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Cablegate: Searching for Cambodia?S Unemployed Garment Workers

VZCZCXRO4314
PP RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHPF #0720/01 2680920
ZNR UUUUU ZZH
P 250920Z SEP 09
FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHDC PRIORITY 1215
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHC/DEPT OF LABOR WASHINGTON DC

UNCLAS SECTION 01 OF 03 PHNOM PENH 000720

SIPDIS

STATE FOR EAP/MLS, EEB, DRL, S/GWI
DOL FOR ILAB

E.O. 12958: N/A
TAGS: ECON ETRD ELAB EAID PREL CB
SUBJECT: SEARCHING FOR CAMBODIA?S UNEMPLOYED GARMENT WORKERS

REFS: A) PHNOM PENH 580
B) PHNOM PENH 277

1. SUMMARY. The impact of the global economic crisis on Cambodia?s

garment sector has been substantial, but obtaining concrete data on

the whereabouts of the women recently laid off from the factories is

difficult. If not rehired at another factory, the majority of women

(who comprise over 95% of the garment sector workforce) choose to
take vocational training, work overseas, or enter the entertainment

and sex industries. Although the Royal Government of Cambodia (RGC)

has taken measures to help mitigate the overall effect of the
financial crisis, choices for unemployed garment workers remain slim

due to low skill sets and lack of English-language capabilities (Ref

A). END SUMMARY.

Economic Crisis Takes Its Toll
------------------------------

2. The garment sector, which employs and supports up to 12% of the

population, has been losing workers at a steady pace since the
global
economic crisis began to affect Cambodia in 2008. An estimated
90,000 workers (over 95% of garment workers are women) have faced
either job loss or a reduction in wages since September 2008, and
another 100,000 are at risk of losing their jobs over the next two
years. Recently released government figures show that exports for
July (90% of which are garments) fell 26.4% year on year, indicating

that the impacts of the economic crisis are still being felt within

Cambodia's formal economy.

3. The RGC has attempted to respond within the framework of
existing
institutions: it has reduced the required Social Security payroll
tax
from .08% of workers' salaries to .05%; it has waived fees for
passport processing to allow more Cambodians to travel abroad for
work; and the Ministry of Labor and Vocational Training (MoLVT) is
implementing a plan that aims to provide vocational training and
living stipends for 40,000 unemployed Cambodians. (NOTE: See Ref B

for additional information on the government?s response. END
NOTE.)

Go Back to What?
----------------

4. Although RGC officials including the Prime Minister have
suggested that unemployed factory workers have the option to return

to their home provinces and engage in agricultural activities, this

may not be possible. Employment in this mostly informal sector is
highly seasonal and, according to the Cambodian Center for Study and

Development in Agriculture (CEDAC), 50% of agricultural workers are

landless and make their living as laborers. Additionally, many
families sold their cultivation land during the country?s recent
real
estate boom, and they rely on remittances from family members in the

city and abroad to survive. Moreover, the average daily salary of
rice field workers in February 2009 was $2.59 compared to the
average
garment worker's daily salary of $2.85. Returning to the rice
fields
decreases the overall family income and presents an additional
burden
to those who must feed and clothe an extra person on such a small
salary.

5. According to the Cambodian Development Research Institute
(CDRI),
there is actually a surplus of labor within the agriculture sector,

allowing little room to absorb thousands of unemployed women; the
recent lack of rainfall has exacerbated the problem. Caritas-
Cambodia reports that poor farmers are experiencing decreases in

PHNOM PENH 00000720 002 OF 003


income, job losses, declining health due to malnutrition, and rising

amounts of debt as families try to borrow their way out of the
financial crisis.

Women Search for Alternatives
-----------------------------

6. In May, the MoLVT began a massive effort to retrain 40,000 of
the
nation?s unemployed with the additional benefit of $1 per day
stipends for food and $10 per month for housing. Many young women
from garment factories have taken advantage of this opportunity to
remain in urban areas. Courses offered range from sewing to
mobile-
phone ringtone sales to mushroom cultivation. Former garment sector

workers tend to be concentrated in the home decoration, hair-
dressing, sewing, and beauty classes, as their lack of education
prevents them from benefitting from more advanced and high-skill
courses. At the Cambodia-India Entrepreneurship Development Center

(CIEDC), former garment workers account for the majority of trainees

in the beauty and sewing classes.

7. However, RGC and NGO contacts have highlighted funding and
capacity issues with current retraining programs. According to
MoLVT
officials, only 15,242 unemployed persons have participated in its
vocational training program. Several sources stated that the
funding
for the first phase of the government training program has already
run out, leaving thousands of unemployed untrained. CIEDC Director

Mr. Pan Nore explained that he has to turn away approximately 10-15

former garment workers each day, as classes at the center have
already reached capacity. Job placement also remains an issue,
according to government and NGO contacts; it is difficult to
ascertain where the small number of young women who complete these
courses have and will go since the retraining program does not
include a job placement component.

From Garment Work to the "Entertainment" Industry
--------------------------------------------- ----

8. A recent study released by the UN Inter-Agency Project on Human

Trafficking found that among a sample of workers in the
entertainment
industry, including brothel, street, karaoke, and massage parlor
workers, 58% entered into sex work in the wake of the financial
crisis, and 19% of those were former garment sector workers. Such
low-skilled work can provide salaries that often exceed those
received while working in factories. Women interviewed at the Rukhe

Karaoke Bar in Phnom Penh confirm the findings of the report. While

the average income for an unskilled general worker in a factory
averages $70 per month, women interviewed in Ruhke (all of whom were

identified as prostitutes) reported earning over $100 in salary and

tips. All were supporting family members, and all were in need of
immediate cash to do so.

Women Working Abroad
--------------------

9. As stable work is harder to come by in Cambodia, many women in
the garment sector have begun searching for opportunities abroad.
According to the Association for Cambodian Recruitment Agencies
(ACRA), the number of Cambodians applying for overseas jobs has
increased 30% and hundreds of women from the garment factories have

been placed in Korea, Malaysia, and Thailand since April. Cambodia

has only recently begun sending workers abroad, but those who are
able to afford the upfront costs of up to $1,000 (costs stemming
from
three months training and language courses, insurance, and loans for

families? sustenance while their supporters undergo non-paid pre-
departure requirements), have the opportunity to make at least $180

per month as a domestic worker in Malaysia and as much as $1,500 per

month working in various fields in Korea that include domestic and

PHNOM PENH 00000720 003 OF 003


factory work.

The Road Ahead
--------------

10. While there is general understanding of the current situation
of
the unemployed garment workers among NGOs and government officials,

clear data that can provide the information necessary to target
efforts toward these women is lacking. With few statistics on
unemployed factory workers and no collective data taken by the MoLVT

on those who have participated in vocational training programs,
there
is no reliable way for stakeholders to measure the impact of these
programs. Better Factories Cambodia (BFC) in conjunction with the
United Nations Development Program (UNDP) plan to track 2,000
garment
workers this year - 1,200 who are at risk for future lay-offs and
800
who have already been let go from the factories. Such reporting
could allow the RGC, NGOs, and development organizations to focus on

these vulnerable women by providing targeted training. Social
safety
nets such as day-care and food programs for women with children,
caps
on microfinance interest rates to make them more accessible to
borrowers, and additional investment in increased living stipends to

allow more women to participate in relevant vocational training
programs, have been discussed at stakeholder forums, but lack of
funding has been cited as a major obstacle to implementation.

RODLEY

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