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Last Updated: Wednesday, 22 December, 2004, 15:46 GMT
Cambodia braces for textiles shake-up
By Guy Delauney
BBC correspondent in Phnom Penh

Textile workers Sophy and Sophoeun Paon in front of a garment factory where they used to work
Thousands of garment workers fear their jobs are under threat

These are worrying times for the garment industry in Cambodia.

The end of a global quota system - known as the Multi-Fibre Agreement - means that Cambodia will have to compete with larger and cheaper rivals, like China and Vietnam.

Hundreds of thousands of jobs are at stake, but despite the concerns of many, there is fresh hope that the Cambodian way of working could make a difference.

The garment industry provides jobs for 270,000 people in Cambodia and is the country's biggest industry by some distance.

Job losses

Van Sou Ieng, chairman of the Garment Manufacturers Association of Cambodia, admits his country cannot compete head-on with some of the bigger producers.

"The closing of some factories has raised some worries for workers - and for us. I think both parties have to open their minds, read more newspapers and understand the whole situation," he says.

"Cambodia has to import every fabric, the raw material of the garments, as well as accessories. The effect of such a handicap is that we are late in our production delivery time. The lead time we have is longer than other countries, so we are less competitive in that sense."

Over the past few months, rumours of job losses have swept through the garment industry.

In some cases they have turned out to be true. Two large factories closed at the end of October, putting around 10,000 people out of work.

Strike threat

The social cost of Cambodia's biggest industry hitting the rocks is hard to calculate. Trade union chief Chuon Mom Tuol warns the consequences could be dire.

I'm worried the factory might close. If it does, I'll be out of a job, and it doesn't look good for the rest of the garment industry
Cambodian textile worker

"After 2004, we will face a serious problem of unemployment and really serious competition between neighbouring countries," he says. "They are going to protest in the street - and sometimes, maybe, if the workers come to us to claim for a job, maybe they'll strike for their jobs. There's going to be social unrest in Cambodia."

Working conditions in the factories are generally good, and many facilities even have air conditioning.

The wages are respectable as well. Around $45 a month is more than a civil servant earns, and the industry has provided employment for a mostly-female workforce who would otherwise struggle to find jobs.

But the fear of job losses in the industry remains.

"I'm worried the factory might close," says on female worker. "If it does, I'll be out of a job, and it doesn't look good for the rest of the garment industry."

Better conditions

However, there has been a switch away from all the doom and gloom.

A survey by the World Bank suggests that the end of the quota system might not mean the end of the Cambodian garment industry. And it is all because of the decision to reject the sweatshop approach and enforce good working conditions.

"It's very clear that over the past four years, Cambodia - by which I mean the government and garment manufacturers together - have been planning a strategy which says: we can't compete at the bottom end of the market, so let's aim for the premium end of the market," says foreign investment specialist Nigel Twose, of the World Bank.

The World Bank's verdict is music to the ears of the government.

Political optimism

"It's really the effect of the risk we took five years ago when we made the decision to link the respect of labour laws to the export of our garments to the US," says Sok Siphana, Secretary of State for Commerce.

"With the end of the Multi-Fibre Agreement, a lot of people are worried because they don't know whether they can compete with China and India or not. In the case of Cambodia, the risk we took by making the labour linkage now turns out to be our competitive edge."

As the workers stitch together pairs of jeans for export, there is a curious contrast.

While there is pessimism on the shop-floor, in the corridors of power optimism reigns. This is one occasion when almost everyone would like the politicians to be proved right.

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