PROJECT ON IMPROVING INDUSTRIAL RELATIONS IN CAMBODIA S GARMENT INDUSTRY TECHNICAL PROGRESS REPORT

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1 PROJECT ON IMPROVING INDUSTRIAL RELATIONS IN CAMBODIA S GARMENT INDUSTRY TECHNICAL PROGRESS REPORT I. General Background information Reporting period: 12 March - 11 June 2015 Project Title: Geographical Coverage: Funding: Improving industrial relations in Cambodia s garment industry Cambodia $491,037 (SIDA); $348,790 (H&M) Starting Date: January 2014 Duration: Contact Person: 3 years Mr. John Ritchotte Specialist on Labour Administration and Labour Relations, ILO Regional Office for Asia and the Pacific Bangkok, Thailand Tel: ritchotte@ilo.org

2 II. Project Strategy and Objectives The project aims to improve industrial relations in the garment industry through a mixture of policy advice and capacity building at three levels: at the enterprise level, at the national level, and at the industry level. At enterprise level, the project collaborates with an international garment brand (Hennes & Mauritz, H&M) to seek commitments to implement in selected enterprises a Memorandum of Understanding on Improving Industrial Relations in the Garment within those enterprises, and to eliminate so-called unfair labour practices, and promote good labour practices, including collective bargaining and gender quality. At industry level, the project works with the Garment Manufacturers of Cambodia (GMAC) and major union con/federations to raise awareness of the MOU and of relevant aspects of the labour law, as well as training to managers and unions to improve communication and negotiation skills. At national level, the project works with the Ministry of Labour and Vocational Training to improve conciliation skills, support legal and regulatory reform, clarify rules and procedures concerning industrial relations, and continue to build a database on union registration and Most Representative Status certifications, and collective bargaining agreements. The Ministry will benefit from improved confidence of our conciliators, more accurate and transparent record keeping, and improved application of laws and regulations. The two broad objectives of the Project are: 1. To promote sound industrial relations through genuine collective bargaining, and to strengthen the regulatory and policy framework governing industrial relations and collective bargaining. 2. At three different levels: enterprise, industry and national, the Project will use a combination of policy advice and capacity building at all three levels, so that training is oriented toward moving stakeholders to implement more sound and appropriate policy approaches. III. Overall Progress The main activities undertaken by the Project during the reporting period are the following: 1. Enterprise Level Activities Enterprise Level MOU/ULP Agreement As indicated in the Project s progress report for first quarter 2015, five out of the 7 participating factories had signed both enterprise level MOU and ULP Agreement. During this reported

3 period, one more factory had also signed both MOU and ULP Agreement. Please see the detailed information on the factories names and their signing date in the table below. No. Name of Participating Factories Detailed Records of the Signing of the Enterprise Level MOU/ULP Agreement Enterprise Level MOU ULP Agreement Signing Date Remarks 1 Factory 1 MOU ULP Agreement 28/08/ Factory 2 MOU ULP Agreement 08/09/ Factory 3 MOU ULP Agreement 12/09/ Factory 4 MOU ULP Agreement 18/09/ Factory 5 MOU ULP Agreement 20/10/ Factory 6 MOU ULP Agreement 11/05/ Factory 7 Drop out TOTAL NUMBER OF FACTORIES SIGNING ENTERPRISE LEVEL MOU: TOTAL NUMBER OF FACTORIES SIGNING ULP AGREEMENTS: 6 FACTORIES 6 FACTORIES Enterprise Level Key Performance Indicators Ten (10) Key Performance Indicators (KPIs) were established to help the project to measure and verify the intended results to be achieved from a range of the planned interventions including training and capacity building programme. The 10 KPIs are divided into 2 categories namely the 3- Month Reported KPIs and the 6-Month Reported KPIs. During this reported period, only the 3- Month Reported KPIs, i.e. Indicators 3, 5, 7, 9 & 10 were updated. As for the 6-Month Reported KPIs i.e. Indicators 1, 2, 4 & 6 will be updated in the next reported period in September Below are the summary of the updated 3-Month Reported KPIs as of 11 June No. 3-MONTH-KPIs (Indicators, Baseline, Target) Accumulative Result as of March 15 Actual Achievement as of June 15 Expected Result Accumulative at the End of the Project Remarks 3 Indicator 3: (%) of strikes that will follow legal procedures Baseline: 8 (0%) 1 (100%) 2 (50%) >90%

