Jobs at risk as Philippines’ garment exports slump

PHILIPPINE garment exports to major buyer countries fell by 39% during the coronavirus pandemic, putting hundreds of thousands of local jobs at risk, the International Labour Organization (ILO) said.

The Philippines is one of the countries that saw the largest percentage of decreases in garment exports to major buyers, along with China, India, and Sri Lanka, the ILO said in a research brief titled “The supply chain ripple effect: How COVID-19 is affecting garment workers and factories in Asia and the Pacific.”

The 39% decline is based on garment imports to the United States, European Union, and Japan in the first half of 2020, compared with the same period last year.

“While the 39% decline appears large, this is a decline from quite low levels: in 2019, garments accounted for just above 2% of Philippines’ total goods exports,” ILO said in an e-mail on Thursday.

The organization said the export decline puts its estimated 629,000 workers in the local sector at risk.

Philippine garment exporters expect to cut over 20,000 jobs, reducing a fifth of around 112,000 employed by companies under the Confederation of Wearables Exporters of the Philippines, Nikkei Asia reported.

According to ILO, major buying countries’ imports from garment exporters in Asia plunged by 70% in the first half as consumer demand fell, governments imposed lockdown measures, and raw material imports were disrupted.

Compared with its counterparts in East and South Asia, the garment sector in Southeast Asia and the Pacific is the most vulnerable to input supply chain disruptions, the ILO report said.

The disruption impacts employment in the sector, with order cancellations and suspended factory operations resulting in widespread layoffs, delayed wages, and salary cuts.

ILO reported that half of the jobs in the garment supply chain in September depend on demand from consumers in markets with strict lockdowns and declining retail sales.

“The typical garment worker in the region lost out on at least two to four weeks of work and saw only three in five of her coworkers called back to the factory when it reopened. Declines in earnings and delays in wage payments were also common among garment workers still employed in the second quarter of 2020,” ILO Regional Office for Asia and the Pacific Labour Economist Christian Viegelahn said in a press release.

ILO said that the health and safety of the workforce must be prioritized to minimize the spread of the virus.

It added the labor force must have freedom of association, noting that trade union membership remains low in the Asia-Pacific region. ILO said it had asked the Philippine government to comment on freedom of association and collective bargaining in the country.

Total garment exports last year was valued at $906 million.

Textile exports were valued at $ 197 million, footwear exports were at $131 million, and travel goods and handbags exports were at $ 747 million, the Philippine Statistics Authority said. Total 2019 merchandise exports were valued at $70 billion.

During the lockdown, local garment exporters shifted production to manufacture personal protective equipment (PPE). In August, firms asked the government to prioritize their products over imports.

Given the pandemic, ILO expects that the global garment industry will be restructured in the coming years, as the sector reshapes its supply chain and technology shifts production and the role of the workforce.

“It remains to be seen as to whether the post-pandemic global garment industry will undergo a fundamental restructuring to forge a new — and possibly more sustainable and resilient path — or whether it will revert back to a largely ‘ business as usual’ scenario,” ILO said.

“Whichever trajectory the industry now takes, workers and enterprises will be on the frontline of its impact.”