Q:What is Better Factories Cambodia?
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Better Factories Cambodia aims to improve working conditions in Cambodia’s export garment factories. This is done through combining independent monitoring with finding solutions. This is usually called remediation. Remediation starts with making suggestions to management following monitoring visits, and is supported with training, advice and information to assist factories improve their performance.
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Q:What are the main issues facing the Cambodian garment industry?
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The main issues facing the Cambodian garment industry are: - Global competition since the end of the Multi-Fibre Agreement (MFA)
- Building on the progress made in improving working conditions and enhancing its reputation for respect of labour standards
- Improving workplace relations between unions and management
- Improving quality and productivity to better deal with competition
- Enhancing the business environment, including supporting the rule of law
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Q:Why is this project only in Cambodia?
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For the ILO to undertake a project of this kind there needs to be an agreement between the ILO constitutents including employers, unions and the government, as well as adequate resources. The ILO would actively consider requests based on these conditions.
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Q:The ILO monitors working conditions in factories, but many factories sub-contract work to smaller, unregistered businesses. How do you deal with this issue?
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Better Factories Cambodia monitors factories that hold an export license. This is enforced by the Ministry of Commerce. There are discussions with the government about extending monitoring to cover sub-contractors. For this to be successful, some structural impediments need to be removed.
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Q:Shouldn’t labour standards inspections be carried out by the government?
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The more pressing issue is that the monitoring system is trusted by all parties – international buyers, unions, factory owners, managers and staff. At this point the ILO’s position as a neutral administrator and observer is invaluable in setting up a monitoring system that will pass over to a completely local administration by the year 2009. This administration will continue to be managed on a tripartite basis – by the government, employers and labour representatives.
Meanwhile, enforcement of labour standards remains the responsibility of the government. The Cambodian government fully supports Better Factories Cambodia and chairs its management committee through a senior official from the Ministry of Labour.
Buyers have said that they find the ILO’s presence in Cambodia very important because it gives them confidence that there is independent, transparent and credible monitoring happening in the country.
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Q:What happens when factories do not comply with your suggestions?
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The Better Factories Cambodia programme is not intended to guarantee complete compliance with labour standards. It focuses on continuous improvement. While problems still remain, over the last four years of the programmes genuine progress has been made.
Better Factories Cambodia is not an enforcement agency. Enforcement is the role of government. International buyers concerned about working conditions often use the ILO reports to help them monitor compliance with labour standards in their supply chains.
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Q:Are working conditions better in Cambodia than in regional competitors?
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This is difficult to answer. The World Bank survey of buyers reported a clear perception that labour standards are better in Cambodia . However, not all factories are the same. There are certainly very good factories in the region as there are bad ones in Cambodia. For the ILO, the issue is the process of improvement and engagement between employers and unions.
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Q:What is the future of the programme now that the MFA (Multi-Fibre Arrangement) has ended?
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There continues to be a high level of interest by international buyers to remain in Cambodia. The ILO, the Government of Cambodia and donors are committed to supporting the programme, as well as enhancing the capacity of employers and workers to resolve workplace issues and comply with national legislation and international standards.
Better Factories Cambodia aims to have lasting impacts. Most of the programmes staff are Cambodian nationals and are continually enhancing their skills and performance.
The project will be self-supporting by 1 January 2009. This will require an on-going commitment by the Government, employers and unions as well as buyers and consumers to ensure that Cambodia can build on its successes. See our sustainability strategy.
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Q:Will international buyers leave Cambodia for countries with lower labour standards and wages?
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In a 2004 World Bank survey, Cambodia’s key overseas buyers rate labour standards as a top priority in their decision to source from a country and consider Cambodia to have an advantage over Bangladesh, Thailand, Vietnam and China.
The survey also found that almost 80% of buyers consider auditing of labour standards to be critical after the end of quotas and have given high marks to the ILO’s monitoring.
Buyers, accounting for 45% of Cambodia’s garment trade, said they intend to increase or maintain current sourcing levels even after the MFA expires. More than 60 per cent of surveyed buyers said that factories’ compliance with labour standards was of equal or greater importance to them than price, quality and lead-time to market.
Buyers state that improved labour standards have a positive effect on accident rates, workplace productivity, product quality, worker turnover and absenteeism.
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Q:Can Cambodia continue to compete effectively in the textile sector?
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A recent Asian Development Bank report found that much depends on what steps are taken by the Cambodian government and, to a lesser extent, by the industry itself in the near future. Cambodian labour costs in the garment industry are among the lowest in the world, at 23 US cents per hour. However costs are driven up by informal and unpredictable payments within the government bureaucracy and the high costs of transport, electricity and other inputs. For example, electricity costs US 15 cents per kilowatt-hour in Cambodia, compared with the international norm of just 6 cents.
Unofficial payments added up to 7 per cent to the cost of total sales. For example, the transport of one container from factory to the customer should cost just under US$4,000, according to the official schedule of charges, including port fees, loading costs and customs charges. However the real cost is well over US$6,000 – adding more than 37 per cent to the official costs.
Labour productivity also needs to improve. This would mean a combination of developing workers’ skills, using better technology in factories, and finding solutions to health and stress problems.
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