04/27/2010

News / Recession shows need for Cambodian garment factories to diversify

27 April 2010 – The global downturn has shed light on the need for Cambodian garment factories to both expand and diversify their markets to include those in Asia to reduce reliance on those in the United States and the European Union, according to a new report by the United Nations labour agency.

Nearly 90 per cent of the 66 factory managers surveyed reported having been adversely affected by the economic crisis, listing falling export orders, heightened pressure to reduce prices and the increased cost of inputs as the three main pressures they are facing.

The report by the International Labour Organization (ILO) said the recession has also exposed the need to look into boosting domestic demand for Cambodian garments.

The industry is almost entirely owned by foreigners and is export-oriented, and factories hire, on average, 700 workers and specialize in one of the following areas: T-shirts, jeans, pants, sportswear, underwear and pyjamas.

The ILO found that production-level workers have borne the brunt of job losses, while managers and other non-production staff have not been as severely affected.

A study released earlier this year found that factory closures or cutbacks due to reduced orders have forced many garment workers out of a job, with one in 10 unemployed workers having lost their positions two or more times last year and most still looking for work.

Today’s publication reported that only 5 per cent of factories exporting their products have provided assistance – in the form of counselling and help in securing new employment – to the workers they terminated.

It also pointed out the renewed urgency now for Cambodia to “develop a reliable and cost efficient electricity supply, for the benefit of all businesses,” including the garment industry, since high power costs are impeding the regional competitiveness of its garment firms.

http://www.un.org/apps/news/story.asp?NewsID=34501&Cr=&Cr1=

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