A garment factory employing some 1,800 workers shut down for unspecified reasons Tuesday, amid fears that changing trade laws could trigger a nationwide slump of Cambodia’s garment industry.
The Luen Thai Garment Co factory on National Road 2 asked its employees to voluntarily quit —instead of firing them—so the workers could collect one more month of wages and compensation, as dictated in the labor law, according to a union leader at the factory.
Between 70 and 80 percent of the workers complied with management’s request, said Menn Seng Hak, deputy secretary-general of the Free Trade Union.
Workers who refused to resign will receive at best only half of their normal wages, he said. Wages for most employees at Luen Thai is between $60 and $100 a month, he said.
Phone calls to the Luen Thai factory Tuesday went unanswered.
Menn Seng Hak said workers were not told why the factory was closing.
However, an official at the Garment Manufacturers’ Association of Cambodia said the factory’s orders had slowed and that management was pestered by overzealous unions.
Hong Kong-based Luen Thai could reopen the factory after six to nine months, the official said. It is not uncommon for factories to close and then resume production ahead of peak retail seasons.
The factory’s closing comes amid fears that garment factories —employing an estimated 230,000 workers, mostly women —could close and depart en masse to neighboring countries as the country loses its valuable US quota at the end of this year.
Speaking Tuesday on investment in the garment sector, Sok Siphana, secretary of state at the Commerce Ministry, again outlined the challenges facing the industry as it enters the World Trade Organization in the coming months and opens itself to international competition.
“If the garment industry can not reach a resolution, the impact will be very large. The impact won’t just affect the more than 230,000 people working at the factories, but it also will affect all the people who get support from those workers and their wages,” Sok Siphana said at a conference in Phnom Penh.
(Additional reporting by Luke Reynolds)