Gender impact of trade liberalisation
Cambodia blazes a new path to economic growth and job creation
Costs and benefits of policy experiment in Cambodia
Authors:
S. Polaski
Publisher:
Carnegie Endowment for International Peace , 2004
Using an international policy experiment that has been under way in Cambodia for the last six years, this paper demonstrates how trade agreements can create jobs and improve working conditions, pay, and labour rights.
The author argues that some of the benefits from the quota bonus and monitoring experiment in Cambodia include:
- in 2002, the value of the quota bonus was $56.4 million
- about 13,000 jobs were created by the increased exports that year, and workers earned total wages of $9.5 million in those jobs
- quota dependent jobs and earnings increased further in subsequent years, as the quota bonus was raised to 12 percent in 2003 and 14 percent in 2004
- the monitoring system also contributed to the growth of nonquota apparel exports
- increased earnings by apparel firms and workers strengthen the private sector economy and also translate to increased tax revenue for the government
- workers are now more likely to be paid the wages to which they are entitled under law, to receive appropriate overtime pay and bonuses, to work in safer and healthier workplaces that pose less risk to their well-being, and to enjoy freedom of association, with the attendant possibility of increasing wages and benefits through their collective bargaining strength.
The author argues that the cost of the programme has been surprisingly modest. Spread over three years, with an average of 200,000 workers in the sector, the annual cost per worker was $2.33, and the average annual cost per factory was $2,333. It is however noted that the distribution of costs of the Cambodia programme was less than optimal in one respect since international buyers, who gained substantial economic benefit from the project, did not contribute directly to the costs of the project.
The author argues that while the Cambodian policy experiment could not be recreated in exactly the same configuration elsewhere, many elements of the project are separable and replicable. The most important components identified by the author are:positive incentives, goal setting, ILO monitoring and transparency.
