Cambodia’s garment sector exports more, employs less

Exports from Cambodia’s garment and footwear sector continued to grow in 2016, rising by 7.2 per cent to US$ 7.3 billion, but the number of exporting factories officially registered in the sector fell by 10.4 per cent and the number of workers declined by 2.9 per cent, compared to 2015, according to the sixth edition of the ILO’s Cambodian bulletin.

The latest issue of the ILO’s Cambodian garment and footwear sector bulletin identified three main factors which may have contributed to the divergence between strong exports and weaker employment and enterprise creation. These factors include a rise in the industry’s productivity, statistical problems with the measurement of employment and factory numbers, and an increase in production in subcontracting factories.

Maurizio Bussi, director of the ILO country office for Thailand, Cambodia and Lao People's Democratic Republic, commented: “A rise in employment and production in subcontracting factories could be a concerning development if subcontracting is being used as a way to undercut regulations, including labour law and the minimum wage”.

Unlike registered exporting factories, subcontractors are not monitored by Better Factories Cambodia and also may receive less attention from national enforcement agencies.

“The situation should be carefully monitored by stakeholders and relevant agencies of the Royal Government of Cambodia,” said Bussi.

According to the bulletin, garments and footwear remain the most important of Cambodia’s exports, accounting for 78 per cent of the country’s total merchandise exports in 2016. The EU remains the most important market destination for Cambodia’s garment and footwear exports, with the US being second.

The sector’s exports to the EU and US combined accounted for only 65 per cent in 2016, down from 72 per cent in 2015, with an increasing share going to markets outside the US and EU, notably Japan and Canada.
Average monthly earnings, including overtime, of Cambodia’s garment and footwear workers increased from US$ 145 in 2014 to US$ 175 in 2015 to US$ 195 in 2016. Adjusted for inflation, real average monthly wages/earnings were eight per cent higher in 2016 than they were in 2015.

The Bulletin has been published within the framework of the ‘Labour standards in global supply chains’ programme financed by the Federal Ministry of Economic Cooperation and Development (BMZ) on behalf of the Government of the Federal Republic of Germany.