The Ministry of Labour and Vocational Training (MLVT) of Cambodia announced yesterday that workers from an additional 11 garment, footwear, and travel goods (GFT) factories will receive financial assistance following the suspension of their labor contracts in December of the previous year. This decision comes as a response to the decreased global demand for GFT products, which has adversely affected Cambodia’s exports in this sector.
The labor contracts were put on hold as the factories faced challenges due to the reduced international market demand for GFT items, leading to a significant slowdown in exports from Cambodia. In light of these circumstances, the MLVT stated that affected workers would receive a monthly allowance of up to $40 from the government. This support is part of a broader government policy aimed at mitigating the economic impact on employees whose jobs have been disrupted due to the industry’s downturn.
Furthermore, it is expected that factory owners will contribute an additional $30 per month to each worker whose contract has been suspended, adhering to previous agreements made to support employees during these challenging times. The government’s financial aid will be distributed in the Cambodian currency, KHR, with the amount varying based on the duration of the employment contract’s suspension.
The MLVT’s announcement did not detail the exact number of workers affected or clarify if the 11 factories had completely ceased operations. The GFT sector’s struggles have been compounded by global economic strains, including ongoing conflicts and changes in trade benefits such as the non-renewal of the Generalized System of Preferences (GSP) by the United States and adjustments to the Everything But Arms (EBA) benefits by the European Union (EU).
This recent round of financial assistance marks the 19th instance of the Cambodian government extending support to GFT sector workers since the onset of global economic challenges. The GFT industry is a significant employment provider in Cambodia, creating nearly one million jobs and accounting for a substantial portion of the nation’s GDP.
Despite the sector’s pivotal role in Cambodia’s economy, the decline in GFT exports has prompted calls for a more diversified export strategy. The aim is to reduce dependency on the GFT sector and foster growth in other industries to enhance the country’s economic resilience.
Economic experts, including Ky Sereyvath from the Royal Academy of Cambodia, have attributed the downturn in Cambodia’s GFT exports primarily to the broader global economic climate, suggesting that changes in GSP and EBA statuses have had limited impact on the sector’s performance.
Source: Khmer Times
