With a total combined value of $7.3 billion, footwear and garments remained the most important export items for Cambodia last year, although the growth rate declined to 7.2 percent. According to the most recent bulletin published by the International Labor Organization (ILO), this followed increases of 10.7 percent in 2014 and 14.5 percent in 2015.

Altogether, footwear and garments accounted for 78 percent of the country's total merchandise exports. Garments exports continue to dwarf footwear, but footwear is rising as a share of the total. In 2016, footwear exports amounted to $763 million, and they were up sharply from $660 million in 2015, when they grew by 12.3 percent from $471 million in 2014.

The European Union remains the main destination, followed by the U.S. Combined exports of footwear and clothing to the two locations amounted to 65 percent of the total export value in 2016, down from 72 percent in 2015. An increasing share of the exports is going to markets outside the U.S. and EU, notably to Japan and Canada.

Yet, even as the country's exports again rose, the number of exporting factories fell, as did the number of workers, prompting concerns from the ILO that labor and minimum wage regulations are being undercut by subcontracting production to non-exporting work sites. Altogether, the number of footwear and garment factories in operation declined by 73 in 2016. The number of workers in the industry fell by 2.9 percent as compared to 2015.

The discrepancy between strengthening exports and weakening employment is attributed to improvements in productivity, statistical measurement problems and increased subcontracting to avoid paying the minimum wage. The minimum wage has risen every year between 2013 and 2017. The average monthly income of Cambodia's footwear and garment workers, including overtime pay, increased from $145 in 2014 to $175 in 2015 and to $195 in 2016. Adjusted for inflation, real average monthly wages were 8.0 percent higher in 2016 than in 2015.

The ILO bulletin says the wage increases have contributed to improving living conditions for hundreds of thousands of low-paid workers. However, they have also sparked calls to ensure that the new wage policy remains sustainable. An increase in the number of factories that are not legally registered for export could indicate subcontracting factories are being used to avoid labor and minimum wage laws.