4 5 Target: >90% Indicator 5: Participating factories experience a reduction in worker turnover and unauthorised absenteeism Baseline: Averaged rate 2014 Average Average Expected Result Average Worker Turnover per month:3.28% 6.14% N/A Unauthorised Absenteeism per 2.00% N/A Reduced by 50% day:2.61% Target: > 50% reduction - - Based on the request made by H&M, the Project will continue to keep reporting on this indicator. Indicator 7: Increased number of factories with well-functioning/improved grievance procedures Baseline: 0 factories One factory Target: 7 factories 1 Factories 6 Factories 7 Factories was dropped out of the programme Indicator 9: Increased number of union members trained in IR related matters (disaggregated by sex) Baseline: 59 (F:28, M:31) Target: Increased number of union members taking part in training delivered by ILO local consultants/if Metall/ACF 791 (500, M;291) N/A Increased number of union members taking part in training delivered by ILO local consultants/if Metall/ACF Indicator 10: Increased number of management staff trained in IR related matters (disaggregated by sex) Baseline: 131(F:58, M:73) Target: Increased number of management staff taking part in training delivered by ILO local consultants/if Metall/ACF 530 (F:249, M:281) N/A Increased number of management staff taking part in training delivered by ILO local consultants/if Metall/ACF Activities Enterprise Level Training IR Mapping of New Batch of Factories During the reporting period, the Project and H&M identified a new batch of 6 more factories to participate in the Project s training and capacity building programme. On 29 April, 2015, the Project organized the orientation meeting for a total of 59 participants (24 management representatives, 26 enterprise union/worker representatives, 4 representatives of union federations, 3 supplier representatives, 1 H&M representative and 1 representative from IF Metall/IndustriALL. Following the orientation meeting, the Project had carried out the IR mapping exercises in the 6 participating factories, which took place from 11 to 29 May 2015.

5 As a result of IR mapping exercises, the key findings and challenges identified in the new batch of factories were mirrored those found in the first batch of 7 factories. Below is a summary of the main challenges identified, ranging from operational to administrative to HR/IR to legal related issues. Operational and Administrative Issues Piece rate fixing system was commonly found as a main source of conflict/dispute; The unions complained of poor working conditions such as hot and stuffy at the factory floor and poor quality drinking water; Annual and sick leave arrangements remain a common issue in most factories; Lack of understanding on the part of unions in their demand for firing of management staff/personnel The existing complaint/grievance handling system seemed to be not working and used effectively in most of the factories. HR and Industrial Relations Issues The management complained of unreasonable demands of unions; Alleged discrimination against union activists for demanding improved benefits and defending the interest of their members. Strong competition and inter-union fighting to gain membership support; Alleged unfair labour practice committed by both unions and management in trying to influence over/interference in one another affairs; High level of mistrust and disrespect between unions and management (personal dislike and stereotyping); Alleged acts of mistreatment by management vs acts of insubordination by union/worker representatives; Terms and conditions of existing agreements were more or less equal to the law and regulations; Lack of capacity, willingness and good faith of parties in negotiations (personal/or group interest over the common interest). Legal and Political Issues Limited knowledge of law and regulations among supervisors and team leaders, unions and shop stewards; Excessive use of FDC ranging from 3 months to 6 months; Illegal strikes by unions, especially when it was linked to industry-wide or national strike. The Project will prepare the detailed IR mapping reports to be used as the basis for the capacity building and training interventions as well as for the future monitoring purposes. Progress Review Meeting with the Previous Batch of the Participating Factories During the reporting period, the Project also conducted the follow-up visits to the first batch of 6 factories to review the progress following the completion of the capacity building and training programme in January These visits took place from 21 to 28 April As a result, it was found that the overall labour-management relations and the level of cooperation and

