Tie apparel sector wages to net export earnings: economist


By Lal Gunsekekera

There was somewhat of a stagnant period in the apparel sector between 2006 and 2010, but in 2011 and 2012 the apparel sector has achieved significant growth in terms of net export earnings per worker; however, wage increments have not kept pace with export earnings, observed Dr. Nishan De Mel, Director, Verite Research.

Addressing a forum organised by the Free Trade zones & General Services Employees’ Union (FTZ & GSEU) on "Foreign Investments & Garment Industry; What’s Wrong, Where" at the National Library Services Board auditorium, last week, Dr. De Mel said exports and wage trends in the apparel sector should be looked at closely by the Ministry of Labour.

"Wage increments have not kept pace with the rising cost of living, GDP growth nor export earnings," Dr. De Mel pointed out.

The annual wage increments effect by the Wages Board during the period 2004 to 2007, amounted to between Rs. 25 to Rs. 35, which Dr. De Mel termed "useless". After 2008 he said there was a sudden jump showing annual increases between a Rs. 150 and Rs. 200, again termed "meaningless" in comparison to other economic factors. "They have not been timely and have been out of reality was the conclusion on Wages Board contributions," Dr. De Mel said.

Dr. De Mel was of the opinion that asking for wage increases in relation to the cost of living and GDP growth were pointless because employers could always argue that these factors where beyond their control.

"It would be prudent for trade unions to negotiate wage increases in relation to "net export earnings per workers, as that has real content in what the industry earned. As for the apparel sector, the workers thus have a claim to negotiate for increased wages, with the apparel sector doing better in the last two years than they did previously," Dr. De Mel said.

Speaking on what he termed, "ground reality", the Joint Secretary of the FTZ & GSEU, Anton Marcus said, it was important to question, how the apparel sector increased their incomes, while factories closed down and the number of workers fell.

Marcus said in year 2000, there were 835 factories that employed 1 million as direct employees. After the Multi Fibre Agreement (MFA) was terminated in year 2004, he conceded that factories closed down and by 2005 there were around 500 factories operating. It was in 2005 that SL qualified for the EU GSP Plus. Today, there are only 314 apparel factories employing 283,000 workers. But export earnings of the apparel sector, have almost doubled.

Marcus gave two reasons for this increase.

One was that the SL apparel industry moved into the more lucrative fashion and designer area creating niche markets for its products. The second factor was the forced increase in worker output.

He said a machine operator who did only a single job and had helpers during the early period of the trade, was made to do many jobs without helpers, with the introduction of multi-skills training. This was gradually built into a payment scheme that was then linked to targets.

"With a beggarly monthly wage of Rs. 7,900, including a budgetary allowance of rupees 1,000 till last December, the compulsion for overtime, targets and incentives during the whole month led these workers to go along with targets that kept increasing. That is how they earn around Rs. 12,000, which company owners claim to be a good take home pay," Marcus said.

"Also, from the side of the government, the laws were amended to help worker exploitation," charged Marcus.

The law during the early years of the industry did not allow women to work more than a hundred hours overtime each year. "This was amended to allow 60 hours of over time per month and also made over time, mandatory. Sri Lanka is the only country where over time is mandatory. This is forced labour."

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