Addressing the economic crisis in the garment sector

Executive Summary The garment industry has been the locomotive of Cambodia’s economic growth and contributed to the steady economic growth in recent years. However, the current economic crisis will have a negative impact on the garment industry as well as the overall growth in the country. There has been a considerable reduction in garment orders in Cambodia which will undoubtedly affect the outlook of the industry for some time to come. The economic shock has led to the closure of an estimated 60 to 70 factories out of a total of 300 export licensed factories, and the retrenchment of 70,000 workers in the last months. The mass layoffs represents the major chanllenge that the Cambidian garment secotr is now experiencing. As a result, there is an urgent need for the UN to take action to reduce the number of workers negatively affected by the crisis, especially the impact of the layoffs on women workers and their families, to ensure socially responsible closures, and to assess how the UN can play a meaningful role to promote the sustainable development of the industry. In order to mitigate the effect of the crises the project will be focusing the main areas for interventions: A. Tracking the effects of the crisis to laid-off workers A following up survey amongst a considerable number of workers in order to assess -on a prolonged basis- their concerns and social and labour market behavior, in order to determine trends and to facilitate analysis on how to better calibrate responses and better fit future employment creation programmes to the needs of these workers. First, A tracking study with a minimum of 2000 respondent could be organized; second, a documentation of sector level outcomes arising as a result of the crisis –including, how the industry is coping in terms of lay-offs, factory closures (and openings), industrial relations and working conditions in particular – will be carried out; and third, an analysis of the mechanisms implemented by the industry to deal with the crisis will be done with the frame of the survey. B. Confidence building on the future of the industry and targeted skills training In order to restore confidence in the industry and to improve its ability to rebound after the crisis, measures aiming to strengthen the long term prospects and comparative advantage(s) of the industry will be developed through industry wide campaigning. An example of this would be to step-up investment in the “I am Precious” Campaign (comprising workers, employers, and government), which demonstrates and promotes garment worker skills and abilities through dress making and T-shirt design competitions. This activity has good global outreach capacity through buyer involvement. As second step, a referral service for laid-off garment workers will be established to avail of set of targeted skills training courses in key areas which will contribute to the industry’s recovery (training vouchers could be provided). GMAC and GIPC training centers would be the most probable service providers in this regard.

Project symbol

CMB/09/03/UND

Admin unit

CO-Bangkok

Start date

05/06/2009

End date

31/12/2012

Total allocation

63799

Total expenditure

Status

Closed

63799

Development Partners

United Nations Development Programme

Country/Countries

Cambodia

Outcomes

More and better jobs for inclusive growth and improved youth employment prospects