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Industrial Zones

(i)  Introduction

In an effort to stabilize the economy and establish a foothold in international trade markets, Cambodia has opened itself to foreign investment and open competition with other developing countries. This move poses a new nationwide challenge for workers and their trade unions, particularly those in the garment industry. The emergence of a global labor market has resulted in serious underbidding of contracts between developing countries, which, while maintaining low production costs has led to downward pressure on workers’ wages and working conditions. A lack of co-operation among international trade unions and threats from developed nations to move production to cheaper markets continues to aggravate the situation. However, the Cambodian garment industry, which currently employs more than 200,000 people, is confident that the number of contracts will continue to increase, complementing the remarkable growth that has occurred over the past eight years.[1]

In 2001, the International Labor Organization (ILO), in cooperation with the Garment Manufacturer’s Association of Cambodia (GMAC), began inspections of factory working conditions. Their independent report found that the major problems in the factories include involuntary overtime work, instances of anti-union discrimination and incorrect payment of wages. 

Key Issues and General Trends

The Cambodian garment industry will likely succumb to the realities of the global labor market once the current quota system expires on December 31, 2004. Losing its preferential status on US and European markets, Cambodia will be forced to complete with countries that offer lower costs and higher productivity. Government and garment industry officials are hoping that Cambodia’s reputation for high labor standards will save the garment industry and the nation’s fragile economy from collapse. In contrast, economists worry that Cambodia’s production costs are too high and that without the quota system, factories will simply relocate to any number of countries that offer lower costs.

One particularly disconcerting aspect of some industrial zones is the outlawing of labor unions. The logic behind such policies is obvious to management; it serves to prevent workers from organizing themselves to demand increased wages and the improvement of often dismal working conditions. Instead, the management prefers to rely on self-created and often ineffective workers committees and codes of conduct. As the workforce mostly consists of uneducated young women with very limited experience with labor unions, it has been fairly easy to establish these practices in the industrial zones. This is a major concern for Cambodia’s labor movement. The government and the companies must realize that the ban on guarantees for industrial zones is no guarantee for industrial peace. The unrest in badly managed industrial zones and the unfavorable image that the zones have worldwide are evidence of this.

To address the above concern, the government is drafting an Industrial Zone Law to regulate the establishment of so-called industrial zones on Cambodian soil.

(ii)  Recommendations

 

For more information on the issues raised in this paper, please contact:

Mr. Nhek Sarin, Executive Director, STAR Kampuchea: Tel: 023 211 612;  011 725 873; star@forum.org.kh ; sarin@forum.org.kh; star-ldp@forum.org.kh