VZCZCXRO3244
PP RUEHCHI RUEHDT RUEHHM RUEHJO RUEHNH RUEHPOD
DE RUEHPF #0409/01 1700736
ZNR UUUUU ZZH
P 190736Z JUN 09
FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHINGTON DC PRIORITY
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHXI/LABOR COLLECTIVE
RUEHC/DEPT OF LABOR WASHINGTON DC

UNCLAS SECTION 01 OF 02 PHNOM PENH 000409 
 
SIPDIS 
 
STATE FOR EAP/MLS, DRL/IL - DOL FOR ILAB 
 
E.O. 12958: N/A 
TAGS: ELAB ECON PGOV PHUM CB
SUBJECT: CAMBODIA QUESTIONS VALUE OF HIGH LABOR STANDARDS 
 
¶1.  SUMMARY: As the global economic crisis takes a firm hold 
in Cambodia, garment manufacturers, service providers and 
government officials have started to question the value of 
Cambodia's high labor standards.  Unions and employers are 
further at odds regarding what constitutes a fair wage during 
a difficult period for Cambodia's garment industry which has 
seen dozens of factory closures and massive layoffs.  While 
industrial relations remain contentious, there has been a 
significant reduction in strikes this year.  Union leaders 
attribute this to the new trend of suppressing freedom of 
expression in Cambodia which they claim has already had a 
negative effect on workers' rights. END SUMMARY. 
 
High Labor Standards - Why Bother? 
--------------------------------- 
 
¶2.  The current bleak state of affairs within the garment and 
tourism sectors includes diminished exports (down 35% in the 
first quarter), reduced numbers of tourists (down 2.18% in 
the first quarter), factory closures (approximately 25 net 
closures in the first quarter), and massive layoffs (as many 
as 40,000 since March alone).  The loss of a $50 million 
potential contract to Bangladesh, in which the Japanese firm 
involved cited the number of strikes as one reason for the 
decision to not source from Cambodia, has been provided as 
one example of industrial relations interfering with the 
garment sector's ability to win and keep business.  Taken 
together, these factors have led some within the government, 
along with factory owners, to question the value of 
Cambodia's high labor standards championed by the 
International Labor Organization's (ILO's) Better Factories 
initiative.  Minister of Commerce Cham Prasidh recently 
warned buyers that the Royal Government of Cambodia (RGC) 
could be forced to revisit the importance it places on labor 
standards "if the result of the support of ILO labor 
compliance means fewer purchasing orders and less business 
for Cambodia."  He went on to state that "in dire 
circumstances in which prices are falling, CSR (Corporate 
Social Responsibility) could be relegated to the back stage." 
 An ILO representative told Poloff that he is now scrambling 
to rally buyers to contact relevant government officials 
directly to reinforce the importance of upholding Cambodia's 
labor standards. 
 
Want More? Make More! 
--------------------- 
 
¶3.  Union demands for higher wages are also prompting 
negative reactions from the government and employers.  The 
Committee for Fair Wages, a coalition of seven labor 
federations representing 80% of Cambodia's garment workers 
has started a campaign to increase the minimum wage from $50 
to $93 a month.  The National Institute of Statistics 
recently issued a report which calculated $3 a day is 
required for an adequate standard of living.  Garment workers 
currently earn $1.93 per day.  A separate report released by 
the Cambodian Institute of Development Study (CIDS) found 
that garment workers require at least $90 per month in order 
to maintain a decent standard of living.  The government and 
the Garment Manufacturers Association in Cambodia (GMAC) 
dismiss both the union request and the report as being 
unrealistic due to the global economic crisis, low 
productivity, informal expenses, and high cost of utilities. 
However, the CIDS president stated that an increase in wages 
would motivate the workers to increase productivity and 
reduce strikes.  GMAC Chairman Van Sou Ieng contends that 
would be like "counting the chickens before they hatch."  He 
elaborated by stating he has no problem raising wages, as 
long as workers first produce more and unions discontinue 
strikes. 
 
Scared to Strike 
---------------- 
 
¶4.  In reality, strikes for the first five months of the year 
are down 67% compared to the same period last year.  Industry 
experts attribute the decline to a wide range of causes, from 
the current economic situation to increased numbers of "most 
representative unions," government pressure, and fear of 
repercussions.  There are currently seven high profile 
disinformation or defamation lawsuits against critics of the 
government.  Although none currently involve unions or 
workers, union leaders worry that the new trend of curtailing 
freedom of expression has already had a negative effect on 
union rights.  The president of CCAWDU, the most independent 
union in Cambodia, claims "the right to protest and freedom 
of speech have been restricted in recent months."  Other 
union leaders, including those of pro-government unions, also 
expressed concern that freedom of expression has declined, 
 
PHNOM PENH 00000409  002 OF 002 
 
 
citing intimidation due to the recent lawsuits.  However, the 
American Center for International Labor Solidarity (ACILS) 
Country Director attributes the decline in strikes to the 
global economic crisis, and not to threats of lawsuits or 
other government interference. 
 
¶5.  Unions also claim that a new draft law on peaceful 
demonstrations is further evidence of the RGC's plan to crack 
down on labor rights and freedom of expression.  The National 
Assembly is currently reviewing the draft law, which would 
include restrictions on demonstration venues, sizes and 
times.  Opposition lawmakers have criticized the draft for 
not clearly defining the phrase "public order," which could 
potentially leave the RGC open to interpret which protests 
disturb such order and arbitrarily shut them down.  Rong 
Chhun, president of the Cambodian Confederation of Unions 
(CCU) sent a letter to the National Assembly requesting the 
deletion of clause 1 and 2 of Article 14 of the draft law on 
demonstrations, which defines a peaceful protest as a 
gathering of no more than 200 people.  He also requested the 
deletion of article 28, which states that public 
demonstrations can be held at just a single venue in each 
province, which the authorities would be obliged to build 
within six months of the bill becoming law.  The RGC has 
responded by claiming that Cambodia needs venues where people 
can assemble to demonstrate peacefully, and that this would 
"protect social security and public and private property," 
but is not meant to reduce freedom of expression or assembly 
in Cambodia. 
 
Comment 
-------- 
 
¶6.  Whether due to the global economic crisis itself, or the 
government simply using it as a pretext, labor standards and 
associated freedom of expression are seemingly in jeopardy in 
Cambodia.  The fact that a respected high government official 
stated that the Better Factories initiative may need to be 
reevaluated due to declining orders has worried many in the 
labor sector who strive to promote workers' rights in 
Cambodia.  The Embassy, ILO and buyers concerned with CSR 
will continue to promote the importance of high labor 
standards.  In response to press inquiries, the Embassy 
recently expressed concern about the constriction of free 
expression in Cambodia.  There have also been high level 
discussions with the RGC on the topic.  The government's 
response over the next weeks to repeated and increased public 
criticism will be key to determining whether labor standards 
are at risk in Cambodia. 
RODLEY