Garment exports from Cambodia rose more than 20 percent in January compared to the same month last year, at a point when the country was embroiled in the global economic crisis, according to data released yesterday by the Commerce Ministry.
Signs that a recovery in the sector could lead to job creation remain scant, with a high percentage of garment workers still facing a reduction in income and in some cases poorer living conditions, industry experts said.
The total amount of exports from Cambodia in January reached $249.54 million, about 64 percent of which went to the US. Exports to the European Union, Cambodia’s second largest market, fell by 5.13 percent to $46.53 million.
January’s garment exports were on par with precrisis levels, which in January 2008 reached $247.48 million, Commerce Ministry data show.
“I wouldn’t call one month a sign of a recovery,” said Ken Loo, secretary-general for the Garment Manufacturers Association in Cambodia. “Having said that, I think the only way to go from here is toward a recovery.”
The speed at which any rebound might take place is still highly uncertain, he added.
Despite more orders, Mr Loo said it was likely garment factories would continue to experience weak profit margins as concerns regarding competitiveness—namely productivity and high overheads—continued to affect the industry.
“Factories still could be losing money because their margins aren’t enough to cover their costs,” he said.
Mr Loo also said the rise in exports from Cambodia had not yet translated into local job creation or new factory openings.
Since the economic crisis spilled over into Cambodia in the final quarter of 2008, about 90,000 garment workers have lost their jobs and 70 factories have been shut down.
Due to weak competitiveness, Cambodia has lost market share to countries such as Vietnam, China and Bangladesh. However, anti-dumping constraints on Vietnam from the US and EU could result in shoe manufacturers coming to Cambodia.
Taking into account the effects of the crisis, a report released yesterday by the Cambodia Institute of Development Study, the UN Development Program and the International Labor Organization, showed that on top of the thousands of garment workers who lost their jobs, those who remain employed have had to cope with a reduction in income.
About 55 percent of 1,200 garment workers interviewed between September and December last year had difficulties covering food costs compared to 28 percent a year ago, according to the report.
Moreover, 58 percent of workers felt they did not have enough money to send home to their families in the provinces, many of which rely on the added income.
“At a household level, the findings indicate that the decline in garment workers’ income has produced an added worker effect, in which households are sending another member of the family to find additional income,” the report states.
In most cases, the additional worker was found to be a female worker aged between 16 and 28. Many workers have also been on leave without pay from inactive factories for longer than the legal limit of three months, according to the report.
Out of 800 unemployed workers interviewed, 66 percent did not get any compensation despite legal requirements that they receive it when being made redundant. Only 59 workers of those who were laid off during the crisis have found new jobs in another sector while 603 workers are still actively looking for employment.
Tuomo Poutiainen, chief technical adviser for the ILO’s better factories program, said even though orders were picking up again with more than 20 factories having been approved by the Commerce Ministry in February, “some of the challenges continue to be there.”
“I think naturally, from a worker’s perspective, just to get a job continues to be a challenge,” he said. “There is still some time before factories will be running at a capacity where they will be able to provide overtime.”
