SEARCHING FOR CAMBODIA?S UNEMPLOYED GARMENT WORKERS

UNCLAS SECTION 01 OF 03 PHNOM PENH 000720 SIPDIS STATE FOR EAP/MLS, EEB, DRL, S/GWI DOL FOR ILAB E.O. 12958: N/A TAGS: ECON ETRD ELAB EAID PREL CB SUBJECT: SEARCHING FOR CAMBODIA?S UNEMPLOYED GARMENT WORKERS REFS: A) PHNOM PENH 580 B) PHNOM PENH 277 ¶1. SUMMARY. The impact of the global economic crisis on Cambodia?s garment sector has been substantial, but obtaining concrete data on the whereabouts of the women recently laid off from the factories is difficult. If not rehired at another factory, the majority of women (who comprise over 95% of the garment sector workforce) choose to take vocational training, work overseas, or enter the entertainment and sex industries. Although the Royal Government of Cambodia (RGC) has taken measures to help mitigate the overall effect of the financial crisis, choices for unemployed garment workers remain slim due to low skill sets and lack of English-language capabilities (Ref A). END SUMMARY. Economic Crisis Takes Its Toll -------------- ¶2. The garment sector, which employs and supports up to 12% of the population, has been losing workers at a steady pace since the global economic crisis began to affect Cambodia in 2008. An estimated 90,000 workers (over 95% of garment workers are women) have faced either job loss or a reduction in wages since September 2008, and another 100,000 are at risk of losing their jobs over the next two years. Recently released government figures show that exports for July (90% of which are garments) fell 26.4% year on year, indicating that the impacts of the economic crisis are still being felt within Cambodia's formal economy. ¶3. The RGC has attempted to respond within the framework of existing institutions: it has reduced the required Social Security payroll tax from .08% of workers' salaries to .05%; it has waived fees for passport processing to allow more Cambodians to travel abroad for work; and the Ministry of Labor and Vocational Training (MoLVT) is implementing a plan that aims to provide vocational training and living stipends for 40,000 unemployed Cambodians. (NOTE: See Ref B for additional information on the government?s response. END NOTE.) Go Back to What? -------------- ¶4. Although RGC officials including the Prime Minister have suggested that unemployed factory workers have the option to return to their home provinces and engage in agricultural activities, this may not be possible. Employment in this mostly informal sector is highly seasonal and, according to the Cambodian Center for Study and Development in Agriculture (CEDAC),50% of agricultural workers are landless and make their living as laborers. Additionally, many families sold their cultivation land during the country?s recent real estate boom, and they rely on remittances from family members in the city and abroad to survive. Moreover, the average daily salary of rice field workers in February 2009 was $2.59 compared to the average garment worker's daily salary of $2.85. Returning to the rice fields decreases the overall family income and presents an additional burden to those who must feed and clothe an extra person on such a small salary. ¶5. According to the Cambodian Development Research Institute (CDRI), there is actually a surplus of labor within the agriculture sector, allowing little room to absorb thousands of unemployed women; the recent lack of rainfall has exacerbated the problem. Caritas- Cambodia reports that poor farmers are experiencing decreases in PHNOM PENH 00000720 002 OF 003 income, job losses, declining health due to malnutrition, and rising amounts of debt as families try to borrow their way out of the financial crisis. Women Search for Alternatives -------------- ¶6. In May, the MoLVT began a massive effort to retrain 40,000 of the nation?s unemployed with the additional benefit of $1 per day stipends for food and $10 per month for housing. Many young women from garment factories have taken advantage of this opportunity to remain in urban areas. Courses offered range from sewing to mobile- phone ringtone sales to mushroom cultivation. Former garment sector workers tend to be concentrated in the home decoration, hair- dressing, sewing, and beauty classes, as their lack of education prevents them from benefitting from more advanced and high-skill courses. At the Cambodia-India Entrepreneurship Development Center (CIEDC),former garment workers account for the majority of trainees in the beauty and sewing classes. ¶7. However, RGC and NGO contacts have highlighted funding and capacity issues with current retraining programs. According to MoLVT officials, only 15,242 unemployed persons have participated in its vocational training program. Several sources stated that the funding for the first phase of the government training program has already run out, leaving thousands of unemployed untrained. CIEDC Director Mr. Pan Nore explained that he has to turn away approximately 10-15 former garment workers each day, as classes at the center have already reached capacity. Job placement also remains an issue, according to government and NGO contacts; it is difficult to ascertain where the small number of young women who complete these courses have and will go since the retraining program does not include a job placement component. From Garment Work to the "Entertainment" Industry -------------- -------------- ¶8. A recent study released by the UN Inter-Agency Project on Human Trafficking found that among a sample of workers in the entertainment industry, including brothel, street, karaoke, and massage parlor workers, 58% entered into sex work in the wake of the financial crisis, and 19% of those were former garment sector workers. Such low-skilled work can provide salaries that often exceed those received while working in factories. Women interviewed at the Rukhe Karaoke Bar in Phnom Penh confirm the findings of the report. While the average income for an unskilled general worker in a factory averages $70 per month, women interviewed in Ruhke (all of whom were identified as prostitutes) reported earning over $100 in salary and tips. All were supporting family members, and all were in need of immediate cash to do so. Women Working Abroad -------------- ¶9. As stable work is harder to come by in Cambodia, many women in the garment sector have begun searching for opportunities abroad. According to the Association for Cambodian Recruitment Agencies (ACRA),the number of Cambodians applying for overseas jobs has increased 30% and hundreds of women from the garment factories have been placed in Korea, Malaysia, and Thailand since April. Cambodia has only recently begun sending workers abroad, but those who are able to afford the upfront costs of up to $1,000 (costs stemming from three months training and language courses, insurance, and loans for families? sustenance while their supporters undergo non-paid pre- departure requirements),have the opportunity to make at least $180 per month as a domestic worker in Malaysia and as much as $1,500 per month working in various fields in Korea that include domestic and PHNOM PENH 00000720 003 OF 003 factory work. The Road Ahead -------------- ¶10. While there is general understanding of the current situation of the unemployed garment workers among NGOs and government officials, clear data that can provide the information necessary to target efforts toward these women is lacking. With few statistics on unemployed factory workers and no collective data taken by the MoLVT on those who have participated in vocational training programs, there is no reliable way for stakeholders to measure the impact of these programs. Better Factories Cambodia (BFC) in conjunction with the United Nations Development Program (UNDP) plan to track 2,000 garment workers this year - 1,200 who are at risk for future lay-offs and 800 who have already been let go from the factories. Such reporting could allow the RGC, NGOs, and development organizations to focus on these vulnerable women by providing targeted training. Social safety nets such as day-care and food programs for women with children, caps on microfinance interest rates to make them more accessible to borrowers, and additional investment in increased living stipends to allow more women to participate in relevant vocational training programs, have been discussed at stakeholder forums, but lack of funding has been cited as a major obstacle to implementation. RODLEY