August 10, 2011

Short-term contracts exploit Cambodia garment workers


International apparel buyers and their suppliers are being urged to take steps to put an end to the widespread use of short-term employment contracts in the Cambodian garment industry amid concerns the practice not only threatens to erode the industry's competitiveness but also violates labour laws and could lead to widespread unrest.

The call for change comes with the publication of a new report that studied the sector's recruitment practices in the wake of nationwide wage strikes by garment workers last September.

Researchers at Yale Law School's Allard K Lowenstein International Human Rights Clinic claim short-term employment contracts not only deny workers statutory benefits, but also restrict their rights under international and Cambodian law.

And they warn Cambodia's garment industry is at risk of undoing the progress it has made in protecting workers in export-apparel manufacturing if the industry fails to take action.

"The Cambodian government has been considering amending the labour law to ease restrictions on fixed-duration contracts (FDCs)," explains James Silk, director of the Lowenstein Clinic and supervisor of the report 'Tearing Apart at the Seams: How Widespread Use of Fixed-Duration Contracts Threatens Cambodian Workers and the Cambodian Garment Industry.'

"The country's apparel industry is already facing heightened international scrutiny because of the mass firings of workers who participated in a strike last year over low wages.

"One of the main competitive advantages of the Cambodian garment industry is its reputation for progress on protecting workers' rights, so it is important to understand the human rights consequences of using FDCs and the impact that permitting their expansion could have on Cambodia's competitiveness."

Nearly half of all Cambodians working in the manufacturing sector are employed by the garment industry - which in turn accounts for more than 80% of Cambodia's total exports.

But regular, full-time workers are almost exclusively hired on short-term, temporary contracts - referred to in Cambodia as 'fixed-duration contracts' - that are repeatedly renewed. And many workers originally hired under 'undetermined-duration contracts' (UDCs) have faced pressure to convert their permanent contracts to FDCs.

As part of their research, the Yale team interviewed with more than 70 stakeholders in Cambodia, including government officials, factory management, labour union officials, local human rights organisations and garment workers.

Coupled with an analysis of both international and Cambodian law, they concluded that the the shift towards short-term contracts leads to increased worker insecurity, threatens workers' rights under domestic and international law, and hinders increased labour productivity.

They also found it limits the competitiveness of the garment industry by discouraging the development of a Khmer middle-management base, and introduces the threat of a major breakdown of industrial relations - including the potential for massive strikes.

And they say factories use FDCs to suppress freedom of association and retaliate against union leaders; deny workers benefits to which they are legally entitled, including maternity leave; coerce workers into forced overtime; and deny workers the full salary and bonuses to which Cambodian law entitles them.

Garment manufacturers, however, seem to believe that putting more workers on FDCs is key to keeping the Cambodian garment industry competitive when faced with cyclical and short-term changes in buyer demand.

They also claim workers prefer short-term contracts because they offer greater job mobility and insulate them from the risk of a factory closing and the owners leaving without paying benefits that have accrued.

For the international apparel industry, Cambodian factories have higher production costs than China and Vietnam thanks to challenges ranging from corruption and high energy costs, through to a lack of cheap, domestically produced raw materials.

But the country's strength as a sourcing destination has been helped by its reputation for upholding workers' rights more than some of its lower-cost competitors - which appeals to international buyers like Gap, Levi Strauss and Wal-Mart who look at more than just the bottom line.

And buyers have a critical role to play in efforts to protect workers' rights, from helping fund monitoring and training programmes through to garnering attention from garment manufacturers and the government when they take a strong position on a labour issue.

The researchers want international firms to take a stand by giving factories incentives to respect workers' rights, such as awarding contracts not just to the lowest-cost producers, but to the lowest-cost rights-friendly producers.

And they are being urged to write to the Cambodian government and the factories from which they source to express their disapproval at plans to relax restrictions on the use of short-term contracts.

The Cambodian garment industry is at a critical crossroads, the researchers say.

"Cambodia can either reinforce its reputation as a country committed to improving workers' rights or implement labour law reforms that will damage both workers' rights and the Cambodian garment industry's reputation, as well as jeopardise industrial peace within the garment sector."

Click here for a full copy of the report.

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