Asia-Pacific, Civil Society, Development & Aid, Economy & Trade, Gender, Headlines, Human Rights, Labour, Women & Economy

LABOUR-NEPAL: Garment Industry Unravels Amid Uncertainty

Marty Logan

KATHMANDU, Oct 6 2006 (IPS) - Business and labour are fighting to gain the upper hand during Nepal’s political transition, a process that has helped to sideline the unemployed workers and anxious factory owners of the troubled garment industry.

“It’s a little bit like in 1990 (when a people’s uprising forced the former king to accept multi-party democracy). Everyone is putting forward their demands,” says Bishnu Rimal, general secretary of GEFONT, the General Federation of Nepali Trade Unions.

“If our government could negotiate with the US government there is a possibility (of the garment industry surviving),” added Rimal, whose union represented more than half the roughly 50,000 people who laboured in the industry during its heyday. “Otherwise, no – China has captured the U.S. and EU markets and we can’t sell anything to India because they have their own producers.”

Since April’s “people’s movement” dumped King Gyanendra from his ruling chair, labour groups small and large have emerged insisting on better deals from a government preoccupied with peace talks with former Maoist rebels, who accelerated the uprising. On the other side, industry leaders have responded with shutdowns to protest what they call workers’ unreasonable demands.

Added to that mix is the Maoist-affiliated trade union, which has used its links to the powerful, still armed insurgents to muscle in on traditional unions’ territory and generally raise the temperature of industrial relations in this impoverished, mainly agrarian South Asian nation.

In the background, the garment industry continues to fade away.

That process began in 1995, when a quota system that guaranteed access to major markets like the US and EU for garments made in Nepal and other developing countries began to be phased out. On 1 Jan. 2005, the Agreement on Textiles and Clothing was eliminated. Today about a dozen of the less than 100 factories registered with the Garment Association of Nepal (GAN) are working.

During the boom years of 1999-2000, ready-made garments accounted for nearly 30 percent of Nepal’s export; today the number is about one-third of that.

What happened to the industry’s workers, the majority of them women? About three-quarters were skilled labourers, particularly those who did the sewing, says Shiv Raj Bhatt, consultant economist with South Asia Watch on Trade, Economics and Environment (SAWTEE).

“I don’t think they have much problem finding work because they have skills,” he told IPS. “But for others, like helpers, it’s very hard to find alternative jobs.”

Many of the former female workers now labour in restaurants, according to a recent survey by SAWTEE. Their male counterparts sell snacks or trinkets on the streets. “A few are doing as well as earlier but the majority are not. Some remain unemployed even two or three years after their jobs ended,” according to Bhatt.

Factory owner Kedar P Poudyal told IPS the slump has a direct impact on the neighbourhood surrounding his small business, a mix of street-level shops with houses above, in a maze of narrow, winding roads in the capital. “My simple company paid millions of rupees in wages every year. If my factory runs, the carton factory will also run, the poly-bag factory will run. But now local restaurants have closed because my workers no longer go there for tea.”

“Only my long-term staff are working now,” added Poudyal, who for 20 years has made men’s and women’s clothing for mostly U.S. buyers. “I paid off my daily wage workers about a month ago.”

The owner of Binita Fashion Industries says that orders started to fall at the start of 2005, when well-prepared manufacturers in China and Bangladesh rushed to take advantage of the end of the quota system.

“Buyers are still interested in working with me,” said Poudyal. “Even today they have orders they want me to fill. But I refuse to take them: the risk factor is so high I might not be able to fill them. There are so many disturbances, so many demands.”

Poudyal says for years he has had to negotiate with Maoists demanding “donations”. “They say ‘you haven’t given this and that to the workers’. They demand 100,000 rupees. You negotiate, you take off one zero; they accept.”

But the demands have grown more frequent and have also inspired his casual workers to side with the Maoists rather than the “liberal” in-house union, says the owner. “My company has stopped hiring…Unless and until my investment is secure from the hands of the workers I will not invest,” says Poudyal.

Union leader Rimal says owners create their own problems. “They meet the Maoists’ demands but when the local unions raise demands they are ignored. What signal does that send? That’s why the workers are ready to follow the Maoists.”

At the industry association, the response is measured. “I don’t blame only the unions; some businesses are overreacting to their demands,” says Garment Association of Nepal (GAN) General Secretary Udaya Raj Pandey.

He blames the industry’s downturn on both the end of quotas and the unrest that has clouded the country in recent years, and that continues to shake the confidence of investors. “The picture is not as bright as we expected after the people’s movement. The government hasn’t been out there selling the message that this is a new beginning. It’s busying itself with political issues,” says Pandey in an interview in his office not far from Poudyal’s factory.

“We told the government we don’t need anything but for them to talk to the U.S. government and get the bill passed (the Trade Act Bill 2005, which would give duty-free access to 14 least developed countries, including Nepal). (The US has) given access to African countries, Caribbean countries, to everyone but Nepal,” Pandey adds.

The quota would at least buy manufacturers some time, he argues. “I don’t say we will be able to do very very well but we will be able to go back to the level of 2000, exporting 200 million US dollars, within six or seven months,” says Pandey. “Two hundred million dollars is a lot for us. It will generate other things and give us some breathing space.”

SAWTEE’s Bhatt is also optimistic – if both the government and industry seriously address the challenges. “The market share we have now can be maintained, for a long time, if government and entrepreneurs perform their jobs properly.we need infrastructure, we need skilled labour. It’s not possible for a single entrepreneur to provide those things. There is a role for government.”