Garments Slump Spills Over to Surrounding Businesses, Residents

5 min read
Street vendors’ carts in front of a factory in Phnom Penh. (Hun Sirivadh/VOD)
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Phnom Penh’s Veng Sreng Blvd. was once packed every evening at the end of the working day. Workers from a long row of garment factories would fill the streets as they prepared to go home. But since a slump in the industry sparked by the Covid-19 pandemic this year, the crowds are scarcer.

Sellers of watermelons, bread, soft drinks, snacks — vendors of all stripes around Veng Sreng and other manufacturing districts told VOD that their small businesses were becoming nearly impossible to sustain, one of the many knock-on effects of a decline in the country’s primary export industry.

Lorn Phally, 37, says he is earning barely enough to eat by selling watermelons off a trailer attached to his motorbike.

“We only make enough to live. We do not have any money left afterward,” Phally says as he sits on his motorbike outside a six-story factory on Veng Sreng Blvd., idly scrolling through his phone.

There are still some workers around who come out of the factories at the end of their shifts, but they rarely open their wallets, he says. “Most of them do not buy because now it’s very hard [for them] to make money.”

We only make enough to live. We do not have any money left afterward.

At a minimum-wage negotiation meeting on September 3, the Labor Ministry said that as of the start of the month, 81 factories had closed down and 491 suspended their operations. About 60,000 workers lost their jobs permanently or temporarily, while many more had their working hours reduced, the ministry said.

Along Street 1019 near the University of Cambodia in Sen Sok district, Soung Soeun, 38, sells soft drinks from a small cart. He used to make enough to send money to his parents, but now he makes no profits, Soeun says.

“There’s been a big impact,” he says. “We have to cover daily expenses … and we have to pay debts.”

He has two children, and is asking his wife to sell the drinks while he looks for construction work. But doing construction would mean increased food expenses, “so there would still be nothing left except to pay for gasoline,” Soeun says.

Some move to sell their wares at other locations, but right now everywhere is the same: Sales are not good.

Vorn Pov, president of the Independent Democracy of Informal Economy Association, says sales have more than halved for many vendors who targeted garment workers.

“The burden on families is heavy,” Pov says. “[Factory workers] do not have overtime work, so salaries are lower. Vendors who used to sell well … typically now only make 30 percent [as much as before].”

As informal entrepreneurs, the vendors have to scramble to make ends meet, he says. “Some move to sell their wares at other locations, but right now everywhere is the same: Sales are not good.”

Many return to their hometowns, and, like the government, Pov thinks farming might be one of the only possibilities for new work.

“If they return to agriculture, they would be able to raise ducks, sell rice or have some food,” he says, though he acknowledges that farming is far from guaranteed.

“If they farm relying on the sky, their crops might not make it to the market if there is not enough water,” he says, calling for public works projects to build more irrigation.

Prime Minister Hun Sen has promoted agriculture as an opportunity amid ongoing economic woes, though some workers returning to the countryside due to unemployment have said farming has simply not been a practical solution for them due to a lack of land and capital, and a glut of laborers.

When workers don’t have jobs, vendors, microfinance [officers] and other sellers of goods as well as services also have a problem.

Garments and footwear manufacturing was one of the main engines of Cambodia’s economic growth, accounting for $10.8 billion in exports last year, or 74 percent of the country’s total exports, according to National Bank figures. But the sector has been hit hard by Covid-19 as global orders and consumer demand plummeted.

Cambodian Labor Confederation president Ath Thorn says the industry’s 800,000 workers propped up an ancillary economy of 3 million people, echoing a Garment Manufacturers Association statement from last year that the sector supported the incomes of 20 percent of the country’s households.

“When workers don’t have jobs, vendors, microfinance [officers] and other sellers of goods as well as services also have a problem,” Thorn says.

In its latest economic update, released earlier this month, the Asian Development Bank estimates an annual GDP contraction of 4 percent for Cambodia due to a sharp drop in garments orders as well as a collapse in the tourism industry and a slowdown in construction. It forecasts a “further suppression of consumer demand as more households suffer financial distress.”

Finance Ministry spokesperson Meas Soksensan acknowledges the impacts of Covid-19 on the national economy, but says people should trust the government. Cambodia will overcome the economic issues it is facing, he says.

“Please trust the measures of the government and the care taken by Samdech Prime Minister,” he says in a message, using an honorific for Hun Sen.

Much of the impact is likely to be felt by informal workers, like the vendors hawking various goods around manufacturing districts. About 93 percent of Cambodian workers are in the informal sector, the International Labor Organization said in 2018.

A bread seller in Sek Sok district, 43-year-old Yon Oeun, says sales have plummeted since the pandemic began. Her husband has gone home to Kampong Cham province to try his hand at farming, hoping to harvest enough rice to feed their three school-aged children.

The evenings are especially bleak, she says. “Since Covid, we haven’t sold well because workers don’t have overtime shifts,” Oeun says. “Right now, things aren’t looking good.”

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

Note: This report was produced with support from the Rosa Luxemburg Foundation under the financial support of the German Federal Ministry for Economic Cooperation and Development.

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