As Unions Grow, an Industry Booms

By Susan Postlewaite

Out on factory row, 25 minutes from central Phnom Penh, where bicyclists and oxcarts share the rutted, muddy road with covered trucks carrying Adidas (ADDDF ), Gap (GPS ), and J.C. Penney (JCP ) clothes for export, Som Tary and her co-workers are discussing the pros and cons of garment work. The job is O.K., they say, even though the hours are long, and without overtime they wouldn't be able to save for their families. "It's not a dangerous job, and $50 or $60 a month is enough," says Tary, who was sent by her family from Kampong Speu Province to the capital to earn money. "But at $45"--the mandated minimum wage--"we can't send any money home." Chea Srey Mom, 22, agrees that factory work isn't too bad but says that workers shouldn't be forced to labor 12 hours a day, 6 days a week, as they are in some factories. Chimes in Sou Sareth, 24, who scrimps to send home money every month: "If I stay in the village, it's useless, so I'd rather be here."

Since peace returned with the 1998 surrender of the Khmer Rouge, Cambodia has begun rebuilding its economy--a tough job in competitive Southeast Asia, where many nations are more advanced in education, foreign investment, and skilled labor. So far, the only factories to arrive in force have been garment workshops, mostly owned by Chinese, Malaysian, Singaporean, or Taiwanese conglomerates. They tap into Cambodia for cheap labor and for its U.S. textile import quotas. In an odd twist of fate, the garment industry is thriving partly because Cambodia has become a test case for labor standards in Asia and the world. But the experiment, known as the "trade-labor linkage," expires at the end of the year, and the government is anxiously waiting to see whether the Bush Administration will extend it.

Under the Bilateral Textile Agreement signed in December, 1998, Cambodia can get as much as a 14% increase in its U.S. import quota if it demonstrates "substantial compliance" with international labor standards. The provisions aren't spelled out, but the idea is that overtime must be paid, child labor banned, and sufficient work breaks offered.

The three-year linkage was controversial but became a priority in the Clinton Administration.

"They were basically calling the bluff of the U.S. labor movement by saying: "If you unions say you're not protectionist, then what if we link quotas to labor rights?" says a Western diplomat who has closely followed the progress of the agreement. Cambodia was selected because the AFL-CIO and the International Labor Organization had already spent time getting Phnom Penh to enact a new labor law authorizing unions and protecting various worker rights.

As a result, the two labor groups are now monitoring conditions in Phnom Penh and are training union leaders in the garment factories. And because quotas are the lifeblood of the garment industry, Cambodia's 200 or so factories are in overdrive, churning out sports clothes for the likes of Abercrombie & Fitch (ANF ), Adidas, Ann Taylor (ANN ), Gap Kids, The Limited (LTD ), Nike (NKE ), OshKosh B'Gosh (GOSHA ), and Reebok (RBK ).

In the first two years of the accord, Cambodia won a 9% increase over its fixed quota of 12 million dozen garments. The quotas are awarded in different categories, with half of Cambodia's quotas granted in jeans and T-shirts. Although conditions in the factories were not monitored in the first years, the labor movement showed signs of healthy growth. Unions were organizing, workers striking, and in May, 2000, the unions got together with the Labor Ministry and agreed on a $5-per-month wage hike, bringing them to the current $45, the first increase since 1997, when pay went from $27 to $40 a month.

Now, the ILO has started a full-scale survey of garment factory conditions. With about one-fourth of the survey complete, the word from Lejo Sibbel, the organization's representative in Phnom Penh, is encouraging. "We have not found child labor to be a problem in the 40 to 50 factories we have visited so far. The Cambodia garment shops, in my opinion, are not that bad," he says. This is the first time the ILO has attempted to monitor a country's entire labor code, "everything from toilets to hours to wages." He describes the ILO's mission this way: "It's not enough for a worker to just have a job. It has to be a decent job."

"CUT THE HEAD." But when the trade-labor linkage expires at the end of this year, what will Washington do? So far, the Bush Administration hasn't indicated where it stands. Naturally, Cambodian garment manufacturers and government are eager for renewal. "For the U.S., it's just a test case, but it's very, very important for Cambodia," says the Western diplomat. Until a few years ago, he notes, the country had virtually nothing to export. Today, the garment industry is the biggest exporter, with a monthly payroll estimated at $12 million a month--in a country with total gross domestic product of only $3.2 billion, most of it in agriculture, and average per capita GDP of $300.

"We have to protect this industry like our own daughter," says Sok Siphana, secretary of state for the Commerce Ministry. "Everybody has to chip in--the unions, the factories, the workers, the government. Because if at the end they close the factories." He uses a Khmer saying: "You'll have to cut the head to fit the hat."

Sok Siphana bitterly criticizes a BBC report last year in which a handful of workers at June Textile, a 4,000-worker factory owned by Malaysian group Genmil, which is a large Gap and Nike contractor, told reporters they were under 15, the minimum age for factory work. Nike and Gap reacted by canceling contracts; Gap returned, but Nike did not. Siphana says Cambodia lost $10 million in contracts. June Textile officials denied employing underage workers.

Chea Vichea, president of the Free Trade Union of Workers of the Kingdom of Cambodia, the most active of the six garment-worker unions, says underage workers are not a major concern: "Our big problems are arbitrary dismissal, not paying on time, not paying the minimum wage." He thinks $70 a month would be a fair wage: "On $70, you can live." The wages now being paid are about the same as in Bangladesh, Indonesia, and Vietnam--and much higher than in Burma, China, or Laos.

Commerce Minister Cham Prasidh is going to Washington in October to meet with the U.S. Trade Representative about extending the agreement. Roger Tan, secretary general of the Garment Manufacturers Assn. in Cambodia, says manufacturers need to know soon what the quotas will be, because orders are coming in now. Tan says if Cambodia can prove itself in the garment industry, other industries such as toys and furniture will follow.

Although garment work isn't much of a career, many workers see a factory job as a step to something better. Saron Soannouv, 20, spends 12 hours a day, 6 days a week sewing Adidas sports clothes, earning about $85 a month with overtime. His only complaint is that this gives him just one day off for English classes: He goes on Sunday when the factory is closed. "Workers should have some time to study so they can move out of the factory and get a better job," he says.

And the better jobs may be coming: Sok Siphana is hopeful that Cambodia will soon diversify beyond garment operations. Recently, a company called Digital Divide Data, armed with a $45,000 contract from the Harvard university student newspaper, hired 20 Cambodian typists to enter back issues of the Harvard Crimson into computers for electronic archiving. General Manager Nhev Sith Sophary is proud to participate in Cambodia's first info-tech industry: "In the factories, they have to work 12, 14 hours, but here they only work 6 hours a day." The workers are being paid $50 a month, with raises to $65 coming after three months' training.

Sok Siphana laughs off the controversy that erupted at Harvard in August, when a spokesman for the "living wage" campaign criticized Digital Divide for exploiting Third World labor. "Different world, different problem," responds the Commerce Ministry official. "What's a problem in one country may be an economic opportunity for us."

Postlewaite has written from Cambodia since 1995.

Edited by Harry Maurer

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