Unions Urge Brands to Intervene on Suspension Pay Law Dispute

5 min read
Workers mostly stay in their rented rooms during a self-isolation period, coming out occasionally to buy food, at a block of dorms where garment workers live in Phnom Penh’s Choam Chao commune on April 22, 2020. (Danielle Keeton-Olsen/VOD)

Garment and footwear unions asked brands to make their Cambodian suppliers pay workers who they say were short-changed during lockdowns, suspensions and permanent closures, in effect asking brands to intervene on the way the Labor Ministry and factories interpret the law.

Some 32 unions and NGOs asked brands to make up a wage gap between what they say is stipulated in the law and the current compensation rate for suspended workers of $70 per month during suspensions — $40 from the government’s cash assistance program and $30 from factories. Workers are owed an estimated $117 million from factory closures during the April lockdown because of this policy, the letter claims based on calculations between unions and international labor rights group Clean Clothes Campaign.

“Without intervention from buyers, there is no realistic hope that workers will be made whole for this loss,” the letter said.

In its 2021 report pandemic-driven wage gaps, the Clean Clothes Campaign estimated that workers were owed $41 million from April’s “red zone” lockdowns on business and movement, noting that half the country’s factories were inside a red zone and those factories only paid half of workers’ wages during a suspension period, as stipulated by a Labor Ministry regulation.

Unions further explained that severance packages paid by factories were lower than what they should be under Cambodian Labor Law, citing issues with calculations of compensation for lack of prior notice and seniority indemnity payment.

The letter argued that factories were paying severance based on what was specified in a letter from the Labor Ministry, rather than the law, and that the Arbitration Council was not intervening to settle the difference.

Ken Loo, Garment Manufacturers Association in Cambodia secretary general, told VOD on Monday that he didn’t know explicitly what letter from the Labor Ministry that unions were referring to. He noted that the ministry had specified no wages need to be paid during the pandemic suspensions.

However, he said it was good for the unions to bring this concern to the brands, who are at the top of the supply chain.

“If the buyers are willing to pay more and help subsidize wages for workers, that is most welcome,” he said.

Unions sent documents to at least nine global clothing and footwear brands that source from Cambodia. Three of the brands responded to VOD by email.

H&M spokesperson Ulrika Isaksson said in an email that the brand was monitoring wages paid to workers, adding that all its suppliers were paying salaries, benefits and severance in line with Cambodian law.

“If any stakeholder has information about violations taking place at a supplier of ours, we would highly appreciate if that information is urgently shared with us so we can take action,” she wrote.

She continued that orders to Cambodian suppliers had been stable “according to [our] business plans” without commenting on the volume, and that there hadn’t been a “noticeable reduction” in its suppliers’ Cambodian workforces.

The company was also “aware of challenges connected to the Arbitration Council in Cambodia” and had raised concerns about the council on platforms for businesses, unions and NGOs like the Fair Labor Association.

“[W]e believe that challenges during this unprecedented time would be best addressed through national tripartite discussion between employer association, trade unions and the government,” she wrote.

Athletics brand Puma would send a letter in response to the garment factories but on initial review, Puma was not buying from factories named in the letter, said senior communications head Kerstin Neuber.

The company had not decreased the number of factories it buys from during the pandemic, and Puma canceled just 0.2 percent of its apparel orders and none of its shoe orders in Cambodia, Neuber added.

Adidas said that the company was committed to “ensuring fair labor practices, fair wages and safe working conditions,” though it did not address specific concerns to Cambodia or allegations in the union’s letter.

“We continued to uphold our standard manufacturing terms, including worker rights protection, and assisted key suppliers in securing bank financing to help them weather the covid-19 crisis,” Adidas wrote.

Adidas’s 2018 factory list counted Hulu Garment — one of the factories named in the letter — as a source but the factory was gone in its 2021 list, instead sourcing from Din Han Enterprise, which was hit hard by the “February 20th” outbreak this year, and Bowker Garment, among the factories that fired workers for violating a travel ban during Khmer New Year last year.

The unions gave brands a week to respond to the letter, sent August 4, but they have not received any response as of Tuesday morning, said Preap Munysovann, secretary general of Collective Union of Movement of Workers.

When asked why the letter was sent to brands that were not buying from factories named in the letter — including Sangwoo, Violet Apparel and others — he said the unions aimed to raise awareness to brands that had been engaged in labor rights in Cambodia, hoping that they may take note of bigger structural problems like the Arbitration Council’s role in settling disputes.

“The brands should be involved, because it’s a supply chain, and it will be important for the future,” he said.

In a June statement, the U.N. system in Cambodia noted that workers in suspended garment factories had received the $40 cash assistance from the government since April 2020, and said that decreased wages “left many struggling to meet basic necessities and led to workers taking loans as a coping strategy.” However the statement did not address concerns about workers’ cost of living, instead noting that the U.N. was working on financial literacy courses for garment workers in addition to various efforts to prevent and mitigate Covid-19 transmission.

Munysovann, from CUMW, said that more than 1,000 members of the union had lost their jobs since the pandemic began, and some 70 or 80 percent of union members have had their employment suspended for quarantine or Covid-19 illness, so many workers, as well as union organizers, are struggling.

“The [manufacturing] companies try to use Covid-19 as a pretext to destroy the labor movement and union activities as well,” he said. “All the workers hope they are entitled to get what [income] they have lost in the past.”

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