in Asia tend to be in low-skill, low-wage industries as China deliberately focuses on higher-wage industries such as precision machining and computer component manufacturing.

Cambodia's government has earmarked development of the garment industry a priority, but as with many business sectors, it's vulnerable to worldwide and regional events. Recently, dozens of Phnom Penh's garment factories have closed shop in reaction to the financial crisis currently gripping the world and thousands of previously employed workers have returned to rural areas. Some of these workers are considering migrating to other countries.

According to a recent report entitled "Migration and Development: The PSI Perspective" published by Public Services International (PSI), "Quality public services are the foundation of decent work and the key to a decent life, giving people a real choice whether or not to migrate. The International Labor Organization (ILO) warns that the current finan­cial crunch along with the food and fuel crises could raise the number of unemployed people by a further 20 million."

Presently, thousands of "middle class" Cambodians are striving to improve their skill sets by learning English, Korean, and how to drive cars. These accomplishments aren't sponsored by any government entities, but rather, are financed by the people. These individuals hope they'll be viewed as more employable by businesses in other nations and anticipate migrating to foreign lands.

What about the factory workers who have been forced to flee to villages for the time being? Will the Cambodian government provide them with the skills needed to attract higher paying business sectors to Cambodia when the economy rebounds? A better question might be; does it want to?

China’s growing influence in Cambodia is undeniably growing. For example, in the final quarter of 2004, the Seng Keang Company, the most powerful logging syndicate in Cambodia, proceeded with the construction of a manufacturing plant equipped with new machinery imported from China. Since we know China is focused on developing their machine manufacturing sector, thereby transitioning Chinese jobs from low-wage industries, it makes perfect sense for Cambodia's Prime Minister Hun Sen to tell China he will strive to keep Cambodia's workforce unskilled, thereby maintaining a haven for Chinese firms seeking cheap labor.

In doing so, Prime Minister Hun Sen can rest assured he'll continue to receive $7,000,000 USD interest free loans from China for unspecified purposes as he did in November, 2008. That's how the game is played folks, and why those clothes at Wal Mart are so cheap.


John Brown Photojournalist On LIGHTSTALKERS
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