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LABOUR-SRI LANKA: Inflation Wears Garment Industry Thin

Feizal Samath

COLOMBO, Nov 7 2007 (IPS) - Thousands of garment workers, mostly young women from rural Sri Lanka, are clamouring for better wages in a campaign that could trigger a mass fallout in the industry, and a possible shift in production to other countries where costs are cheaper.

Workers like Chrishanthi (one name), a 23-year-old employed in a garment factory at the Katunayake Free Trade Zone near Colombo, say living costs are rising sharply and they cannot make both ends meet. “A coconut costs 30 Lankan rupees (25 US cents) and a loaf of bread is 35 rupees (30 cents). This month the grocery bill was LKR 3,888 (35.2 dollars). Unless there is a salary increase by at least LKR 2,500 (22.6 dollars) per month, we will have to resign and go home,” she said.

In contrast, the current minimum basic salary is only LKR 6,000 (54.3 dollars.

But factory owners here say production costs are the highest in the region. “We already have the most expensive machine operators in the whole of Asia,” says Ajith Dias, chairman of the Joint Apparel Association Forum (JAAF), the garment industry representative body, adding; “We just cannot afford to increase wages.”

Some Sri Lankan garment manufacturers have production units in the Middle East, Africa, India, Vietnam and Cambodia, initially begun to make use of quotas in those countries. But due to the pressure of rising costs and inflation which has raised the cost of living, some companies are looking at shifting production to cheaper locations. Economists say this flight is happening in most sectors, and recently local paint manufacturers joined the bandwagon, saying rising costs – for a plethora of reasons – could force them to produce elsewhere and export to Sri Lanka.

The festering civil war on the island has been no help either.

Yet unlike other sectors, garments are Sri Lanka’s biggest export now with foreign exchange earnings topping any other export. The industry employs more than 300,000 workers, mostly women, while thousands of others are dependant on this sector. Women, who account for 51 percent of Sri Lanka’s near 20 million population, are in fact the mainstay of the economy, churning out garments, working on tea plantations (the biggest commodity export) and employed in several foreign countries as domestic workers.

Last month ‘ALaRM’, a coalition of non-government organisations and trade unions in the garment sector, launched a campaign asking the authorities and garment factories for an immediate salary increase of LKR 2,500 dollars) for garment workers.

The October to end-November campaign will see thousands of garment workers involved in a variety of events, from lamp lightings to demonstrations and awareness rallies, to put pressure on companies and the government to increase their wages.

“The main objectives of the campaign are to demand a salary increment and to ensure the payment of the minimum wage of LKR 5,000 (45 dollars) and the budgetary relief allowance of LKR 1,000 (nine dollars) to be made to each and every employee in the sector,” AlaRM said in a statement.

ALaRM is also demanding a minimum ‘living wage’ of LKR 12,504 (113.3 dollars) per month per worker for an 8-hour work day inside free trade zones and a ‘living wage’ of LKR 10,183 (92.3 dollars) for those outside trade zones. Living costs are higher for workers in trade zones because they are not living at home or nearby.

Niduka, from the southern town of Galle who works at Katunayake, said while her basic salary is LKR 7,200 (65.2 dollars), she works overtime and night shifts to earn twice that amount each month.

To earn this, she has enslaved herself to the factory and works like a machine. “We have no time at all to have contact with the outside world. Even if it is possible, we don’t feel like doing so because we are too tired. We need not exert ourselves so much if the basic salary is good,” Niduka said.

Employers blame inflation – now running at 18 percent – and rising cost of living on the crisis in the industry. “The rate of inflation needs to be brought down to at least 10 – 12 percent minimum, over the next six months. It needs to be brought down to a single digit, but immediately, this minimum level needs to be met,” JAFF’s Dias said.

Exchange rate stability is also a serious problem. Sri Lanka’s rupee is depreciating at around five percent a year against the US dollar and much faster than any other country in Asia, pushing up costs.

The strain is already showing on the sector. Industry officials say in the past 18 months some 100 small and medium factories have closed down. It is estimated that where 800 factories were operating at one time, the figure now stands at 350 to 400 factories.

Due to rising costs of living, which cut into any disposable income and anything to take home for those living far away, the industry has between 15,000 to 30,000 unfilled vacancies.

The industry is so desperate it gives incentives to workers to rope in new recruits. “Money is given when we go home on leave to bring new workers. If a good salary is paid such crises would not arise. If our labour is given a value and the dignity it deserves, everybody will work happily,” says Nishanthi, another worker.

The industry says salary increases at this point of time are not possible as garment factories are not able to increase profits at the current rate of inflation.

“They want a 40 percent increase on the current minimum basic salary. How can we do that? Our retail prices are the same as five years ago, or lower. Our margins are wafer thin. The costs of all other inputs are also going up. So how can we accommodate this type of salary increase and continue to stay in business?” asks Dias, a director at Brandix, one of the largest industry groups.

“Even if salaries were increased, it will add to inflation. So in a few months time they will want another salary increase because the salaries will not be enough again,” he said.

JAAF says the only solution is to control the rate of inflation and the cost of living. “This rate of inflation must be brought down to a bearable level,” said Dias.

Padmini Weerasuriya, coordinator of the Women’s Centre, a women’s rights organisation, says when workers do not earn enough to cover costs, they cut down on food, leading to poor nutrition. Poor nutrition, in turn, results in lower productivity.

“There is one girl who cooks herself one meal for the day… and for five days she ate only rice and wattakka (pumpkin). It’s pathetic but we found lots of examples like this (in a survey we did on a ‘living wage’),” she said.

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