PHNOM PENH — The Garment Manufacturers Association in Cambodia has forecast a bleak outlook for the rest of 2014, at a time when the country’s minimum wage debate is heating up.
According to an informal survey of 247 factories, GMAC found that 50 percent do not have enough orders to fill production for the rest of the year. Some 26 percent of factories say they will have to close lines or partially suspend operations due to a lack of orders, while 160 factories say they have had orders cut on average by 40 percent.
“Buyers don’t have confidence in stability here — in the factories’ ability to deliver the goods — because we are under the constant threat of strikes, regardless of whether the unions, or those that threaten to strike, even have the ability or the power to deliver on their threats,” Ken Loo, GMAC secretary general, said. “It’s safe to say that across the board, orders are down 30 percent to 40 percent until the end of the year.”
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Ongoing instability has rocked Cambodia’s garment industry since December after a nationwide minimum-wage protest came to a fatal end on Jan. 3 when at least five demonstrators were killed when security forces opened fire with live ammunition.
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Debate over Cambodia’s minimum wage flared again on Monday, when eight unions threatened a strike of similar magnitude if negotiations progressed as they did last year, when unions felt their demands were not taken seriously.
Unions are calling for a rise from the current minimum wage of $100 to $177.
GMAC’s Loo said his survey is being shared with unions, the government and the Labor Advisory Committee as evidence of the response from major brands concerning the industry’s instability and to support the manufacturers’ claim that $110 was the highest minimum wage the sector could support.
“Anything above this means that places will not be able to afford it and will have to close, so the higher the minimum wage, the more difficult it will be for factories to continue operating in Cambodia,” Loo said.
According to the GMAC survey, the main buyers that have cut their orders are Wal-Mart Stores Inc., H&M, Levi Strauss & Co. and Adidas.
Contacted on Tuesday, the companies would not comment directly on their level of orders in Cambodia, but said they were working with the government to promote stability in the sector.
“Predictability of supply and its converse, disruption of production, is a concern to Levi Strauss & Co. and any brand sourcing from Cambodia,” a spokesman from Levi Strauss said via e-mail. “For Levi Strauss & Co., repression of worker and human rights in Cambodia is also a very serious concern.”
H&M media representative Anna Eriksson reaffirmed her company’s commitment to the garment industry in Cambodia, without detailing sourcing levels.
“It is in the Cambodian textile industry as well as in H&M’s interest that the industry continues to develop to an advanced and mature textile industry,” she said. “We are dependent on stable markets in which people are treated with respect and with our dedication we can contribute to positive development.”
Dave Welsh, country director for labor rights group Solidarity Center, said on Tuesday there was no doubt that buyers had dropped their orders following the January protests. He believes that this is because the perpetrators in the January shooting have not been punished, while criminal charges have been levied against union leaders.
“There is a decline, but our point is that the decline is not linked to minimum-wage discussions; the decline is linked to buyers’ increasing frustration over so many unresolved issues from the events in January,” he said.
A decision on the minimum wage from the Labor Advisory Committee is due next month.