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Garment industry in Cambodia

How the ILO helps to promote labour standards in global supply chains

Cambodia’s garment and footwear sector has continued to perform solidly in 2014 and the first quarter of 2015. Exports continued to grow along with employment and workers’ average wages, a new ILO analysis finds.

Feature | 27 July 2015
By Maurizio Bussi, Acting Head of ILO Country Office for Thailand, Cambodia and Lao PDR
PHNOM PENH (ILO News) – Cambodia’s garment and footwear sector has continued to perform solidly, with exports growing by 10.6 per cent over 2014 and the first quarter of 2015.

The number of factories operating and the number of workers employed in the industry have also increased, according to the International Labour Organization’s (ILO) new Bulletin on Cambodia’s garment and footwear sector. The sector now employs some 600,000 workers, whose wages have risen significantly over the past two years. This figure pertains to the export sector only and does not include factories working as sub-contractors.

What’s more, the growth of the industry compares favourably against predictions that the new monthly minimum wage levels of US$100 (effective 1 February 2014) and US$128 (as of 1 January 2015) would lead to a contraction of export volumes with direct implications on employment levels.

The current minimum wage of US$128 is still lower than that of some competitors in the region such as China (US$297), the Philippines (US$269) and Thailand (US$237), but above the level in Sri Lanka (US$66), Bangladesh (US$71) and Pakistan (US$99 to US$119).

Meanwhile, the number of factories operating in the sector has reached a record number of 640 in March 2015, compared to 528 factories in late 2013.

This is good news for Cambodia’s garment and footwear industry, but also for the workers in these sectors. The new ILO Bulletin reviews the performance and progress of Cambodia’s garment and footwear sector using up-to-date official data, with a focus on exports, wages, employment, factory openings and closures and newly approved foreign direct investment.

As social conflict in the past has shown, the minimum wage is a topic of critical importance in Cambodia.

We welcome the fact that the government, unions, and employers all committed in June 2014 to a minimum wage review process that is evidence-based and takes into account a range of social and economic factors. In this context, the ILO hopes that the Bulletin will become a vital resource helping key actors in the world of work to have an informed discussion and constructive negotiation on minimum wages and other social and economic issues in the garment and footwear industry.

Workers and their unions are understandably concerned to ensure that wages are adequate to meet the needs of workers and their families. On the other hand, it is also vital that the impact of the minimum wage on enterprises, productivity, competitiveness and employment is taken into account. The Bulletin presents information about a range of factors of interest to both social partners.

The ILO therefore does not take, or recommend, a specific minimum wage level for Cambodia. Instead, it is responding to a request to provide technical advice and assistance to the government and social partners on the basis of sound analytical work anchored to national data.

The ILO intends to release new issues of the Bulletin on a roughly quarterly schedule. It has been published within the framework of the ‘Labour standards in global supply chains’ programme financed by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), Germany's leading provider of international cooperation. The programme was initiated as part of a renewed partnership between the German Federal Ministry for Economic Cooperation and Development (BMZ) and the ILO.

For further information, please contact:

Matthew Cowgill, Chief Technical Adviser - Labour standards in global supply chains
ILO Regional Office for Asia and the Pacific
Tel.: +66 2288 1724