Sri Lanka factory strikes to slow Cambodian garment industry

07 Jun , 2012 – Sri Lanka
Yarns and Fibers Exchange

A sharp increase in garment factory strikes this year has raised eyebrows among industry insiders, who say the disputes could lead to a decrease in year-on-year export growth.

The Arbitration Council, which hears work-related disputes such as factory strikes, saw claims nearly double during the first five months of the year compared with 2011, data from the council shows.

The strikes would slow the Kingdom’s garment manufacturing industry, Ken Loo, secretary-general of the Garment Manufacturers Association of Cambodia, said yesterday.

Strikes at the SL Garment Processing factory, one of the biggest garment processing facilities in Asia, had had a particularly large effect on the industry, Loo said.

“Of course, any strike is definitely affecting the industry. But we understand that we were close to an election, so that will cause an increase in strikes.

“I can’t say why this is, but I think it will become normal after the election,” he said.

“When [SL] has a problem, it impacts on about 50 factories here — no products for export.”

Because of the strikes, the industry, which exported about US$3.3 billion in garments last year, a 10 per cent annual increase, would not experience growth in 2012, Loo said.

The disputes even put the country’s low wage-cost advantage on the line as customers look to other potential markets.

“Now the buyers are waiting to see what will happen next here. We have to wait and see. If the situation does not improve, some factories will be moved to [Myanmar],” Loo said.

The Arbitration Council had been inundated with claims this year, Y Samphy, a manager for the council’s training and communications department, said yesterday.

Disputes had centred on wage compensation increases, some of which fell outside Cambodian regulation, he said.

“Up to now, we have had so many lawsuits compared to other years. But we haven’t gotten stuck in a deadlock, and we have been 71 per cent successful with the claims,” Y Samphy said.

The government has a rosier forecast for garment exports. Kong Putheara, a spokesman for the Ministry of Commerce, said there was no worry over the current volume of strikes.

“I don’t think it impacts on our exports this year, because it is just a kind of mini-strike, not sizeable and time-consuming like in other countries,” he said.

“It will take us a short time to resolve. If there is an impact, it will be small. We see exports increasing.”

According to Ministry of Commerce data, total garment and textile exports rose by 17.52 per cent year-on-year in the first quarter of this year.

Source: The Phnom Penh Post