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Better Factories Cambodia Seeks More Oversight

The watchdog body that monitors export-oriented apparel factories to ensure compliance with labor standards will begin monitoring subcontracted factories.

GENEVA — A watchdog body that monitors export-oriented apparel factories in Cambodia to ensure working conditions comply with global labor standards is gearing up to extend its oversight to subcontracted factories in 2013.

This story first appeared in the October 2, 2012 issue of WWD.  Subscribe Today.

“We hope to be able to do so next year,” said Maeve Galvin, a consultant at Better Factories Cambodia.

BFC, created in 2001 as a result of the U.S.-Cambodia Textile & Apparel Trade Agreement to create incentives to improve labor rights, is managed by the International Labor Organization and works with the government, the Garment Manufacturers Association of Cambodia, labor unions and international buyers to enhance conditions in the sector.

“BFC in 2012 began to work with our stakeholders on a plan to ease subcontracting factories into the system,” Galvin said. “However, the rapid growth of the industry has meant that these plans have been put on hold.”

Galvin indicated the project did not have the extra resources and capacity “to begin monitoring factories in the midst of the growth in export factories,” which are estimated to total more than 60.

Expanding the scope of BFC to subcontracted factories was among a list of recommendations made by a new report, “10 Years of the Better Factories Cambodia Project: A Critical Evaluation,” compiled by the Clean Clothes Campaign and the Community Legal Education Center.

The study concludes that the BFC project has “significantly aided” in ushering in better working conditions, but also notes that there are areas that need improvement. It critically outlines that the scope of BFC is limited to factories registered with the GMAC and Cambodia’s Ministry of Commerce, which is mandatory for factories that want to export, but does not cover factories that produce only for the domestic market. In 2011, there were 284 factories registered with the BFC project, but it’s estimated the number of subcontracting factories is in the hundreds.

“This is problematic because manufacturers tend to use subcontractors to escape the [BFC] monitoring,” it noted, adding that some factories have up to 12 subcontracted facilities.

Jeroen Merk, CCC international coordinator, said the current BFC system “is easy to circumvent” and noted that much of the subcontracted production — more frequent when BFC factories have many orders — ends up in exports. Conditions are “worst” in these factories, he said.

One means to determine that a BFC factory is not engaging in illegal subcontracting, Merk said, is to monitor and compare production output to the number of workers. The report also suggests that there needs to be more burden sharing in the BFC program because the bulk of the costs of compliance “are mostly borne by the manufacturers.”

“This is problematic because buyers can negatively impact working conditions through their sourcing and purchasing practices,” the report said.

In 2011, 32 brands that comprised 60 percent of Cambodia’s apparel exports participated in a BFC-hosted buyers forum. Merk said brands such as H&M, Gap Inc., Adidas and Nike know what the issues are and are more keen to have better working-condition terms and are “more proactive.”

However, the role of brands has been “rather limited” on the wage front, he said. Wages need to improve in real terms in Cambodia, Merk said, and “brands should help make this possible.”

The minimum monthly wage is $61, the study said, but also notes that real wages have declined 14 percent since 2000.