A publication of the Asian Development Bank No. 4     August 2009
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“The Cambodian government deserves credit for agreeing to legalize ethical labor practices in exchange for access to US and other markets”
Catherine Vaillancourt-Laslamme
Training specialist with the ILO in Cambodia
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Out of Work and Back Into Poverty: Asia's Women Hit Hard by Recession

Mass layoffs across the region are hitting disproportionately hard women in traditional labor-intensive export industries such as textiles and garments, footwear and leather products, electronics, handicraft and toys

HANDS ON A garment worker learns to operate a cutter during a training program at the Self Employed Women’s Association (SEWA)-Trade Facilitation Center in Ahmedabad, India.
Photo by AFP

Veasna Lun anxiously flips her Tack Fat Garment Company seamstress ID between her fingers as she and a half dozen coworkers sit outside their rented rooms discussing a dreaded appointment at the factory the next day. The single 24-year-old came from a poor rice-farming family to work in the burgeoning garment industry 6 years ago.

As orders dwindled with the global economic downturn, 2 months ago she and many of her coworkers were put on half pay and told to stay home. Her appointment at the factory the next day is to find out if she and her coworkers will permanently lose their jobs.

“Those who are laid off have no choice but to go home,” says Ms. Lun. “I have been sending my brothers and sisters to school, and supporting my entire family. They will lose everything if I am unemployed.”

Ms. Lun is not alone. Mass layoffs across Asia are hitting disproportionately hard women in traditional labor-intensive export industries such as textiles and garments, footwear and leather products, electronics, handicraft and toys, according to the report of the International Labour Organisation (ILO), Asia in the Global Economic Crisis: Impacts and Responses from a Gender Perspective, authored by Jessica Owens and Amelita King Dejardin, a senior technical adviser with the ILO.

Construction and car and auto parts manufacturing are also among the sectors already suffering from job losses, with tourism and financial services likewise affected. Thailand’s Permanent Secretary for Labour Somchai Chumrat reported that more than 300 factories in Thailand closed in the first 4 months of 2009 and more than 29,000 workers were laid off.

From electronics plants in the People’s Republic of China to textile factories in Indonesia, the ILO projects in its 2009 Global Employment Trends report that up to 27 million in the Asia and Pacific region could lose their jobs this year, forcing another 140 million in developing countries back into extreme poverty. “Progress in poverty reduction is unraveling, and middle classes worldwide are weakening,” says ILO Director- General Juan Somavia. “The political and security implications are daunting.”

Male workers are distributed across a wider range of economic sectors, but women workers predominate in export industries hardest hit by the recession and are the first to be laid off, bearing the brunt of the current economic crisis. The ILO in Jakarta estimates that of the 13 million unemployed in Indonesia today due to the crisis, 43% are female workers because most companies retrenching employees are in women employee– dominated export sectors, such as textiles, garments, and shoes.

ILO’s Amelita King Dejardin says that when women workers lose their jobs, their children and other dependents are affected, especially among the poor. The poorer the family, the more the women’s earnings are needed for the family’s subsistence, and children’s health and education. As women workers are concentrated in lower-paid jobs in such countries as Thailand, Philippines, and Viet Nam, they tend to save less, so small pay cuts or cost of living increases have a greater fallout on their families.

Asia’s experience during the 1997 economic crisis provides evidence of what happens to women workers during hard economic times. In Thailand, 95% of those laid off from the garment sector were women. In the manufacturing sector, it was a staggering 88%. In Republic of Korea, 86% of those who lost financial services and banking jobs were women.

A stark example of this Asia-wide trend is Cambodia’s garment industry. A mere economic speck a decade ago, the industry has grown into the country’s biggest industrial employer. It has provided decent work to hundreds of thousands of Cambodian women and elevated them out of dire poverty.

“The Cambodian government deserves credit for agreeing to legalize ethical labor practices in exchange for access to US and other markets,” says Catherine Vaillancourt- Laslamme, a training specialist with the ILO in Cambodia. The monitoring of working conditions by the ILO through the Better Factories Cambodia program attracted brand-name clothing giants, such as Adidas, Disney, Gap, H&M, and Nike, seeking to avoid worker exploitation issues in other countries.

The garment industry received another boost with Cambodia’s entry into the World Trade Organization in 2004. A United Nations Development Programme (UNDP) report noted textile factories in Cambodia brought in 12% of gross domestic product in 2007, and contributed 72% of overall product exports, mirroring the trend across Asia where export-driven growth over the past three decades has brought millions of women into the region’s workforce.

In 2007, 320 factories on the outskirts of Phnom Penh employed 350,000 workers, 85% of them women. Making up to a $100 a month with overtime and bonuses, the money garment workers sent home raised tens of thousands of poor rural families out of poverty.

Then last year, the current global economic meltdown began emptying order books. As Western shoppers cut spending, Cambodia’s garment manufacturing was the hardest-hit sector of the economy. According to the ministry of commerce, garment exports generated only $70 million in January 2009, compared with $250 million in January 2008. Production has plummeted by a third, and more than 80 factories have closed their doors, with 80,000 either losing their jobs or being temporarily laid off.

If the current slump continues unabated, the Garment Manufacturer’s Association of Cambodia predicts that in the next 2 years at least another 100,000 jobs could disappear with devastating consequences for the rural poor.

ROCK AND A HARD PLACE A worker breaks rocks for US$0.12 per basket. The stones will be used in a housing project near Lele, a village south of Kathmandu, Nepal.
Photo by AFP

ILO’s Ms. Vaillancourt-Laslamme worries that hard-won labor standards in countries like Cambodia could become casualties of the recession, as pressure mounts to reduce costs by lowering decent working conditions. A handful of Cambodian garment manufacturers that closed their doors in Phnom Penh have migrated to countries with cheaper labor and little or no protection for workers.

“It would be a shame to see the groundbreaking effort for better working conditions for thousands of Cambodian garment workers degraded for the sake of tee shirts that are a dollar cheaper,” she says. The Cambodian government and labor groups are trying to get the message to consumers overseas that buying Cambodian garments means supporting ethical labor practices.

The ILO and labor rights groups say Asian governments need to boost social protection programs for such workers vulnerable to the global economic downturn. At a meeting earlier this year, Prime Minister Hun Sen called on Cambodia’s development partners to join with the government to provide a social safety net to help laid-off workers.

Last March, $7 million was provided for vocational training of 10,000 laid-off garment workers to learn skills such as radio and television repairs, mechanics, and weaving. Another $1 million has been earmarked for microloans to help jobless garment workers to start their own businesses.

Stressing the need to take measures to support vulnerable groups in the labor market, the ILO argues in its Decent Work Agenda that huge untapped potential exists among these groups worldwide: economic growth and development could be much higher if people are given the chance of finding decent work.

In the garment district in Cambodia, Veasna Lun and her coworkers nervously returned to the factory for their dreaded appointment. They were relieved to find out that they would keep their jobs—for now.

Ms. Lun and her coworkers still face an uncertain future. Without overtime or bonuses, they have less to send home. And like millions of women workers and their families across Asia, they worry that their job will be the next casualty of the global recession.

James Hutchison has worked as a writer and photographer in Asia for more than 25 years. His work has appeared in more than 30 international publications.