The garment and footwear industry is one of the main pillars of Cambodia’s economic growth, accounting for about 80 percent of the nation’s exports. Over the last 10 years, we’ve seen the growth rate of the country decelerate, going from double-digit figures to single-digit due to an increase in regional competition, low productivity and the rising cost of labour. The government recently approved a new minimum wage for the sector, set to come into effect in January next year, which will increase the minimum salary of workers from $153 to $170.
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To discuss these and other issues, Khmer Times’ May Kunmakara sat down with John Cha, an executive committee member of the Garment Manufacturers Association of Cambodia (GMAC). Mr Cha is also the head of the organising committee of the recently held “National Career and Productivity Fair”, which sought to bring to the fore the challenges for the industry in the years to come.
KT: When it comes to garments, how do you define productivity?
Mr Cha: Productivity is about working smarter, not harder. It’s about doing new things or improving the way existing things are done to create value and results. There’s always future work to do to raise value. Productive organisations focus on increasing performance by changing the way people work to be more effective and achieve greater results.
KT: GMAC organised a productivity fair on October 27. What did this event mean for the industry?
Mr Cha: The fair was also a forum to hold discussions on the topic of productivity improvement. Experts from Japan, South Korea, India, Malaysia and Cambodia shared their experiences in productivity development strategies and how to implement them. Experts also lectured on Kaizen initiatives and techniques, which is a Japanese term that loosely translates to “continuous improvement”.
KT: What has your organisation been doing to improve productivity?
Mr Cha: GMAC, together with the government and other stakeholders, is working towards improving not just labour productivity but also total factor productivity, which refers to the portion of output not explained by the amount of inputs used in production. We need to create a work environment conducive to the implementation of productivity improvement initiatives at industry level as well as at factory level.
GMAC, for example, is investing in capacity development for its member factories. Our Cambodia Garment Training Institute (CGTI) provides a full range of skill development courses tailored to the needs of our factories. I understand that governmental agencies in Cambodia are also doing their part with different strategies.
KT: Starting in January 2018, the minimum wage for the sector will increase by $17. What is GMAC’s view on the different raises the minimum wage has had over the years? How will the new minimum salary affect the industry?
Mr Cha: Wages will increase over the years. The challenge is to improve productivity levels to match this. Judging from feedback within the garment and footwear sectors, the level of productivity is still behind China and Vietnam. We, together with all other stakeholders, need to work hard on this.
KT: According to the latest figures from the Ministry of Commerce, export growth for garments and footwear products is decelerating. What do you think is causing this?
Mr Cha: That’s not exactly accurate. In fact, over the last few years, the growth rate of total exports has enjoyed a steady growth. However, of late, export growth for footwear and travel goods has grown much faster.
KT: Recently, the Ethical Trading Initiative (ETI) said there was a lot of room for progress in the garment sector and many opportunities for the government and buyer companies to work together towards a better future for the industry. What’s your view on this?
Mr Cha: There could be some misunderstanding in this regard. Cambodia is in fact at the forefront of upholding good labour practices in the area of ethics, particularly for the garment and footwear industries. For example, the country has rectified all core labour standards. In fact, most of these are actually incorporated into the Labour Law. Our program, which is being audited on labour and occupational health and safety practices by Better Factories Cambodia (BFC), has proven to be exemplary.
Our ‘tripartism’ approach in solving labour related disputes and our minimum wage negotiation process are definitely praiseworthy. Our efforts in eliminating child labour are another success story. Overall, we were not given credit where due. Of course, we can always improve further.
KT: With the elections coming up next year, many predict a slow year when it comes to business. What do you think the effect will be on the garment industry?
Mr Cha: For any country in the world, general elections are always a tough time. As business people, we hope for a peaceful and stable electoral process.