Cambodia's Garment Industry Resumes Production After Strike Ends

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PHNOM PENH, Cambodia—A nationwide strike in Cambodia's garment industry petered out Monday after a violent weekend crackdown on political and labor protests, allowing most factories to resume production.

The fizzling of one of Cambodia's largest strikes in recent years brought relief for many garment manufacturers, who have complained of mounting financial losses because of missed shipments and lost orders. The strike—started Dec. 24 by tens of thousands of workers demanding higher wages—also stoked concerns over a widening fallout for this Southeast Asian economy that relies heavily on garment manufacturing as its main export earner and biggest formal-sector employer.

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Police in Phnom Penh prevented land-rights activists from filing a petition with France's embassy on Monday. Getty Images

Union officials and workers halted their protest after police on Friday opened fire on a labor demonstration, killing at least four people and injuring dozens more. Authorities also arrested 13 workers before extending the crackdown to opposition supporters, dispersing them from their main rallying point in the capital on Saturday and banning further protests indefinitely.

Opposition leaders and rights groups have condemned the violence, but labor and industry officials credited the crackdown for ending the strike.

"Most, if not all, factories reopened today [Monday], though only about 50% to 60% of workers came back," said Ken Loo, secretary-general of the Garment Manufacturers Association in Cambodia, which represents roughly 600 factories. "Many workers had gone back to their hometowns to avoid trouble, but they should be returning over the next few days," he said.

Oum Mean, secretary of state at the Ministry of Labor, estimated that roughly 80% of factories were open Monday, excluding those in the vicinity of Veng Sreng Boulevard—the site of Friday's shootings.

At Veng Sreng, located in southern Phnom Penh, the area's convivial bustle has been muted by a heavy security presence. Since Saturday, heavily armed soldiers have patrolled the two-lane thoroughfare in jeeps—mounted with light machine guns—and heavy trucks, keeping a close watch on residents and the few workers who stayed behind. "There's far less vehicle and pedestrian traffic than usual," said Cheang Vinna, a 31-year-old who works at one of the factories along Veng Sreng Boulevard. "Most workers have left in fear."

The strike started as a protest against the government's offer last month to raise the industry minimum wage 19% to $95 a month, starting in April—well short of union demands for $160 a month. Workers then scorned a sweetened offer made by officials last week—a 25% increase to $100 a month, starting in February—and defied government orders to return to work by Jan 2.

The Asia Floor Wage Alliance, a group of trade unions and labor rights activists, estimates that a living wage for Cambodian garment workers should be $283 per month.

Unionists still hoped to achieve their goal, but said they would rethink their approach after the Friday's clashes. "We don't currently have plans for more protests since the situation has worsened. We don't want to see more lives lost through violent suppression," said Ken Chheanglang, vice president of the National Independent Federation Textile Union of Cambodia. "We appeal to workers to return to work and earn their wages first, while we decide our next strategy."

Garment manufacturing is Cambodia's biggest export business, supplying apparel to retailers mainly in the U.S. and European Union. The industry earned nearly $5.1 billion in the first 11 months of 2013, up 22% from the period in 2012, according to the Commerce Ministry. Cambodia has about 800 garment and footwear factories that employ about 600,000 workers, mostly women, labor officials say.

Manufacturers favor the country for its low-wage costs, but strikes are frequent because of what union leaders say is widespread discontent with meager salaries, poor working conditions and lax enforcement of labor laws.

Industry officials say it is difficult to gauge financial impact from the latest strike, though a rough assessment—based on historical export data and the number of working days lost—suggests that garment makers may have lost hundreds of millions of dollars in output.

Many factories have temporarily shifted production out of Cambodia while others may be considering a longer-term relocation, said Mr. Loo, the industry association official.

"Besides loss of production time and costs incurred on making alternative production and shipping arrangements, there are intangible costs as well," such as reputational damage, he said.

On Monday, with the protest ban in place, police briefly detained five activists who tried to deliver a petition to French diplomats. The five women—land-rights advocates who have campaigned against the reclamation and development of a lake in Phnom Penh—were planning to ask the French Embassy for help in securing the release of other activists who were recently detained, rights groups said. It isn't clear why they sought French officials for help.

Police released the women a few hours after their arrest. A military police spokesman declined to comment on reasons for their arrest and subsequent release. French Embassy officials weren't available to comment.

Broader economic impact, however, should be limited barring any fresh flare-up in labor unrest, economists say. Chan Sophal, president of the Cambodian Economic Association, said he still expects economic growth in 2013 to come in at roughly 7%, as many had projected before the strike. "If the risks don't recur, growth could be maintained at roughly 7% this year," he said.

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