Cambodian garment workers caught in high-interest rate debt trap

The world’s biggest garment and footwear brands are recovering from the impact of COVID-19, but Cambodian women workers who work in the factories that produce clothing or footwear for these brands, have seen their wages decline and are getting caught into a debt trap.

This was revealed in a survey titled, ‘Stitched Under Strain’ conducted by Action Aid Cambodia. Most of the women workers who were surveyed said they had to take high-interest loans of up to 20 percent because their wages have dropped since the pandemic began and are earning now less than in 2020.

This is despite working six days in a week and official wages have risen to US 0.

The survey found that the workers were forced to take high-interest loans and at least 90 percent of the 300 workers surveyed had at least one loan to repay, but several had multiple loans to pay off.



Even though the wages have increased, the survey found that even this was not enough to meet their basic needs, which forced these women to take loans at high-interest rates. The survey informed that the brands had prioritized profits overpaying workers a decent living wage.





The survey also recommended redressing these issues which include increasing transparency by publishing a list of supplier factories and their sub-contracting factories, resolving wage theft or severance disputes, and commitment from brands to pay a living wage.

The Southeast Asian country has an estimated 700,000 workers working in hundreds of apparel factories, with most of the population dependent on these factories.