6 communication in those factories had been improved from moderately to considerably. Both management and union/workers representatives were reported to have been able to apply the knowledge and skills acquired from the training to facilitate and resolve the workplace issues. Five factories had already adopted and improved their own grievance procedures based the ILO s introduced standard grievance procedure that was developed specifically for Cambodian enterprises. The Project will continue to monitor the progresses in the first batch of factories against the established baselines/indicators as per the detailed KPIs reported in the table above. 3. Industry Level Activities MOU Review Meeting and Renewal of Industry-Wide MOU As indicated in the previous quarterly report as of 11 March 2015, the signatory parties to the Industry-Wide MOU, which had already lapsed since 2 January 2015, were still not able to reach agreement to have it renewed. However, in the joint meeting held on 29 April 2015, the union parties had agreed to the latest proposed texts on the desired better enforcement mechanism for non-compliance, which were drafted by the ILO and ACF based on close consultations/and meetings with the two parties. The representatives from GMAC also had agreed in principle on the latest draft but said they need to consult with the newly elected board members of GMAC. ACF would continue to facilitate the agreement from GMAC, and hopefully to set a date for signing the next-renewal of MOU in the near future. 4. National Level Activities Labour Court Law Update Since the Ministry informed the ILO of its intention to move forward with the proposed establishment of the Labour Court early this year, the Ministry had been in regular communication and discussions with the ILO with a view to obtaining necessary assistance needed in the process of developing this important piece of legislation. To that end, the ILO has provided both technical and financial assistance to the Ministry in bringing an expert from the Philippines to share experience. In addition, on the request of the Ministry, the ILO is considering to sponsor a study tour for members of the Ministry s TWG to pay a visit to a number of selected countries with an effective and workable labour court system from which Cambodia can adopt and develop its own labour court system. Costs of the study tour will not be covered under the SIDA/H&M project. Training and Capacity Building of MOLVT s Conciliators The Project will provide training workshops on Conciliation Skills and Techniques for new and less experienced conciliators in all 24 provinces across the country. At the time of writing this report, one of such Training Workshops with a 2-day duration, had already been provided for the 8 Provincial Departments of Labour and Vocational Training. This place from 8 to 9 June 2015 in Sihanoukville, conducted jointly by Mr. Benedicto Ernesto Bitonio, ILO s international consultant from the Philippines, Mr. Veyara, NPC and the 2 senior and experienced conciliators from the Ministry for a total of 32 new and less experienced conciliators from Sihanoukville,

7 Koh Kong, Kampot, Kep, Kampong Speu, Kandal, Kampong Chhnaing and Takeo provinces. Two more training workshops had already been scheduled to take place in Kampong Cham and Siem Reap in the last week of 22 June for the rest of 16 provinces. Tripartite Consultation on IR Policy Development and Review of Existing Regulations and Procedures As indicated in the Project s progress report for the first quarter 2015, the ILO had provided technical assistance to the Prakas on Essential Service. Following the meeting between the ILO s specialists and the Ministry s Technical Working Group in February 2015, the Prakas on Essential Service, at the time of writing this report, had already been drafted. However, due to the Ministry s busy work schedules and priorities given to other more important areas such as attendance of ILO labour conference, finalization of the TU law and the upcoming MW negotiations, it is very unlikely that this Prakas will be brought for discussions and consultation any time soon. However, the Project will continue to follow-up with the Ministry s TWG and to update on the progress in the next reported period. IV. Workplan Attached to this report is the updated 2015 Workplan.

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