Worked to Debt: Over-Indebtedness in Cambodia's Garment Sector | Land Portal

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June 2020
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Garment workers in Cambodia have been devastated by the economic impact of the COVID-19 pandemic. Years of chronically low pay in the sector have forced workers to rely on debt – most of which is provided by microfinance institutions (MFIs) and collateralised by borrowers’ land titles – to meet their basic needs. Hundreds of thousands of heavily indebted workers are now out of work, after hundreds of factories suspended their operations, putting them at risk of land loss and other human rights abuses. The garment sector has also been hit by the announcement of the partial withdrawal of the European Union’s Everything But Arms (EBA) trade preferences in February 2020. This decision came after the EU, the garment sector’s largest export destination, found “serious and systematic” violations of human rights in Cambodia. Results of this research are from a survey of 162 garment workers (158 women) between March and May 2020. Workers came from three different factories that have partially or fully suspended work. Researchers found that two-thirds of workers were paying off at least one microloan, and that these repayments took up the majority of their pre-suspension incomes. On average, the combined monthly payments for debt and food expenses exceeded workers’ salaries, resulting in the vast majority of microloan borrowers eating less food to be able to repay. 96% of respondents who held microloans said their life was either “much worse” (80%) or “slightly worse” (16%) now compared to before taking out their microloan. Just 2% reported their life was “slightly better”, and none said it was “much better”

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LICADHO is a national Cambodian human rights organization. Since its establishment in 1992, LICADHO has been at the forefront of efforts to protect civil, political, economic and social rights in Cambodia and to promote respect for them by the Cambodian government and institutions. Building on its past achievements, LICADHO continues to be an advocate for the Cambodian people and a monitor of the government through wide ranging human rights programs from its main office in Phnom Penh and 13 provincial offices.

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