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Expanding Job Opportunities

The NPRS states that the “generation of jobs and improved conditions of work are key to reducing poverty” and seeks to achieve these goals through facilitating private sector development, expanding exports and expanding tourism. Central to this approach has been the accession of Cambodia to the WTO and a general opening up of the country to international competition.

Progress

In 2003, around 40,000 new jobs were created in the manufacturing and SME sectors, while around 200,000 new workers entered the labour market. Mostly favourable weather conditions contributed to a recovery in the agricultural sector.

The September 2003 meeting of the WTO in Cancun approved Cambodia’s accession to the world trade body, though not without concern being expressed by NGOs that Cambodian farmers and small businesses are ill prepared for the impacts of freer trade.

In October 2003, the ILO released a report on working conditions in the garment sector which showed improvements in most areas, despite continued problems with respect to correct payment of wages, involuntary and excessive overtime and anti-union discrimination. [1]   

Issues

NGOs believe that the essential requirements for fostering economic growth are improving governance, improving the court system, increasing capabilities, and improving infrastructure.   Getting these “basics” right will achieve growth much more effectively any strategy that may erode workers’ rights, reduce environmental safeguards, or reduce villagers’ access to land and natural resources.

Private sector led growth is essential to the RGC’s strategy for job creation. However, FDI has been declining since 1999. Neighbouring countries are seen as having a more stable political situation, suffer less from corruption, have better rule of law and stronger, more capable government. The workforce in Cambodia is seen as being under skilled and the country continues to suffer from inadequate infrastructure. All of these factors need to be addressed if job opportunities are to be increased.
Case Study

Srey Tuic is 23 years old from Prey Veng Province. She has been in Phnom Penh working in a garment factory for over 3 years. She does not like the work or the living conditions and is often sick and nostalgic for the village. Despite this she continues to work and earn money to send home to the family.

She started working in the factory because her parents were finding it difficult to support the family. She recalls her father explaining “before when you were younger we could grow enough rice to fill our stomachs and sell the extra to the wholesalers, but now it costs too much to grow.” Srey Tuic tells that she can only remember not having enough, and sometimes it was because her family had to give away a portion of the yield to the owner of the fertilizer shop, as payment in kind for the fertilizer to be borrowed. Other times they had to sell a large portion of the yield, so there was not enough to eat, she attributes this to “my brother got sick and needed to go to the hospital”. Another time it was because the family lost everything during a protracted drought. She recalls “even though my family borrowed money to pay for the water pumping it was never enough and the drought killed everything that season and we were left behind and felt despair all the time.”

“So when I heard of another girl going to Phnom Penh to work in the factory, I and my mother went to enquire how to also pay my way to the job at the factory. For this my family borrowed a big sum of money, … I think about US$100. It was after this I prepared and I knew I would have to work to help them from despair.”

“Now my family just live from the money I send them. It is so hard for me that now I eat fish one time a week. I am sick because I do not eat good food, and I work hard because if you do not make the pieces you do not get money because they count the ones you make.”

Srey Tuic explained that when her father had some rice to sell it is very cheap, because the rice from Vietnam or Thailand keeps the Cambodian rice low. But fertilizers from the Philippines or the USA are very expensive and the new rice varieties are dependent on them.

She also explains that she still tries to find ways to earn some money because she knows that it is not easy in the factory and that she cannot do the work forever. “When I am really sick I do not dare go to the doctor because I cannot spare the money. I never go to a wedding or have leisure time because this would be to waste the money that my parents need from me. I am really afraid I will lose my job. Many people are saying that the factories will close soon, if this happens I will not know what to do because my parents will die if I cannot support them. Many girls also fear that their jobs are on the line, the fear is motivated by the same concern, that their families will be hopeless without the remittances.”

The RGC has hailed the approval of Cambodia’s accession to the WTO as being a major step forward in its pursuit of its pro-poor trade strategy. However, the NGO community remain concerned about the possible negative impacts of WTO accession.  Although the NPRS promised an “ex-ante poverty and social impact analysis” in order to consider the impact of trade policy on the poor, none has been carried out. At the same time there has been insufficient public debate as to the effects of accession, or to the conditions under which Cambodia’s accession was accepted.   Issues to be considered include the impacts of accession on small farmers and on small-to-medium sized enterprises, which are ill-prepared to face increased international competition in the domestic market. 

WTO entry is seen as essential to the survival of the garment sector, which currently comprises almost all of Cambodia’s exports and accounts for over 170,000 jobs, employing mainly young women from the provinces.  WTO entry would provide Most Favored Nation (MFN) status, cushioning the impact of the end of the Multi-Fibre Agreement quota system, which is to be phased out in 2005.   However, continued market access for the garment industry is far from being assured.  NGOs oppose any attempt to erode labour standards in order to increase international competitiveness.  Competitiveness can best be achieved by increasing skills, and by reducing bureaucracy and corruption. Informal payments to officials comprise a significant cost to companies doing business in Cambodia and add to business uncertainty. 

Current thinking by the RGC, GMAC, and unions suggests that Cambodia might be promoted as having a garment sector that prides itself on acceptable working conditions and protections for its workers. To achieve this reputation, further improvement in the enforcement of standards is needed.  A dialogue with all stakeholders in the sector, both nationally and internationally needs to be pursued further.  Policies affecting garment workers need to be discussed with the garment workers themselves, and proper consideration to their economic and social circumstances is needed.

A key component in the government’s strategy to increase international competitiveness, as outlined in the NPRS, is the creation of industrial and export processing zones.  Internationally, EPZs have demonstrated the trend towards creating investment, production and profit extracting enclaves with minimal backward linkages or re-investment into the local host economy. NGOs are concerned about a possible lowering of labour and environmental standards in these zones, a loss of fiscal revenue opportunities, and an intensification of existing economic inequalities.

Tourism provides a promising, if volatile, source of foreign currency. However, the NGO community is concerned as to whether tourism is capable of having a direct pro-poor impact. Income raised through tourism has had a tendency to flow outside the communities most affected by tourism, even when cultural and eco-tourism approaches are promoted.  Although Siem Reap is a centre for tourism, it remains one of Cambodia’s poorest provinces.

To reduce negative impacts of tourism, some of the proceeds of tourism need to be reinvested in child protection, training and standards. To achieve a more sustainable approach to tourism it is necessary to ensure a high degree of local community involvement. The agreement between Cambodia, Laos and Vietnam to increase tourism in the northeastern provinces of Cambodia has been heralded as a way of improving the economy and reducing poverty in these areas. However, the impact upon indigenous people in these areas will be potentially significant. The NGO community is concerned that, without access to education and training services, these communities will be further marginalized rather than assisted by these developments.

Recommendations

The NGO community believes that pro-poor growth will be best be achieved through consideration of the following factors.:

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[1] RGC, Poverty Reduction Strategy Progress Report, draft, December 30, 2003.

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