Evidence of workers in distress: Declining income, rising living costs, and spiralling debt post-covid


Evidence of workers in distress: Declining income, rising living costs, and spiralling debt post-covid

06 September 2023

As the Cambodian economy has been recovering from the Covid-19 crisis, its effects on the livelihoods of Cambodian garment workers continue to persist. Several recent surveys conducted among workers indicate that the vast majority have incurred large sums of debt during the Covid-19 lockdowns, with many unable to repay their loans. Moreover, the findings suggest that the effective income of many workers has decreased, while basic living expenses have increased due to inflation. This paper compares the key findings of surveys conducted by CNV, AFWA, and the independent Cambodian trade unions CCAWDU and CATU in 2022 and 2023. Each of these studies highlights different aspects of the increasing immiseration of Cambodian garment workers. The objective of this paper is to summarize and synthesise these findings in order to provide a concise overview that asserts the need for significant wage increases in the Cambodian garment industry ahead of the 2023 national minimum wage negotiations.

Conclusion & Recommendations

The findings of the surveys discussed in this report reveal the worrying trend of increased immiseration among Cambodian garment workers, whose incomes are declining, whose purchasing power has decreased, and who are burdened by large amounts of debt. While the survey samples might not be statistically representative of the Cambodian garment industry as a whole, and the longitudinal comparisons over the years were not conducted with the same samples, these surveys nevertheless report similar findings, thus indicating the same development. As they all focussed on different aspects of the issue, their results can thus be used to interpolate the more general trend.

The first trend that these reports show is that effective take-home wages in the industry are declining. The CNV survey shows that there is very little variation in basic wages across the industry, reporting that the nearly all workers earn no more than the 200$ minimum wage as the base wage. This is confirmed by the independent union survey, which reports that 75.5% of workers earns the 200$ minimum wage as a basic wage, up from 51% before Covid-19, suggesting that base wages are in fact falling even though the statutory minimum wage has increased. Furthermore, additional income from overtime work and other benefits such as piece rate bonus and attendance bonus, which account for a large part of effective income, has also decreased. The independent union survey reports that average monthly overtime pay has fallen by 22$ (from 34$ to 11$) per month since 2020. Similarly, the 2023 CNV survey reports a median income of 257$, which is 14$ lower than the 271$ that was reported in 2022. The AFWA survey reports a similar level of monthly income at an average of 254$ per person and 378$ per household. Due to the purposeful complexity of the wage breakdown into base wage plus various benefits, allowances, and bonuses, Cambodian garment workers have experienced an insidious wage decrease, despite increases in the sector’s minimum wage.

The second trend that these surveys show is that the basic living expenses of Cambodian garment workers are increasing and that they are structurally higher than actual income levels. The CNV and AFWA surveys report very similar levels of monthly expenses at 425$ and 424$ respectively. This is well above the average monthly household income that AFWA reports at 378$. Moreover, this is a huge increase from the median expenditure of 345$ per month reported by CNV in 2022, which suggests that price levels for basic necessities have increased at a much higher rate than the official inflation rate of 5.3%. As such, it is no wonder that CNV reports that 40% of workers have a second job (on top of a 48-hour work week plus overtime) to make ends meet. Moreover, the surveys shows that garment workers are structurally cutting back on food expenses and are unable to save money for emergencies.

The third trend that these surveys demonstrate is that the vast majority of Cambodian garment workers are stuck in a vicious cycle of debt. The CNV survey reports that 77% of workers are in debt with a median debt of 5000$. The independent union survey even reports that 91% are in debt, with 54% unable to make repayments, and 34% even having multiple loans. It, furthermore, reports that 70% of workers have suffered increased debt since Covid-19, when they were forced to borrow money to survive.

These surveys thus show that, in general, the income of Cambodian garment workers has declined, while living expenses and debts have increased. Despite marginal increases in the national minimum wage over the last few years, Cambodian garment workers are faced with continual impoverishment. As such it becomes clear that Cambodian garment workers need significantly improved wages to cover basic living expenses and repay their debts. Moreover, increases in the minimum wage have to outweigh loss of additional income from overtime work, bonuses, and benefits to ensure that effective take-home wages are actually increased. The CNV report suggests a necessary minimum wage of ranging from 300$ to 500$ to meet the basic needs of workers, while AFWA suggests a living wage of 701$ for Cambodia. In any case, a substantial increase of the minimum wage is required to move towards a living wage in the Cambodian garment industry.

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