Adidas, Nike Among Brands ‘Failing’ Cambodia’s Garment Workers
Sportswear giants like Adidas, New Balance, Nike and Puma are leaving Cambodian garment workers to “languish” below the poverty line, a new report claimed Thursday.
Published by ActionAid, an international women’s rights organization, in partnership with the Center for Alliance of Labor and Human Rights, the Cambodian Alliance of Trade Unions and the Coalition of Cambodian Apparel Workers Democratic Union, “Stitched Under Strain” details what it describes as long-term wage loss, exacerbated by the pandemic, that has become the “daily reality” for workers in the Southeast Asian nation’s largest employment sector.
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“What emerges is an alarming indictment of a global fashion industry that puts profit
above the rights of garment workers in factories across Cambodia,” it said. “While most of the brands covered by this research have returned to profitability, workers’ financial
precarity is worse than ever.”
Of the 300 workers researchers interviewed, one-quarter reported a decrease in monthly take-home pay, excluding overtime, since 2020, despite a legal minimum wage increase of $10 in the three years since.
When overtime was taken into account, the majority of those surveyed said they earned less than before Covid-19 hit, with the payments themselves plummeting by more than 60 percent from 2020 to 2023.
The global downturn hasn’t helped with creating enough orders, either. Cambodia earned $5.49 billion in apparel exports in the first eight months of the year, a nearly 19 percent year-over-year decline, according to trade data.
The post-pandemic reduction in overtime hours was one of the biggest concerns garment workers raised through the research the report noted.
The sector’s 800,000 mostly female workers, who are heavily reliant on this supplemental income to make ends meet, have gone from earning, on average, an additional $36 before the pandemic hit, to an average of $12 per month in 2023.
Only 4 percent of respondents said there was enough overtime for those who wanted it, while 67 percent said that overtime wasn’t an option for them at all. Of the 27 percent who cobbled together some extra hours, nearly all—85 percent—reported working less than 10 hours of overtime a week.
As the cost of living continues to spiral upward, workers across the industry are experiencing a rapid decline in their well-being. A 2021 study by ActionAid and the Cambodian Alliance of Trade Union found that 70 percent of surveyed workers experienced hunger in the immediate wake of brands’ slashing orders en masse in 2020. In 2023, the report said, the situation is “not much better,” with nearly half of surveyed workers (49 percent) saying that they often go to work without eating enough.
Researchers also found a “shocking intensification” in household debt stemming from workers’ financial insecurity. More than 90 percent of respondents reported being in debt, and only 8 percent said that they didn’t have any loans. Some 70 percent of workers reported that their debt has increased since the pandemic began.
“Everyone has debt and keeps thinking a lot about debt,” a worker from Berry Apparel, which produces clothing for Nike, is quoted as saying. “You spend a lot of emotional effort thinking about how you can get money to pay the interest, so you don’t have the full concentration for work. You think about how you can reduce costs to pay the debt—children’s schooling, food. But if you don’t have enough food you can’t concentrate at work.”
Michelle Higelin, executive director at ActionAid Australia, said that the findings reveal “damning evidence” that brands are failing to uphold the rights of the workers who make their products in Cambodia. She urged companies manufacturing in the country to ensure that workers are paid a fair if not living wage.
“Footwear companies like Adidas and Nike mark up the retail price of shoes well beyond the manufacturing costs, while the workers making the shoes are paid extremely low wages that leave them unable to afford basic necessities like food and housing,” she said. “The unjust practices of major brands are trapping the workers who make our clothes in a cycle of poverty.”
Adidas said that it is committed to fair labor practices throughout its global supply chain and that its workplace standards require suppliers to progressively raise employee living standards through improved wage systems, benefits, welfare programs and other services.
“Workers employed with our contract suppliers are usually paid considerably higher than the local minimum wage,” a spokesperson said. “We employ a team of 50 specialists, who work daily toward more sustainable business practices in our supply chain. Through more than 1,200 factory audits last year, we reviewed and evaluated supplier conduct, work with suppliers to address issues and make improvements where necessary.”
A Puma representative said that all five of the brand’s core factories in Cambodia—two footwear, three apparel—pay their workers above the Global Living Wage Coalition’s benchmark, excluding overtime. In its annual report, Puma disclosed that those same facilities pay a gross wage, including overtime and bonuses, of 55 percent above minimum wage in 2020 and 68 percent in 2022.
Sourcing Journal also reached out to New Balance and Nike for comment.
Adidas has come under fire by activists who accuse it of failing to take responsibility for labor violations by its suppliers. They say that eight Adidas contractors in Cambodia “stole” $11.7 million from more than 30,000 workers during the April-May 2021 national lockdown, while another laid off 1,000 workers in 2020 without paying them the $3.6 million in legally owed severance. The former Ye collaborator has consistently rejected the allegations, however.
Nike also recently faced calls from a group of shareholders to pay roughly $2.2 million in owed wages for garment workers at two of its supplier factories, including Cambodia’s Violet Apparel, which unexpectedly shuttered after a Covid-induced decline in orders. As with Adidas, the Just Do It firm has denied any culpability.
As Cambodia kicks off its minimum wage talks for 2024, labor campaigners are casting doubt on whether the legal threshold can sufficiently meet workers’ needs. According to the Industry We Want’s wage dashboard, Cambodian workers face a 62 percent gap between the minimum and living wage.
“This month, Cambodian workers are campaigning for a higher minimum wage. Workers and unions need the support of international brands to ensure their demands are met,” said Khun Tharo, Program Manager, Center for Alliance of Labor and Human Rights. “We need brands to act immediately and responsibly based on their commitments and promises to pay decent living wages to their workers. No one making clothes for the world’s most popular brands should be living in working poverty.”
