As global brands bounce back from COVID-19, Cambodian garment workers face spiralling debt


As global brands bounce back from COVID-19, Cambodian garment workers face spiralling debt

The women making clothes and shoes for some of the world’s biggest brands have seen their wages drop and are spiralling into debt, even as fashion companies see revenues rise, according to a new report.

The report, Stitched Under Strain, surveyed more than 300 garment workers at Cambodian factories supplying products for global brands including Nike, Adidas, Puma, New Balance and Levi Strauss.

“All that is left for me now is debt and illness,” a worker from Meng Da Footwear factory, which supplies Adidas, said in the report.

Three years after COVID-19 first brought the global fashion industry to a standstill, a majority of workers surveyed reported earning less now than in 2020, with 85 per cent saying their salary was not enough to meet basic living costs.

That is despite working six-day weeks and an official rise in the minimum wage to $US200 ($310), according to the report from global women’s rights organisation Action Aid and the Cambodian Centre for Alliance of Labor and Human Rights (Central).

“While big global brands like Nike and Adidas continue to increase their profit margins, wages of the workers in Cambodia who are making these shoes have been going backwards,” Michelle Higelin, executive director at Action Aid Australia, told the ABC.

Australian consumers could feasibly drop $200 or more on a new pair of sneakers, an amount more than half of a Cambodian textile worker’s pay for a whole month.

“We’re definitely seeing with the cost of living that the price of sneakers is going up, yet at the same time, the workers who make those shoes – who are mostly women – are getting less than $1 an hour for their work. It’s simply not fair,” Ms Higelin said.

Garment worker at unnamed factory holding sign saying: "We are workers to have a decent living wage 2024".

Garment workers a calling for “a decent living wage by 2024”.(Supplied: Central)

Cambodia relies heavily on the garment industry, with an estimated 700,000 garment workers in the South-East Asian nation.

The report found the pandemic had forced many workers to take out predatory loans, with more than 90 per cent of those surveyed holding at least one loan, but many holding several, including informal loans with interest rates of more than 20 per cent.

The report also said unions provided anecdotal evidence that “a growing number of workers are being forced to provide compromising images and videos as collateral for loans, facing threats that the images would be released if debts were not paid”, but it added it was unclear how widespread that practice was.

Khun Tharo, Central’s program manager, told the ABC their research showed the current minimum wage for workers was “not enough to meet their basic needs” and that taking on debts left workers in a vulnerable position.

“They are not even able to live as a human being with dignity – this needs to be guaranteed,” he said.

Four women and a man raise their fists in the air, with some holding megaphones.

Fashion brands have bounced back since the pandemic, but union leaders say workers have been left behind.(Supplied: Clean Clothes Campaign)

In 2020, the sudden closure of Violet Apparel, which supplies Nike, saw hundreds of workers dismissed with just 24 hours’ notice, and although some workers received settlements, many said it was below what was owed.

“I am in a lot of debt. Before that [the closure of Violet Apparel], I was debt free but now it’s everywhere,” one worker was quoted in the report as saying.

“I’m the breadwinner of the family, I have to raise my younger sibling and my parents as well … I had to pawn my jewellery and house title. I am still paying the debt and don’t have the house title back yet.”

Mr Khun added Central had collected more data in recent months – not included in the report – suggesting more workers were being laid off, suspended or facing mass terminations, which he described as an alarming development given the rising cost of living in Cambodia.

He urged Australians buying from major brands to echo the calls of workers to be paid fairly.

“The consumer must be aware that the clothes that they are wearing are the clothes [made by] workers suffering from poverty wages, and locking the Cambodian garment workers into spiralling insecurity, hunger and debt,” he said.

How have brands responded?

The report said companies had prioritised profits over workers’ rights and issued a list of recommendations, including increasing transparency by publishing a list of supplier factories, including subcontractors, urgently resolving any wage theft or severance disputes, enforcing responsible purchasing practices policies and committing to paying workers a living wage.

A Cambodian woman holds a sign reading "Pay your workers".

The report urges brands to be transparent and not hide behind layers of suppliers and subcontracted factories.(Supplied: Enric Catala/Clean Clothes Campaign)

The report said there was a large gap between the Cambodian minimum wage and the Asia Floor Wage Alliance’s suggested living wage of $US701, however, the Global Living Wage Coalition lists the 2022 living wage for Cambodia as $US231 per month.

Puma said it had 32 factories in Cambodia, describing five of them as “core factories” that produce the majority of its products.

A spokesperson said at those five factories – two supplying footwear and three apparel – workers are paid $US265, above the Global Living Wage Coalition benchmark.

An Adidas spokesperson said the brand was committed to fair labour practices, fair wages and safe working conditions, adding it carries out audits and has published a supplier list since 2007.

“Our workplace standards require our suppliers to progressively raise employee living standards through improved wage systems, benefits, welfare programs and other services. Workers employed with our contract suppliers are usually paid considerably higher than the local minimum wage,” they said.

Levi Strauss said it could not comment on the report but it said it had a supplier code of conduct that required all suppliers to meet financial obligations to their workers.

“Any and all reports of failure to do so are thoroughly investigated and addressed as quickly as possible,” it said.

The report also called on the Australian government to create legislation to ensure supply chain oversight and said our trade agreements should “include redress mechanisms that enable workers to access compensation in response to cases of human rights violations”.

The ABC has also approached Nike, New Balance, and Gap, as well as the Australian Department of Foreign Affairs and Trade and the Cambodian government, for comment.

Source: ABC News

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