First effects of the crisis in Cambodia: the poor are getting poorer

Chom Chao (Phnom Penh, Cambodia). 10/03/2009: Workers of a garment factory who were laid off come to receive half their salaries
©John Vink/Magnum

Ka-set
http://cambodia.ka-set.info/

By Laurent Le Gouanvic
27-07-2009

Economic forecasts for 2009 in Cambodia, which were hardly optimistic, unfortunately seem to be confirmed as the months go by. As the first 2009 semester has just ended, several studies highlight that the Kingdom, which is among the poorest countries in Asia, is bearing the brunt of the economic crisis. First affected, Cambodian poor families have become poorer during the last months, much more than what neighbouring countries have experienced, according to the findings of an investigation carried out by a private society. The conclusions are even more worrying as another report, realised under the United Nations Inter-Agency Project on Human Trafficking, expresses concern over the increasing number of women, including former garment industry workers, who prostitute themselves to survive.

Less income for poor Phnom Penh residents
Three out of four poor households in Phnom Penh have seen their income decrease between June 2008 and June 2009, according to the results of a regional study by society Indochina Research published mid-July. The conclusions of the investigation, carried out in the Cambodian capital as well as Hanoi (Vietnam) and Vientiane (Laos) with 600 women aged 25 and more in households with monthly income of less than 300 dollars, show that Phnom Penh residents were hit by the crisis more harshly than their neighbours in the region.

During the same period, a very large majority of poor families in the Laotian capital saw their income increase (43% of those surveyed) or stagnate (32%), when that was the case only for respectively 10% and 16% of women interrogated in Phnom Penh. In Vientiane, only 26% of the poor households selected for this study experienced a decrease of their income between June 2008 and June 2009. In Vietnam, urban poor were more affected than in Laos, as 49% of them experienced an income decrease, but a relatively more significant proportion managed to maintain their income (32%) or increase them (13%). Phnom Penh poor therefore appear to have been those most affected.

Small entrepreneurs hit hard
The study, realised under Indochina Research’s I-Trak programme, also specifies that in Phnom Penh, poor households depending on a small independent activity or micro-enterprise were more vulnerable to the effects of the economic crisis: 69% of them saw their income decrease in June 2009 compared to the same time a year before, while wage earners seem to have resisted better as “only” 15% of those interrogated in the Cambodian capital have declared having less resources to provide for their household. However, for those, who are many, whose income has remained unchanged, it has become difficult to face increasing expenses.

Unfulfilled basic needs
Another worrying finding for Cambodia: while, in their great majority, those surveyed in Laos and Vietnam declared not experiencing difficulty to buy food staples, Cambodians are still many to claim they are not able to meet their basic food requirements.

However, there is reason for optimism, the summary of the study highlights: 37% of Phnom Penh residents interrogated foresee an increase of their income next year, while 41% hope to at least maintain them. Admittedly, in light of the extremely low levels of income (average GDP per year per inhabitant is slightly inferior to 600 dollars, according to official figures), few are those who can still envisage their means of subsistence decreasing… In Laos, those surveyed once again appeared much more optimistic than their Cambodian neighbours: 67% of them anticipated an income increase in 2010.

The poor countries more vulnerable
Whilst it is limited by the low size of the population sample selected, the study confirms the fears expressed in several reports published in the last months, starting with that of UNCTAD on “the least developed countries” which claims that poor countries are the most serious victims of the economic and financial crisis that broke out in developed countries and calls to rethink profoundly the development aid provided to the 49 least developed countries, including Cambodia.

From factories to brothels
Similarly, early July, the United Nations Inter-Agency Project on Human Trafficking provided the first conclusions of a study aimed to measure the impact of the financial crisis on human trafficking, carried out in April and May 2009 with 357 women aged 15 to 49 and working in brothels, karaoke bars and massage parlours. If it seems difficult to establish a link with certainty between the global financial crisis and the development of prostitution from those few data collected thanks to the International Labour Organization, the International Migration Organization (IOM) and the NGO World Vision, who authored the report, consider that an increasing number of women have left the industrial sector – mostly the garment industry – since the start of the crisis, due to increasingly difficult working conditions and insufficient revenues. The minimum monthly salary of a garment factory worker is currently 50 dollars, an amount that was revised shortly before the July 2008 elections and includes a so-called “living cost adjustment” six-dollar bonus.