Ranks of Poor Crept Higher in Financial Crisis

The number of Cambodians living in poverty rose about 4 percent in last year’s recession and workers in the construction industry were among the hardest hit by job losses, the World Bank said Friday.

In a report on the effects of the global financial crisis on worldwide development targets set for 2015, the Bank said the number of female-headed households and male-headed households living in poverty increased by 4 percent and 3.7 percent, respectively, from late 2008 through 2009.

In rural areas, the share of poor households headed by women grew by 4.6 percent, a steeper rise than was recorded by male-headed households in rural poverty, which grew by 3.6 in the period since the economic crisis hit, according to a case study on Cambodian workers featured in the report.

In 2007, before the crisis, Cambodia’s national poverty line stood at between $0.50 and $0.75 per person per day depending on geographic location within the country. At that rate, between 31 and 33 percent of Cambodians lived in poverty.

The Bank’s findings released on Friday are the most precise figures yet on the effect of the economic crisis on poverty in Cambodia. The Bank estimated this month that Cambodia’s economy had contracted by 2 percent last year as Cambodia’s export dependent economy suffered reduced demand from Western economies shocked by the wave of wealth destruction cascading from investment banks through the financial system and into rising unemployment.

Cambodian exports, 90 percent of which were garments, fell by nearly 16 percent. The Cambodian Development Resource Institute noted in a report last month that the economic crisis had “halted” poverty reduction, which saw the share of people living in poverty decline from 45 percent in 1994 to about 30 percent in 2007.

The Bank is now forecasting 4.4 percent growth for this year.

Cheam Yeap, chairman of the National Assembly commission on the economy, questioned the report’s findings, as the World Bank worked on the bases of other people’s data, while Cambodian officials can “collect the data directly” from the field.

“In sum, I do not agree with the World Bank report and they were just doing [the report] based on other reports,” he said, denying that Cambodians had grown poorer in the last 18 months.

“In Cambodia, there is no increase in poverty. There was just stagnation” in the major economic sectors agriculture, garments, tourism and construction. “Unlike in other countries, Cambodian workers are farmers’ children. So when there was the crisis, they returned for farming,” he added.

The World Bank report also found male construction workers were most affected from losing their jobs when the crisis put many construction projects to a halt.

Though female heads of households were quicker to fall into poverty, male construction workers were hit harder by job losses, the report said.

“Quantitative and qualitative evidence from Cambodia suggests that more male workers in the construction sector have been affected by the crisis than female workers in the garment sector. Moreover, male construction workers are more likely to be poor and have fewer economic fallbacks than female garment workers,” the report said.

Since the economic crisis reached Cambodia in the final quarter of 2008, about 90,000 garment workers have lost their jobs and 70 factories have been closed down.

The report released Friday found that men and women had begun to work longer hours in the recession in order to supplement their incomes, while female-headed households in rural areas struggled to cope with reduced incomes and male migrants were unable to visit their homes as frequently as before.

“[A]n increased dependence on common property resources, including firewood, has increased women’s time on domestic chores”, it said. “[F]emale-headed households commonly cut back consumption sharply and increased their indebtedness to cope with loss of income as remittances from urban areas fell.”

“Male migrant workers–often migrant spouses–reported being unable to return home as often as before because of increased transportation costs and reduced earnings,” the report said.

Tuomo Poutiainen, chief technical adviser at the International Labor Organization, said the report’s findings on how workers were affected by the crisis “in a broad sense resonates with what we have seen in 2008, 2009.”

“The span of the crisis is one and a half years, people definitely have been hurt,” he said. “On the other hand the industries, garments, tourism and construction more slowly, are coming back online…. [But] it’s too early to say when the garment and footwear industries will be back at their old production level.”

Moeun Tola, Head of the Labor Program at the Community Legal Education Center, said he agreed with the findings that unemployed construction workers had been hit harder than laid off garment workers.

“In the garment industry, jobs were lost but sometimes they managed find other jobs. Construction workers, they have to go back to agriculture,” he said.

Mr Tola said textile jobs were becoming more available again, adding however, these jobs were often offered at lower wages than before the crisis and with short-term contracts.

 

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