The Ministry of Labour and Vocational Training (MLVT) announced on Wednesday that textile workers whose employment contracts were suspended between July and August 2023 will receive compensation.
It added that workers who were suspended for two weeks will receive $20, and those who were suspended for between 15 and 30 days are set to receive $40.
Pav Sina, President of the Collective Union of Movement of Workers (CUMW), said that the compensation will help ease the financial burden of workers who have been affected by the suspension of their contracts.
However, he added that the social protection package provided by the government is not enough for garment workers to make up for the expenses gained as a result of them losing their jobs.
Sina said, “Although it is not enough for workers to make up for their expenses due to job losses, the compensation can help ease workers' financial burdens after their employment contracts were suspended.”
Besides providing financial support to suspended garment workers, the government should try and attract more foreign investment to prevent more contract suspensions, he suggested.
Additionally, addressing abrupt declining orders is vital in preventing more workers from being suspended, he said, noting that declining orders are not only occurring in Cambodia but many other countries as well.
Sin added, “The current employment contract suspension of garment workers was the result of the Russia-Ukraine war, which decreased foreign orders.” All relevant stakeholders are now trying to help ease workers’ financial burdens by providing social protection finance.
In 2018, before the pandemic hit, foreign orders were high because of Cambodia’s low-cost workforce. For instance, Cambodian garment workers’ minimum wage is as low as $200 per month. This is much lower than the minimum wage in other countries, such as Thailand, Malaysia and the Philippines.
That is why foreign companies find Cambodia an attractive destination because they are able to produce textiles at a low cost. Therefore, textile products produced in Cambodia are able to compete with the same product produced in countries with higher production costs.
Despite the challenges, the garment sector contributes to more than a third of Cambodia’s gross domestic product (GDP), accountable for $11.3 billion in garment exports in 2021, according to the International Financial Corporation.
The suspension of contracts is a common practice in the garment industry. In Cambodia, it is often used by employers in response to declining orders as a result of the global crisis.
In early 2023, more than 100 factories suspended work as a result of declining orders from Western and US markets, putting thousands of jobs at risk. In July 2023, more than 10,000 garment workers were suspended as a result of low demand and canceled orders.
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