Factories Can’t Afford to Pay Suspended Workers 40 Percent: GMAC

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Workers at a shoe factory in Kampong Speu’s Samraong Tong district protest over their suspension without compensation on March 26, 2020. (Supplied)

Cambodia’s garment industry group said this week that factory owners would not be able to pay 40 percent of suspended workers’ wages as recommended by the government, as they cut back work for tens of thousands of employees in the sector.

The global coronavirus pandemic has caused widespread shortages in raw materials, and international clothing brands are increasingly canceling orders as retail stores shutter around the world to prevent the virus’s spread, depressing demand.

Ken Loo, secretary-general of the Garment Manufacturers Association in Cambodia (GMAC), said the flow of money from brands to factories to workers had been severed for many employers.

“Usually, we produce goods, hand the goods over to buyers and settle the money. Now, they won’t accept the goods, so where is the money?” Loo said.

As of Tuesday, Loo said more than 70 factories had asked to suspend at least some of their employees’ contracts, affecting about 30,000 workers.

In February, as factories headed toward supply shortages due to the effects of the coronavirus in China, Prime Minister Hun Sen announced that garment workers who are suspended from their jobs would receive 60 percent of their base wages, with 40 percent provided by factories and the remaining 20 percent paid by the government.

However, Loo said that covering 40 percent of suspended workers’ wages had become too steep for factory owners.

He called for more help from the government, asking them to cover a little more than 20 percent of the minimum wage.

“[I’m] asking the government to help us. [Buyers] will not settle,” he said.

International brands were postponing their orders as consumer demand shrinks in export markets like Europe and the U.S., he said.

“Things have been produced and have not been exported. [Buyers] asked us to stop [producing] immediately,” Loo said. “For the upcoming one or two months, factories will have no income.”

Loo urged buyers to pay for the products that were already produced in Cambodia so factories have money to pay their workers.

In a statement on Wednesday, Human Rights Watch condemned international apparel brands for canceling their orders without assuming financial responsibility for workers in factories across Asia.

“These are extraordinarily challenging times, yet clothing brands facing tough business decisions to ride out the COVID-19 crisis should not forsake the factory workers who make their branded products,” said Aruna Kashyap, senior counsel in the women’s rights division of Human Rights Watch.

Labor Ministry spokesman Heng Sour told VOD on Wednesday that the government is offering workers $38 per month of suspension, or 20 percent of Cambodia’s minimum wage, if they attend trainings held by the government — a requirement criticized by unions.

Sour did not answer questions about how many workers had so far received this assistance from the government.

According to the Labor Law, companies can suspend employment contracts for up to two months if they face serious economic difficulties. The suspension of a labor contract relieves employers from paying the suspended worker “unless there are provisions to the contrary that require the employer to pay the worker.”

Ath Thorn, president of the Cambodian Labour Confederation (CLC), asked factories to pay suspended workers because they would otherwise have no income to pay their expenses.

“Employers should consider providing the 40 percent for the upcoming two or three months [of suspension],” he told VOD. “I think that this won’t be a problem because employers have had businesses here for four to 10 years, so they should have enough money.”

Thorn added that workers should be able to receive 20 percent of the minimum wage from the government without going to ministry-led trainings, as going to gatherings puts workers at risk of catching the virus.

A World Bank report released on Tuesday projected that Cambodia’s GDP growth could dip from 7 percent last year to 2.5 percent, or as low as 1 percent in a worst-case scenario, with slow recoveries expected in the garment industry. 

Based on the data from the Ministry of Commerce released in February, Cambodia had a total of more than 1,500 factories across the country by mid-2019, employing more than 800,000 workers, most of whom are women.

Additional reporting by Danielle Keeton-Olsen

(Translated and edited from the original article on VOD Khmer)

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