Financial Times

Better working conditions means improved performance
Ethical business practices, such as better working conditions for workers in the apparel industry, led to better business performance, a top garments industrialist said last week.

Sri Lanka’s apparel industry has responded well to pressure from leading brands for better working conditions and labour standards, Mahesh Amalean of MAS Holdings told a stakeholder forum on differentiating Sri Lankan apparel through the Global Reporting Initiative (GRI).

It was organised joint by the GRI, which promotes economic, environmental, and social performance reporting in the corporate sector, and the Joint Apparel Association Forum (JAAF), the apparel industry umbrella organisation grouping all stakeholders. It was supported by the Association of Certified Chartered Accountants whose aim is to encourage companies to be more open and accountable for the social, environmental as well as economic impact of their activities.

Amalean said his firms introduced industry best practices almost two decades ago, long before corporate social responsibility (CSR) became a buzz word.
“We started it not because of any conditions laid down by customers but because we believed it was genuinely the right thing to do,” Amalean said.
Good working conditions, which were put in place right from MAS Holdings’ first business in 1986, led to improved performance.

For instance, air-conditioning of factories because of the use of polyester material in apparel manufacture, the company found, made workers more comfortable and less fatigued. MAS Holdings also introduced Joint Consultative Committees between workers and management that gave workers a voice for their complaints.

Pressure to improve standards for workers came in response to the ‘sweatshops’ image of the apparel industry in developing countries where workers were exploited, with poor wages and working conditions.
Better industry standards were introduced in the 1990s when leading brands came under pressure from activists to do ethical sourcing.

“We already had such (ethical) manufacturing standards,” Amalean said.
Among the benefits of such improved standards was that the company had a more engaged workforce, both in the company as well as the community, and a more empowered workforce that displayed greater team spirit and sense of ownership and pride in their place of work.

“All this translated into better business performance,” he said. A. Sukumaran, Chairman of the Sri Lanka Apparel Exporters Association, told the same forum that as a country, Sri Lanka cannot compete on price alone.

“Our success depends on competitiveness,” he said, pointing out that Sri Lanka’s wages in the apparel industry were the highest except for India and China, which had fully integrated apparel industries, unlike Sri Lanka.

The end of textile quotas and increased competition from low-cost producers had led to reduced profit margins and orders below expectations while countries like China and India were gaining ground due to fully integrated apparel industries.

Prices and lead times were getting squeezed while Sri Lanka’s apparel exporters were not getting enough business and the best price.
“Countries below our standards are recording impressive growth,” Sukumaran said.

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