At least 10,731 garment workers from eight factories in Phnom Penh and Kampong Chhnang province have been suspended or terminated since July, according to a union’s preliminary report.
Touch Soeu, president of the Free Trade Union of Workers of the Kingdom of Cambodia (FTUWKC), said the recent mass suspension of garment workers is not new for the industry and is a result of the economic crisis and political landscape in Cambodia.
“Before the suspensions and terminations of worker contracts, the factories told the workers that there were no raw materials, no buyers, and supply and demand were not equal,” Soeu said.
The clothing sector, which employs an estimated 700,000 people and generates about 80% of the country’s export income, is the biggest formal employer of low-skilled labourers in Cambodia.
The worker terminations documented in the report reflect a trend in the industry, which has faced other major layoffs this year. Labor Ministry spokesman Heng Sour told CamboJA in March that 71 factories suspended 32,023 employees in January and February 2023.
Of the eight companies included in the report, Quantum Clothing Group, Wanlin-Zongheng Garment Factory and T.F.G Garment did not immediately respond to emailed requests for comment. Tripos International and Shoe Premier II did not answer the phone when called by CamboJA. M & V International Manufacturing and Meng Da Footwear Industrial could not be reached.
When reached by phone and Telegram, a human resources officer at Can Sports Shoes said he could not provide answers to questions without first contacting the company’s legal team. CamboJA did not receive responses in time for publication.
“The recent situation has seen alarming increases in factory suspensions,” said FTUWKC Vice President Say Sokny. “At the same time, a large number of new factories have been transformed from garment factories, with a large number of workers, into electrical equipment factories, with a small number of workers.”
Sokny said she is also concerned that international investment in Cambodia may decrease, causing even more layoffs, due to criticism from other countries about the recent national elections. The US State Department said it would pause certain foreign aid programs, but the statement makes no reference to the garment industry or garment workers.
Back in 2020, the European Union cancelled 20% of its Everything But Arms agreement with Cambodia due to serious human rights breaches. The US Generalised System of Preferences program, which was allowed to expire that same year, has not been revived.
Kan Sokvy, a worker at Kampong Chhnang’s Can Sports Shoes factory which was included in the report, told CamboJA that he had just returned to work in August after a two-month suspension. He also serves as a FTUWKC leader for union members at his factory location.
The recent layoffs have had a profound effect on workers’ livelihoods, he said, and he also believes that Cambodia’s economy may be affected by possible future foreign sanctions.
“[The government] should take a step back a little bit to respect human rights, respect democracy, and the job market will increase so that all workers can have jobs,” he said. “Every investor in Cambodia observes the leadership of the government. If the leaders respect democracy, respect human rights, then they will invest with us.”
In March the government pledged monetary assistance for suspended garment workers in the form of $30 per month from the company and $40 per month from the government. So far, the government has said it would provide this monthly allowance to over 36,000 employees at 89 factories. A similar program was available to workers due to the COVID-19 pandemic from 2020 to the beginning of 2022.
Sokvy said the union’s workers at his factory, including himself, had not received the pledged assistance. Even if they had, he said, it wouldn’t be enough to meet their needs.
Director general of the Labor Ministry’s Labor Department, Seng Sakada, did not answer calls or respond to CamboJA’s questions sent via telegram.
Sok Eysan, spokesperson for the ruling CPP, said the global economic situation is not good, which affects the economies of many countries including Cambodia. The government assistance program will help suspended and laid off workers have financial stability, he said.
“Due to the crisis in Ukraine and Russia and the decline in factory orders, the factories were suspended and closed, affecting the Cambodian economy,” he said.
Ath Thorn, president of the Cambodian Labor Confederation, said that the suspension or dismissal of factory workers is a result of low demand and cancelled orders. On top of that, he said some factory owners exploit their workers and don’t respect labour laws.
“Recently, owners of companies have closed their companies without paying [the workers] and went on to open new ones,” said Thorn.
In January 2023, the government decided to exempt textile and industrial enterprises from paying certain taxes until 2025 to help the declining sector. Ky Sereyvath, an economic expert at the Royal Academy Cambodia, said the new exemption has incentivised some company owners to shut down factories.
“The suspension of workers relates to a new law. The new law offers the owner of a company free tax exemption when they open a new business,” she said. “So some of them [owners] shut down and opened new [factories].”
Khun Tharo, program manager for the NGO Central, said preliminary data from Central shows that around 20,000 garment workers were suspended or terminated from February to July of this year. He said some factories did not comply with Labor Ministry requirements when laying off or suspending workers.
“This trend [of layoffs] has been going on since the beginning of 2023, but has increased [even more] closer to the national election,” Tharo said.
Foreign investors may have been hesitant to invest right around the national elections when there has been some political uncertainty in the country, he said. According to Central, some large factories have laid off 20% to 30% of their workers this year.
Additional Reporting by Phon Sothyroth
