EU Contract Cancellations Trigger Mass Layoffs in Cambodia’s Garment Sector
On March 13, 2025, Cambodia’s garment industry experienced a wave of mass layoffs after European Union buyers canceled or failed to renew contracts, leaving tens of thousands of workers without jobs. The downturn stems from reduced EU demand for Cambodian textiles, intensified by geopolitical tensions and shifting trade policies. The Garment Manufacturers Association in Cambodia (GMAC) reported that at least 50 factories have suspended operations since January, affecting more than 80,000 employees.
The sector accounts for roughly 80 % of the country’s total exports and employs over 700,000 people, most of whom are young women from rural areas. Layoffs began in late February when several major European retailers, including H&M and Primark, announced they would not renew contracts with Cambodian suppliers.
GMAC secretary‑general Ken Loo confirmed the scale of the disruption, stating on March 10: “We have seen a 30 % drop in orders from EU buyers compared to the same period last year. This is not a temporary slowdown. It is a structural shift in demand.” The cancellations follow the EU’s partial withdrawal of trade preferences under the Everything But Arms scheme, which had granted Cambodia duty‑free access to European markets since 2001.
The EU suspended some benefits in 2020 over human rights concerns, but the full impact is now being felt as alternative sourcing options in Bangladesh and Vietnam gain traction. The layoffs have hit workers hard, particularly in Phnom Penh’s industrial suburbs and the southern province of Kampong Speu.
Many employees live paycheck to paycheck with no savings. On March 12, a group of 200 workers from the Suntex garment factory in Kandal province protested outside the factory gates, demanding unpaid wages and severance pay. The factory closed abruptly on March 8, leaving 1,500 workers jobless. Srey Mom, a 34‑year‑old seamstress who worked at Suntex for six years, said: “I have three children and no income now.
The factory did not even give us notice. We need the government to help us find new jobs or provide support.” The Ministry of Labor has not yet announced a formal response, though officials said they are monitoring the situation.
The Cambodian government has acknowledged the crisis but offered limited concrete measures. On March 11, Prime Minister Hun Manet told reporters in Phnom Penh: “We are not abandoning our garment workers. We will diversify exports and attract new investors.” He added that his administration would work with GMAC to find alternative markets, including China and Japan.
