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ASEAN ANALYSIS  14 September 2010

Labor unrest in Asia’s garment sector

By David Swartzentruber
AseanAffairs   14 September 2010

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This week garment workers in Cambodia are on strike, at least 30 percent of them, to protest the wage increase that was raised by US$5 in July to $61 a month. The workers want $93 a month.

The protest in Cambodia follows similar protests China, Vietnam and Bangladesh. Bangladesh has Asia’s lowest garment-sector wages and the new minimum following the protests is US$43.

The garment industry is the main employer in Cambodia with 297,000 employed in the garment industry and another 48,000 in footwear. Since the 1990s the garment industry has driven the Cambodian economy, accounting for 70 percent of Cambodia’s exports in the first six months of this year.

Producing garments is not an easy life. Cambodian workers have a 10-hour work week, six days a week, and they are filled mostly by women with low formal education.

Cambodia’s garment industry was stimulated by trade preferences earlier in the first years of this century but when Vietnam, China and Bangladesh entered the World Trade Organization in 2007, this protection vanished.

Other handicaps are the high cost of electricity in Cambodia, the need to import fabric and lower work productivity. On the positive side, Cambodia has a good reputation among companies who espouse ethical standards of employment .

A study by the United States Agency for International Development suggested that increased productivity might raise incomes more than minimum wage increases and that it might be beneficial to have more Cambodians in management roles. This would give Cambodian workers hope that they could advance in their jobs to a higher role.

The drawback in higher wages is that Cambodian garment exports to the United States was doubled that of Chinese exports and slightly more than Vietnamese exports.

Higher wages rather than greater productivity could be a difficult conundrum for the Cambodian garment industry.

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