Lanka, inflation, and garment industry
Thousands of garment workers, mostly young women from rural Sri Lanka, are clamouring for better wages in a campaign that could trigger mass fallout in the industry, and a possible shift in production to other countries where costs are cheaper.
Workers like Chrishanthi 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). Unless there is a salary increase by at least LKR 2,500 ($22.6) 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).
But factory owners here say production costs are the highest in the region. “We just cannot afford to increase wages, says Ajith Dias, chairman of the Joint Apparel Association Forum (JAAF).”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 per cent of Sri Lanka’s near 20 million population are in fact the mainstay of the economy.
Employers blame inflation — now running at 18 percent — and rising cost of living on the crisis in the industry. 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.
“They want a 40 per cent 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, adding “this rate of inflation must be brought down to a bearable level.”
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 and for five days she ate only rice and pumpkin. It’s pathetic but we found lots of examples like this,” she said. — IPS