A survey of managers from 66 Cambodian apparel factories found the majority expecting to increase or maintain their current workforce, and only 10 percent said they anticipated additional job losses. About one-third believed business conditions would remain as dire as they were last year.
This story first appeared in the May 4, 2010 issue of WWD. Subscribe Today.
“Nearly 60 percent of factories reported they are planning to hire new or previously laid-off staff in the next 12 months, while 40 percent had no plans to hire,” said the ILO report.
The factories polled were predominantly foreign owned, mainly by Asian investors, and on average had 700 apparel workers per facility. The factories specialized in producing T-shirts, pants, jeans, sportswear, underwear and pajamas.
The optimistic outlook marks a sharp turnaround from last year, when the global recession triggered a sharp decline in demand for Cambodian apparel. Exports fell by more than 20 percent and 70 factories were shuttered, resulting in the loss of more than 70,000 jobs.
The apparel sector is a primary contributor to the Cambodian economy. In 2008, apparel exports of $2.9 billion accounted for 65 percent of the country’s export earnings, according to the report.
Despite the improved economic environment, the managers pointed to a number of other issues that are hampering recovery and could prevent further gains in the sector. Rising energy costs, low productivity, a lack of skilled labor and rising costs of materials were among issues managers and their factories face.
Based on Cambodian apparel industry data, the cost of energy tripled to 15 percent of total costs by 2009 compared with just 5 percent of total costs in 2005.