| Low wages,
falling profits at Lankan garment factories
By Dilshani Samaraweera
Garment workers are living on 'malnourished'
wages while factories are struggling to retain orders
with prices and profits spiralling down. What is plan
B for Sri Lanka's 300,000 garment workers?
The garment industry directly employs nearly 300,000
people and indirectly supports around 800,000 people.
At this point it is also the country's biggest export
income generator and accounts for nearly half of total
export earnings coming into the country. But the latest
findings on the internal workings of the industry show
that Sri Lanka desperately needs to rethink the garment
business - and fast.
Subsistence wages
A 'living wage' index complied by the Apparel Industry
Labour Rights Movement (ALaRM) - a coalition of trade
unions and labour NGOs - shows that garment workers
are living and working on a barely subsistence income.
The income and expenditure calculations for the 'living
wage' show that the garment girls work over 8 hours
a day to earn enough to be malnourished.
The findings show that garment workers
need to earn around Rs 10,000 to Rs 12,000 per month
to live on. At the moment they earn around Rs 7,500
- with overtime and incentives.
As incomes, even with overtime and
incentives, are not enough to live on, garment workers,
mainly young girls, are cutting down on the quality
and quantity of their food.
The results of this poor food intake
are seen in another study conducted by the Medical Research
Institute (MRI) of Sri Lanka.
"We did a study 2 years ago with
the Ministry of Labour. We found that 55% of garment
girls were iron deficient and 35% were anaemic,"
said Dr Renuka Jayatissa, consultant medical nutritionist,
MRI. This is despite some factories providing at least
some meals to workers."Because of poor nutrition
they spend more on medicine. The iron deficiency also
results in low output and low productivity at work,"
said Dr Jayatissa.
Dr Jayatissa points out that even
the ALaRM's 'living wage' allocation for food - Rs 2,068
and Rs 2,113 per month - is inadequate to meet nutritional
needs of a working person. "These girls actually
spend only about this amount on food. That is why they
are iron deficient," said Dr Jayatissa.
In line with the MRI's findings, the
'living wage' calculations too, show that garment girls
spend more on medical treatment than the national average.
The findings also indicate that medical expenditure
increases with the duration of employment.
"The health and medical expenditure
among garment workers is higher than the national average.
But what is more disturbing is the correlation to duration
of work," said B. Gowthaman, Coordinator, ALaRM.
Meanwhile trade unions point to the
large gap between minimum wages in the public sector
and private sector - although both face the same cost
of living increases. Trade unions point out that an
unskilled grade 3 labourer in the government sector
gets a minimum salary of Rs 11,730. However the minimum
wage in the private sector is less than Rs 5,000.
Lowering profits
Garment factories however maintain that they cannot
afford to give workers the proposed living wage. The
Joint Apparel Association Forum (JAAF), the umbrella
industry body, says that profits of garment companies
are reducing due to post quota competition. The JAAF
says garment companies are struggling to stay in business.
"Our total exports are worth
about US$ 3 billion per year. A vast majority of the
(garment) companies are struggling to make a 4% return,
which comes to about US$ 120 million. If we increase
salaries to Rs 12,000 from Rs 7,500 that alone is a
cost increase of around US$ 160 million per year. This
is higher than the entire industry profit. So how on
earth are we going to do that?" says the JAAF spokesman
on labour issues.
What is plan B?
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Although Sri Lanka's garment
industry has survived post quota competition and
has even managed to show some growth, in the long
term industry sustainability is uncertain.
To begin with garment manufacturing
is an outsourced business. Businesses are outsourced
to cut costs. So when costs in a particular destination
go up, the business goes to a cheaper destination.
Over the years the garment and textile industry
migrated from the west, to Asia and other parts
of the world because of this reason. Therefore,
if Sri Lanka's costs continue upwards, the industry
lifespan will wind downwards. Particularly if
left in its current form as a basic cut-and-stitch
operation.
Another mismatch is seen between
the garment business and the people of Sri Lanka.
Most garment workers in Sri Lanka have ordinary
level or advanced level qualifications. This amounts
to higher levels of education than among many
other developing country workers. However, despite
their education, these young people are stuck
with largely routine jobs with very limited growth
and development chances.
As it is, garment factories
are already finding it difficult to recruit workers.
Young, village girls are no longer queuing up
to join garment factories despite their need for
jobs and money.
"Some 20,000 to 30,000
vacancies still exist in the garment sector. Whether
this is due to low wages or due to the image of
garment work being low status, needs to be examined,"
says B.Gowthaman from ALaRM.
All of these findings indicate
a need to move the garment industry to a higher-value
rung from the current low-value assembling plant
situation. However, time is of the essence because
the business is already shifting to lower cost
destinations than Sri Lanka. Budgetary support,
preferential trade agreements and promotional
campaigns can only do so much to sustain an industry
model that is showing signs of increasingly becoming
unsustainable.
Therefore, given Sri Lanka's
dependency on the garment business in terms of
both employment and income, a plan B is now overdue.
Policy makers need to come up with a plan that
reduces dependency on garments by creating other,
new types of employment. The garment industry
itself needs to shift from the current low-end
to a more sustainable position.
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