The cost of labor in Cambodia’s garment sector ranks second lowest among the world’s 40 major producers of apparel to the US and Europe, according to a recent survey by a US research and consulting firm.
Jassin-O’Rourke Group found the average hourly cost of labor in Cambodia’s garment factories to be $0.33 per hour, after factoring in bonuses and social benefits, only higher than Bangladesh, at $0.22 per hour.
By comparison, Vietnamese laborers cost $0.38 per hour, Thai laborers cost $1.29 to $1.36 per hour and Hungary’s labor costs top the 40-country list at $4.45 per hour, according to the study conducted between December and March.
Since its founding in 1998, Jassin-O’Rourke Group has tracked apparel and textile manufacturing labor costs in more than 60 countries and provided consulting to fiber producers, textile mills, apparel firms, home fashion firms and retailers, the firm’s co-founder and Managing Director Mary O’Rourke said.
China, the study said, would remain the world’s most important apparel supplier to Western markets and Japan because of increased labor productivity and improvements in export quality.
Despite Cambodia’s low labor costs, the study did not identify Cambodia as an “important supply country” in Asia, citing Bangladesh, Vietnam, Pakistan and India as more important low-cost suppliers.
That is because Cambodia must import its fabrics and also “is perceived to be more focused on basic knits and nightwear and is not moving toward more complex garment capacity,” O’Rourke wrote in an e-mail from New York on Wednesday.
“Cambodia remains highly regarded among major retail and traditional apparel brand owners,” O’Rourke said, and the country will “likely continue to enjoy Asian-led investment to expand capacity, particularly as China’s costs continue to rise.”
However, she said, Cambodia must move away from children’s clothing and toward adult and business apparel, broadening its style complexity. Cambodia also needs to find more sources for fabrics and increase labor productivity, she added.
Leaders in the garment industry echoed O’Rourke’s advice for Cambodia to boost productivity Wednesday.
While Chinese workers can produce 28 to 32 pairs of pants per day and Vietnamese workers 18 to 22 pairs, Cambodian garment workers produce 12 to 14 pairs per day, said Van Sou Ieng, chairman of the Garment Manufacturer’s Association of Cambodia.
“Cambodia, in absolute terms, is cheaper [than Vietnam]. But, taking into account productivity, it isn’t cheaper,” Van Sou Ieng said by telephone.
Productivity is low in Cambodia, he said, because of a labor force of inexperienced workers from the countryside.
Mona Tep, director of the Garment Industry Productivity Center, which is funded by US Agency for International Development, agreed that total labor costs here are likely higher than in Vietnam.
Cambodia’s garment sector is only operating at 35-to-40 percent efficiency, and workers are considerably less productive than Vietnam’s work force, Mona Tep said. An increase in productivity here is necessary to keep and attract investors, she said.
“This is how we might move to the next step of the manufacturing process,” she added.
Labor Ministry Undersecretary of State Oum Mean and Free Trade Union President Chea Mony both said low labor costs could help attract foreign investment. “The low labor wage is not good for the Cambodian employee,” Chea Mony said by telephone Wednesday, “but good for the investor.”
(Additional reporting by Neou Vannarin)
