Saving for self-reliance in Cambodia: Credit unions helping garment workers to organise
There is no minimum wage in Cambodia, despite the Labor Law requiring one to be set in the private sector through sub-decree. More than 10 years after the law was passed, this has not been done. The exception is the garment industry which has a minimum wage created through a special agreement between the Cambodian government, unions and the Garment Manufacturers’ Association of Cambodia (GMAC). Currently the minimum wage for garment workers is US$140 per month. However, this is a very recent improvement and one paid for in blood.
With near-poverty wages, many garment workers often turn to micro-finance for temporary relief.
Nationwide, some forty-five microfinance institutions (MFIs) now serve some 1.8 million borrowers, out of a total population of over 15 million, and predatory lending is becoming widespread. A study by the Institute of Development in 2013 identified Cambodians with as many as six separate loans, while 51% of clients reported having made a sacrifice (such as eating less or poorer quality food) on at least one occasion in order to make a loan repayment.
Garment workers are no exception. A recent study from the DC Institute suggests that at least 45% of Cambodia’s 700,000 garment workers are in debt. The median loan repayment is around 180,000 Riels (US$45) per month, which on most occasions only covers interest which can be as high as 20% per month. On top of this, ILO survey results show that Cambodian garment workers spend only $1.30 per day on food. A staggering 42% of workers suffer from anemia, 16% are underweight and 8% are severely food insecure.
With support from UNISON’s international development fund (UIDF), the Center for Alliance of Labor & Human Rights (CENTRAL) has been coordinating a savings’ group for garment workers to combat debt and provide a space for workers to discuss their grievances. Membership has now grown to 198 workers (140 women) from 36 garment factories.
Each month a membership meeting is conducted and members can save a minimum of US$2.50 per month and a maximum US$50 per month. Savings earn interest at a democratically nominated rate (currently 0.8%). Members can also borrow money at democratically nominated interest rates (currently 2.5%), providing them with access to funds to clear existing high interest loans and emergency support (during termination for union activity, work suspension, healthcare, childcare).
Each savings group meeting involves discussions and forums, providing a platform to share common workplace issues. Common topics discussed include the right to maternity leave, wages, OH&S, transport and social protection. The savings group brings together existing union members as well as unorganized workers, and this interaction has resulted in the registration of several new unions this year.
The total amount saved is now in excess of US$18,159.