Economist suggests new wage formula SL apparel workers

An economic expert has suggested to implement a wages formula based on net export earnings per worker for Sri Lankan apparel workers allegedly receiving low wages and forced to work excessive overtime to meet unrealistic, ever- increasing targets

There was somewhat of a stagnant period in the apparel sector during 2006 and 2010, but now in 2011 and 2012 the apparel sector has shown a significant growth in terms of net export earnings per worker,” he observed.

Dr. Nishan de Mel, Director, Verite Research said that it would be prudent for trade unions to negotiate wage increases of these workers in relation to “net export earnings per worker” as that has real content in what the industry earned

He was addressing a recent forum organised by the Free Trade Zones & General Services Employees' Union (FTZ&GSEU) on “Foreign Investments & Garment Industry; What's Wrong, Where” at the National Library Services Board auditorium in Colombo.

Dr. de Mel was of the view that demanding wage increases in relation to rise of cost of living and GDP growth has counter arguments in that, the company owners could always say, they cannot respond to issues out of their ambit and they can only afford to consider demands according to what they earn as income ries that employed a million as direct employees. After the Multi Fibre Agreement (MFA) was terminated in 2004, he said factories closed down and by 2005 there were around 500 factories operating. It was in 2005 that Sri Lanka qualified for the EU GSP +. Now there are only 314 apparel factories employing 283,000 workers. But he said, the income in the apparel sector, has almost doubled.

Mr. Marcus attributed two reasons for this increase. One was that the apparel industry moved into the more lucrative fashion and designer area that has very high ‘ mark ups’ for quality products and two, the forced increase in worker output. He said a ‘ machine operator’ who did only a single job and had helpers during the early period of the trade, was made to do many jobs without helpers, with the introduction of ‘multi skills training’.

This was gradually built into a payment scheme that was then linked to targets. With a beggarly monthly wage of Rs. 7,900 including a budgetary allowance of Rs. 1,000 till last December, the compulsion for overtime, targets and incentives during the whole month led these workers to go along with targets that kept increasing. That is how they earn around Rs. 12,000, the company owners claim is a good ‘ take home pay’, said Mr. Marcus.