Business

Cambodia: 90,000 garment workers could lose jobs over proposed EU trade sanctions

by Simone Preuss
14 Nov 2019

About 90,000 Cambodian apparel and textile workers could be out of a job if the proposed trade sanctions by the European Union cause fashion brands to source elsewhere, fear workers’ rights groups. Currently, Cambodia profits from the “Everything but Arms” (EBA) scheme established in 2001 that gives 49 of the world's poorest countries duty-free access to EU markets as part of the EU's wider Generalised Scheme of Preferences (GSP). However, the EU announced on 11th February of this year that Cambodia could lose its status over violation of EU standards in fundamental areas, such as the tough political course taken by Prime Minister Hun Sen, which is setting the country on the road to becoming a one-party state, but also the widespread corruption.

This would have serious consequences for the garment industry, Cambodia’s largest employer with a workforce of 700,000 people, generating 7 billion US dollars (5.45 British pounds) annually, of which exports to the EU made up 45 percent in 2018. This number is already shrinking after the EU began a process that could see tariffs reintroduced by August 2020: EU exports declined by about 600 million US dollars compared to the same period last year according to Ken Loo, secretary general of the Garment Manufacturers Association of Cambodia (GMAC).

International buyers would move production should trade benefits end

Reintroducing tariffs is a step whose financial consequences few international buyers would be willing to bear: According to Reuters, Xiaoxu Liu, sourcing manager for China and Southeast Asia at Irish apparel discounter Primark that has about 20 factories in the country, said a few weeks ago that European companies would “pull out of production” and that staying without the trade deal would be “a big challenge.” Similarly, David Savman, head of production at Swedish fast fashion giant H&M with about 50 factories in Cambodia, warned of a “substantial backlash,” confirming that the company would do less business in the country should the trade benefits end. Alternative sourcing countries could be China and Indonesia, he said.

While most international buyers have an exit strategy that would ease the transition for supplier companies to find new buyers, this strategy does not include garment workers, most of them women: Around 90,000 of them or almost 13 percent could lose their jobs and would likely end up “in the entertainment or service industries, at bars and massage parlours, and be exposed to sexual exploitation” according to Khun Tharo, program coordinator of the Center for Alliance of Human and Labor Rights.

An alternative would be migrating to Thailand, where 2 million Cambodians are already estimated to work. “Many of them undocumented and vulnerable to modern-day-slavery. Either way, serious risks will be taken,” warns Tharo according to Reuters.

Garment workers and their families would be most affected

At the beginning of the month, non-profit think-tank Mekong Future Initiative (MFI) released a short documentary film that highlights the plight of Cambodia’s female garment workers: Following seamstress Sek Hong who has been working since 1997, viewers see that losing her job would affect not only herself but also her family - her aged father and school-going son - and her community consisting of teachers, bus drivers, vegetable vendors and other merchants. All would be short-changed should Sek Hong lose her job.

Once again, all eyes are on buyers to avert a potential crisis, working together with stakeholders such as international and local trade unions, the Garment Manufacturers Association of Cambodia (GMAC) and programmes such as Better Factories Cambodia. As Reuters reported, international buyers attending the Textile and Apparel SEA Summit, which took place at the end of last month in Phnom Penh, said they were already working with suppliers in Cambodia to boost productivity in a bid to minimise job losses.

Photo: film still