A new study says that benefits of the EU’s GSP+ trade scheme, despite the increase in exports, have not trickled down to thousands of Sri Lankan garment workers.
A report by the Friedrich Ebert Stiftung and the Centre for Policy Alternatives, titled ‘GSP+ and Sri Lanka: Economic, Labour and Human Rights Issues’ was released this week.
According to the report the current GSP+ scheme (2006-2008) and the previous GSP preferences have helped export diversification and export growth in Sri Lanka.
During the two trade preference schemes, total exports to the EU from Sri Lanka went from around US$ 1.3 billion in 2002 to US$ 2.8 billion in 2007. Apparel exports to the EU more than doubled from US$ 697 million in 2002 to US$ 1.4 billion in 2007.
The trade schemes also helped expand Sri Lanka’s export basket. While previously exports were dominated by garments, by now a handful of other items are showing significant export returns. By end 2007, apparel accounted for only half (50%) of total value of exports to the EU. A few fast growing items, such as electronic products, boiler machinery, frozen fish and bulk tea, accounted for the balance half.
But the report also notes weaknesses in transfer of benefits to workers.
Worker welfare
The biggest beneficiary of the GSP scheme is still the apparel sector that employs around 250,000 workers. But, despite the large numbers of workers, it is raw materials, and not labour that is the biggest cost of garment factories. Raw materials account for 69% of total cost of garment production. Labour costs are only 15% of total cost of production. Utility bills, like electricity is around 2.3% of cost of production. In extra-large factories, labour and utility costs are on average lower than in small, medium and large factories.
The report also notes that worker welfare facilities in garment factories are generally good. A majority of garment factories, in addition to paying basic salaries, pay overtime, provide meals, transport, attendance allowances, bonuses, medical facilities, accommodation and uniforms, free of charge.
Sanitary facilities in factories were also not seen as a problem and most workers did not complain about boarding facilities. The downside is the wages.
Exports racing but wages crawling
Despite other benefits, the basic salaries of different categories of workers in apparel factories were in general lower than the minimum wages set by the Wages Board. For instance, the lowest minimum wage in 2006 was Rs 2,645 but the average lowest wage in the surveyed garment factories was Rs 895.
Wage increases also do not reflect export gains. In 2002-2004 the value of apparel exports increased by 41% but the minimum wages increased by 15%. In 2005-2007, during the GSP+ regime, the value of exports increased by 43% but lowest minimum wages increased by 38%. In general, most garments workers take home more than the basic pay. But this is mainly by working ‘overtime’. Overtime work is also not always by choice. Most workers (54%), mainly from small factories said they work overtime to earn more money. But 35%, mostly from large factories, said it was ‘compulsory.’
Poor quality of life
Because of the low salaries and increasing cost of living, workers are also cutting down on food and health. As much as 34% of garment workers, mostly women, said they reduced the number of meals per day. Only 9% ate meat, only 17% ate eggs, 22% ate fish, 38% ate green leaves and 56% drank milk daily.
Women workers that do overtime work at night had the greatest prevalence of anaemia.
Therefore, the report notes that ‘compulsory’ overtime work may have caused health problems for women workers.
These findings, says the report, indicate that the GSP+ has not increased welfare of middle and lower level workers that account for 90% of the garment industry and that the benefits of the GSP+ is not trickling down, despite trade gains. |
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