Cambodia: Response to "Where Sweatshops Are a Dream" New York Times Op-Ed

Response to "Where Sweatshops Are a Dream" New York Times Op-Ed

Source: Better Work
— filed under: Article

In his New York Times Op-Ed column published on 15 January 2009, titled “Where Sweatshops Are a Dream”, Mr. Kristof makes a number of points regarding what he sees as an adverse effect of labour standards compliance on the economic development of low-income countries that we feel require some clarification and comment.

We agree with Mr. Kristof’s assessment that increasing formalized private sector jobs in developing countries, such as those in apparel factories, are a welcome alternative to perilous, poverty-level work, such as scavenging. This is a crucial element in reducing global poverty that aligns with the missions of the International Finance Corporation (IFC), a member of the World Bank Group, and the International Labour Organization (ILO), to reduce poverty through promoting sustainable private sector development globally and to promote decent work. IFC and ILO have recently joined forces through the innovative Better Work Programme, inspired by the Better Factories Cambodia (BFC) programme, to promote these mutually enforcing goals.

Kristoff suggests that to be profitable, factories in low-income countries must be sweatshops. Productive labour is key to attracting investment and sustaining competitiveness. That hinges on jobs that are safe, protect worker rights, and pay minimum wages. A recent study by the Organization for Economic Cooperation and Development (OECD) found that countries that lower labour standards with the intent of providing a more competitive environment do not attract more foreign direct investment.

In reference to the claim that higher wages has sent the apparel industry “to operate more capital-intensive factories in better-off nations like Malaysia,” trade data has shown quite the contrary. Middle-income countries have been rapidly losing apparel production to lower-income countries, like Cambodia. The U.S. Department of Commerce reported a nearly 6% decline of textile and apparel imports from Malaysia in 2007 and a further decline of nearly 3% in 2008. With an industry more than three times the size, Cambodia’s imports to the US continued to grow in recent years, up 13.3% in 2007. Even as the global financial crisis began to hit the industry worldwide, Cambodia’s 2008 exports to the US remained essentially the same.

The growth of the Cambodian industry over the last seven years has coincided with the high road strategy that Kristoff refers to, incidentally born of a creative bilateral trade agreement with the United States which offered increased market access as an incentive for demonstrating improved working conditions. The industry continued to thrive after the trade agreement expired while others, like that of Madagascar died out. Furthermore, while all garment manufacturing countries are suffering from the current economic downturn, there is no reason to suggest that Cambodia’s industry is suffering disproportionately. In fact, a survey of international buyers at the end of the trade agreement found that compliance with minimum standards was a key reason for them to remain in the country.

Ensuring good labour practices has become a prerequisite for doing business in the global apparel market. It is not a luxury sought by a small niche. International buyers, including the major retail outlets, expect compliance with labour standards and put considerable effort into auditing their supply chains on these issues. Using leverage created by this demand for increased labour standards, the Better Work programme helps local industries improve compliance and competitiveness.

Referring to the child in Mr. Kristof’s article, let us not confuse a sweatshop with a factory. It is not a sweatshop that Neuo Chanthouh dreams to be in, but a factory where one could work in a safe environment and earn a decent living. The ILO and IFC, through Better Work, aim to make this dream possible by promoting both labour standards and competitiveness in global supply chains (www.betterwork.org), and ultimately improving the lives of millions of workers in the developing world.