Trying times for garments
View(s):
Good news is a rare commodity these days. So like a breath of fresh air, news that the GSP+ concessions have been extended for another four years is good news for Sri Lanka, particularly at a time when the garment industry is facing challenging times with recession in the west reducing sales of garments amidst gloomy global conditions.Thus just as we are slowly recovering from Sri Lanka’s economic crisis, the uncertain global scenario where buying power has reduced, has begun to bite the country’s apparel exporters. There are also factory closures and some workers being laid off here.
On top of this come proposed new labour reforms where trade unions allege workers will lose overtime benefits while having longer working hours, in a proposed four-day work week.
According to industry officials, apparel exports have seen a 15-25 per cent drop in orders as a result of the global economic slowdown caused by the increase in interest rates to combat high inflation in the West, specifically in major exporting countries including the US, UK and Europe.
The European Union in a Twitter post on July 19 said: “As negotiations for our new GSP+ arrangement are still ongoing between the EU’s co-legislators, the European Commission has proposed a four-year extension to the current scheme until December 31, 2027 so that countries like Sri Lanka, don’t lose their preferential access in the interim.”
Earlier the Joint Apparel Association Forum (JAAF) sounded the alarm saying the onus was on the government to prove it has abided by the UN conventions on human and trade union rights to be able to qualify for the next round of GSP+ concessions. The current round of concessions expires by end-2023 with the new round taking off in January 2024.
JAAF Secretary General Yohan Lawrence, in a statement, said that securing GSP+ depends on Sri Lanka upholding the already ratified conventions spanning human rights, labour, environment and governance. “If Sri Lanka is to lose GSP+, the combined loss for the apparel sector is estimated at US$494 million, which is 79 per cent of the estimated trade loss,” he said.
Thus Sri Lanka has been saved from any embarrassment and any industry collapse by the latest statement from the EU on GSP+.
As I pondered over these developments, I received a call from Pedris Appo, short for Appuhamy, a retired agriculture expert who does farming. He was also searching for information on the garment sector, which he had some affinity to since there was a large garment factory in his town.
“I say…..some garment workers here have been expressing concern about their jobs. Is the garment industry facing a crisis?” he asked.
“Indeed the industry is facing a crisis. The good news is that Sri Lanka will receive GSP+ concessions, which the industry is dependent on, for a few more years until a final evaluation on the concessions is completed. The bad news is that the industry is losing orders, factories are closing and workers are getting laid off,” I said.
“This is very worrying to workers as they don’t have information about global trends and export orders,” he said. “Maybe the industry also needs to come up with a statement and set the record straight on the crisis it is facing and whether there will be job losses in coming months,” I said.
Garments are Sri Lanka’s biggest industrial export with the EU being the main entry for the country’s garment exports. Apparel and textile exports from Sri Lanka fell by 14.55 per cent to US$412.43 million in May 2023 compared to the same month in 2022 while January-May 2023 exports fell by 15.66 per cent to $2024.68 million compared to the same period last year. Exports of all products to the US, Sri Lanka’s main market for apparel exports, fell by 16.38 per cent to $1140.70 million in the first five months of 2023. Exports to Europe including the UK, all big markets for apparel, also fell sharply in January-May 2023.
The new concessions for Sri Lanka from January 2024 onwards also depend a lot on whether the country has fulfilled its obligations and commitments to the 27 Conventions related to international standards in human rights, labour rights, the environment and good governance. According to officials, some new commitments are to be added when the new round of concessions is finalised.
A few months ago Ms. Shobini Gunasekera, Director-General – Europe and North America at the Foreign Ministry, was quoted in a Sunday Times report as saying that Sri Lanka has complied with all the regulations as per EU GSP+ concessions and was confident in regaining these concessions when the new round of GSP+ concessions is announced.
Her comments came at the conclusion of the 25th Session of the EU-Sri Lanka Joint Commission dialogue in Colombo.
Ms. Gunasekera said that while the new cycle of benefits comes into effect next year, countries currently receiving GSP+ benefits like Sri Lanka have a two-year period to reapply for these concessions and will continue to receive these benefits during the next two years.
At this point, my focus on the column was distracted by the conversation of the trio under the margosa tree which ironically was on the same topic.
“Magey gamey thiyena angalum karmanthaya wahala, weda karana kattiyata rassawal nethi wela (A garment factory in my village has closed down and workers are without jobs),” said Kussi Amma Sera.
“Godak angalum karmantha thiyena Katunayake Nidahas Welanda Kalapaye goda denekge rassawal nethi wela, amathara wedath nethi wela (At the Katunayake FTZ where there are many garment factories many people have lost jobs and overtime work),” noted Serapina.
“Kalapayen pita thiyena podi angalum ayathana walath kattiyage rassawal nethi wela (Many have lost jobs in smaller garment units outside the zone),” added Mabel Rasthiyadu.
The worst hit in the garment industry are small and medium scale factories.
As I sipped my second mug of tea on Thursday morning, my thoughts were on the need for the industry, helped by the government, to focus on how Sri Lanka would meet these challenges particularly with regard to job losses and overtime work.
Hitad.lk has you covered with quality used or brand new cars for sale that are budget friendly yet reliable! Now is the time to sell your old ride for something more attractive to today's modern automotive market demands. Browse through our selection of affordable options now on Hitad.lk before deciding on what will work best for you!