PHNOM PENH: Hundreds of garment factories in Cambodia and elsewhere in Asia are facing serious financial problems due to the economic effects of the Covid-19 pandemic.
As demand for clothes decreases significantly with many stores in Western countries closed due to the pandemic, clothing brands have either cancelled their orders or stopped placing new ones over the past several weeks.
In Cambodia alone up to 130 factories have asked the country's Labour Ministry for permission to suspend their operations entirely or partly.
According to a DW news report, the garment industry is the biggest employer in the nation with about 750,000 workers. Around 100,000 Cambodian workers have recently lost their jobs, either permanently or temporarily and this number is likely to increase.
Centre for Alliance of Labour and Human Rights programme coordinator Khun Tharo said there were serious questions over the long term financial viability of some factories.
"We know some factories are owned by massive multinational companies who will probably be able to survive, but when we start looking at some of the smaller factories and at subcontractor factories, which don't have the financial resources of these bigger companies, it paints a very concerning picture of the near future of the industry."
The Garment Manufacturers Association of Cambodia, which represents hundreds of employers, has also said that some factories may not survive the crisis, largely because the margins on which these companies operate are small.
The factories are pushed into a difficult position by some of the world's biggest clothing brands. At least 14 brands have cancelled their orders and either refuse to pay for them or demand a discount, according to the Worker Rights Consortium, an organisation that monitors factories worldwide.
Following fierce criticism, some of these brands recently announced that they are working to find a solution for the factories and their workers.
The mass cancelations of orders hit not only Cambodian factories, but also those elsewhere in Asia.
In Bangladesh, over one million people could lose their job, in Myanmar at least 70,000 jobs are at stake, according to Human Rights Watch.
Vietnam Textile & Apparel Association expects exports from the country to shrink by 15 per cent.
In Cambodia, the crisis poses a huge challenge for the government as social security is scarce in the impoverished nation and the resources to bail out factories are limited.
The authorities and the factories have agreed that workers who are suspended will receive US$70 per month, which is less than 40 per cent of the country's minimum wage.
Finding new jobs will also be a tough challenge for the over 100,000 Cambodian garment factory workers who are now left without work.
Much of the country's economy has been affected by the pandemic, with many businesses in the travel and entertainment industry closed as well.
"The answer for Cambodians who can't find work in Cambodia has always been to look for work overseas, but with international borders closed and much of the world facing the prospect of an economic depression, this is not an option that will realistically be open to these workers," Tharo told DW.