Inflation driving Cambodia garment workers to quit

PHNOM PENH, Cambodia: Soaring inflation and stagnant wages have forced thousands of Cambodian garment factory workers to quit and look for better-paying jobs or return to the countryside, union leaders said Wednesday.

The development raises concerns about the future of the country's main dollar-earning industry.
"Their factory wages could no longer cope with rising food prices," said Chea Mony, president of the Free Trade Union of Workers of the Kingdom of Cambodia, which had 80,000 members at the start of the year.

Since then, 27,000 have quit, he said. Many are now working in entertainment clubs such as karaoke parlors, where they can earn more than at their previous jobs, he said.

"Sometimes they collect $5 to $10 in tips per night from guests, and they work even fewer hours than when they were in the factories," Chea Mony said.

Others have returned to homes in the countryside, where living costs are lower.

In April, garment manufacturers raised wages by about US$6 to an average of US$50 a month.

But union leaders said the raise has done little to help the workers cope with the high costs of living in and around Phnom Penh, where most factories are located.

Consumer inflation in July rose to 22 percent in July, up from 18.7 percent in January, the last time the figure was released.

High food prices are adversely affecting Cambodia's poor, who spend approximately 70 percent of their total household consumption on food, according to a recent World Bank analysis.

Chhay Than, Cambodian Minister of Planing, said the July inflation rate was the highest recorded in 15 years and has been driven mainly by high price of oil.

The consumer rate remained at 22 percent for August, though that figure will be officially released only next week, said Khin Song, deputy director of the ministry's price index department.

Factories have been having difficulties trying to hire new labor to fill the empty slots in their assembly lines, said Chuon Mom Thol, president of the Cambodian Union Federation, another labor group.

The garment industry is the country's major export earner and employs about 350,000 workers, mostly women.

Kaing Monika, the external affairs manager of Garment Manufacturers Association of Cambodia, said the country's clothing exports in the first six months of this year were worth about US$1.35 billion, a 4 percent increase over the same period in 2007.

But the profit margin, calculated to have been around 2 percent, is becoming thinner or nearly nonexistent for most factories due to high production costs caused by skyrocketing oil prices and inflation, he said.

"The buyers did not pay higher prices, and the workers are demanding more wages because of the inflation that makes them really hard to cope with the current cost of living," he said.

He said the future of the industry "is getting very tough," adding that the competitive situation looks to tighten even more when U.S. measures, which have served as de facto limits on imports from trade rivals China and Vietnam, are lifted at the end of the year.