Asia Times: Sri Lanka: Not a pretty picture


	November 23, 2001	atimes.com

India/Pakistan

Sri Lanka: Not a pretty picture
By Feizal Samath

MORATUWA, Sri Lanka - Nine months ago, garment factories in southern Sri Lanka were short of staff and advertised walk-in job vacancies on notice boards outside. The situation has now been reversed. Factories, buckling under one of Sri Lanka's worst economic crises, are now laying off staff while scores of young women are turning up in search of work.

At least 50 small and medium-scale factories are likely to close in the next few weeks because of lack of work and foreign orders. Some 200 out of a total of 800 factories across the island are working at 50 percent or have shut down many production lines.

Garments are by far the country's biggest export, with 54 percent of Sri Lanka's foreign revenue coming from the sector, but growth has slowed down considerably this year. The industry's main markets are the United States and Europe, where consumer demand has been hit by the global recession. In addition to a combination of problems facing the Sri Lanka, such as falling tourist arrivals, high oil prices, a soaring cost of living, lower production and adverse external trading conditions along with a continuing ethnic conflict, the country's economy is heading for zero growth this year for the first time since 1955.

"It is the worst crisis faced by the industry in the past 20 years," said Cassian Fernando, Serendib Garments Ltd's managing director and a past president of the Sri Lanka Chamber of Garment Exporters. "Some factories which have 12 lines are working with just two," noted Fernando.

Nihal Seneviratne, the chamber's general secretary and chief executive officer of Nilano Garments, which is a few kilometers away from Serendib's, agrees that the garment industry is going through difficult times. "We may be forced to resort to lunchtime picketing and demonstrations outside our factories urging the government to step in if the new regime does not provide us some relief," he said, speaking at his new high-technology factory built in June. Parliamentary polls are due on December 5. "I can't pay back my loans taken to build this factory. We are hoping the banks would help us to reschedule repayments."

The crisis in the garment industry goes back to many months before the September terror attacks in the United States, which further dampened demand and aggravated the problems of the industry. Chamber officials said the US recession was already slowing down garment orders when the September attacks occurred. Many of the US buyers were situated in the World Trade Center in New York and after the bombings have been dispersed and unable to place orders.

"They have told us to hold on for at least three months to get their act together," Fernando said. "We also had the July attacks at our airport, which has added to our headaches by way of increased war-risk premiums," Fernando said, referring to the Tamil rebel attacks on the Colombo airport.

Fernando said competitive prices offered by Sri Lanka's rivals, such as Bangladesh, Pakistan and African countries, in the United States and European Union markets are also affecting the industry. "US buyers are now prepared to pay $6.50 per garment if it fetched $10 earlier. We are forced to undertake orders at any price or face closure while thousands will lose jobs," he said.

The chamber, in addition to government support in the form of incentives to tide over the crisis, is also seeking approval from labor authorities to employ workers for half the month, or pay half-month wages without work.

Last month, a delegation of government and business people went to the United States and Canada in a bid to whip up more enthusiasm from a recession-hit West. The team, led by Manel Pandithasekera, additional director general of the Sri Lanka Export Development Board (EDB), also worked to make use of current efforts by US buyers to source their supply of garments from outside the Middle East.

Garment-industry officials said Middle East-generated orders were being given to non-Muslim countries after the September attacks, and already countries such as the Philippines are benefiting from this move. "There are reports in the market that the Philippines got a big US order for 700,000 dresses that is normally given to a Middle Eastern factory," one official said.

Lyn Fernando, past chairman of the Sri Lanka Apparel Exporters Association, said US buyers were worried that the Afghanistan crisis could affect the Middle East and delay garment orders, and hence were looking for other suppliers.

Women are facing the brunt of the crisis, as they represent the bulk of the 1 million workers in the industry. Women also form the bulk of the workforce in the tea industry and the overseas-labor markets, which together with garments are the driving forces of the Sri Lankan economy.

At the Serendib factory at Moratuwa, about 15 kilometers from Colombo, Vajira Maduwatte is hopeful that there will be better times. The factory supervisor, who joined the firm seven years ago as a helper and moved up the ladder, laments the loss of overtime work as part of reduced demand. "We can't blame the management for that. There is simply no overtime. We used to get 50 hours a month overtime some months back, but we would be lucky to get a few hours per month now," she said, adding that the reduced income was affecting many workers, who made up to Rs5,000 ($55) or more per month inclusive of the basic monthly wage of Rs3,500.

"There is little we can do except hope that we still have our jobs and that the situation would improve," Maduwatte said, adding that she was not interested in going abroad like her sister, who works in a garment factory in Dubai.

Prashanthi Kumudini, a machine operator, echoes the same views, saying the salary without overtime work is tough for her family of three children and a husband. "We need overtime for a decent wage as living costs are very high. Bus fares and food costs have risen sharply," she said.

(Inter Press Service)