Lesotho clothing industry - is there a future?

Lesotho: Government to Turn Its Back On Textile Industry

Kristin Palitza

28 October 2011

ANALYSIS

Maseru — Lesotho's textile sector - the country's largest employer - is regarded by many as the only way out of the poverty trap in a tiny kingdom where more than half of the population lives on less than 1.25 dollars a day. But what many do not know is that the government and the World Bank have unofficially turned their backs on the sector and will soon cut important subsidies.

Makhoase Lethibelane, 30, works 10 long hours each day as a label printer at the Shinning Century Limited textile factory in Lesotho's capital Maseru. Her work is repetitive, draining and badly paid. At the end of each month, Lethibelane takes home a meagre salary of 122 dollars.

Her income not only has to support herself and her eight-year-old daughter, but also her unemployed parents. Still, Lethibelane says she feels "lucky to have a job, since many others have lost theirs."

Lesotho is one of Africa's largest textile manufacturers, with the majority of its exports destined for the United States. The country boasts some 40 textile and apparel plants. But since the global economic crisis caused textile exports to dwindle, many of this country's 60,000 textile workers lost their jobs.

At Shinning Century, half of the factory's machines stand idle. Managing director Jennifer Chen says she had to lay off two-thirds of her staff over the past couple of years. She only employs 500 to 600 workers at the moment.

"We lost many orders due to the financial crisis," explains Chen. Some of her main customers, well- known U.S. brands GAP and Banana Republic, moved their business to China or Vietnam when the economic meltdown hit in order to save money on lower salaries in Asia, she says.

For the past few years, Lesotho had been a favourite textile-manufacturing destination due to the African Growth and Opportunities Act (AGOA), a tariff-preference programme designed by the U.S. government in 2004 to attract business to Africa.

The impact was immediate: numerous Asian investors took advantage of AGOA benefits and set up their factories in Lesotho. The number of textile jobs tripled in a country where nearly half the population is unemployed and one in four is HIV-positive.

"AGOA secures us business because it offers duty-free supply without quota limitations," says Chen, who hails from Taiwan. In addition, textile manufacturers have been receiving heavy subsidies from Lesotho's government to keep the country attractive compared to Asian countries, where minimum salaries and worker's rights are seldom observed.

Even though who benefits most from AGOA remains questionable - almost all of Lesotho's clothing factories are owned by Asian immigrants who reap the main profits while Basotho workers scrape by on survival wages - both factory owners and the Basotho people have firmly placed their hopes on the revival of the local textile industry, eager to emulate Mauritius' success in creating a competitive, high- end export market for textiles.

Poverty levels in this small Southern African constitutional monarchy have reached dramatic levels after the economic crisis caused a 60 percent decline of Lesotho's share of Southern African Customs Union revenue and a drop in global diamond prices. Alternating floods and droughts have ruined subsistence agriculture, leaving tens of thousands food insecure.

According to the World Bank, Lesotho's Gini coefficient - which measures inequality and ranges from 0, or perfect equality, to 1, or perfect inequality - is at 0.63 among the highest in the world. It has by far surpassed the threshold of 0.4 at which serious inequality could lead to social unrest.

With AGOA poised to expire in 2015, and Lesotho's preferential status with the U.S. thereby under threat, textile manufacturers as well as textile unions have been trying to come up with alternatives to rescue an industry on which the livelihoods of 40,000 workers and their families depend. "We have to find ways to develop a regional supply chain in the Southern African Development Community (SADC)," reckons Chen.

Union representatives demand diversification and expansion of the industry to stay competitive. "We need to start manufacturing production materials locally, like fabric, zips, hangers, buttons," says United Textile Employees general-secretary Bahlakoana Lebakae. "At the moment all our raw materials come from the East."

But unbeknown to unions and manufacturers, Lesotho's government has made different plans.

"The textile sector lacks profitability. It's no longer competitive internationally. Government has given up on it and clearly indicated to us it can't subsidise the textile (industry) any longer," World Bank Lesotho senior operations officer Macmillan Anyanwu told IPS.

After consultation with the World Bank, Lesotho's government decided to ditch the textile sector, to eventually cut the subsidies and instead invest in agriculture, horticulture, water management and tourism. "We need to diversify away from textiles into other areas," hinted Prime Minister Pakalitha Mosisili in February.

Lesotho is one of Africa's largest textile manufacturers.

With the help of the World Bank, the government has been piloting new sector development since 2009.

"We are trying to find markets for (agricultural) products and water supply in and outside the (SADC) region. We also focus on increasing the capacity of small to medium-sized businesses and improving border services to boost economic growth," says Anyanwu, explaining some of the steps government has taken with the support of the World Bank.

By 2013, when the pilot phase comes to an end, government will officially adjust its economic policy to invest in the most promising sectors. What will become of the thousands of textile workers and their families remains unclear.

Copyright © 2011 Inter Press Service. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com).

More pressure for SA clothing sector in Newcastle -murder

South Africa

The death of a clothing factory owner in Newcastle has shocked the local apparel community. Many of the owners live at their factories in not such luxury environments. In the meantime the factories  that were closed in protest against the combined raids by various government officials have attentively opened.

A handful of fashion designers will not revitalise the textile sector

Comments from The ReDress Consultancy

A fashion show is going to assist in sustaining the jobs of thousands and multi-million rand textile companies in South Africa claims the article below. 

First of all,  once again, we have the misuse and misunderstanding of the words textile and apparel. They are two distinct sectors within the wider industry. Even the “fashion experts” confuse the industry.

It is great that a designer can supply work to co-operative and help these small businesses. But that is my point. The 30 odd designers who showcased at the AFI fashion event do not require or use hundreds or thousands of meters of fabric which is constructed into hundreds or thousands of apparel units.

The general manager of AFI says that South Africa does not have a “developed based” to contribute to the GDP of the country. How many fashion weeks, fashion councils and workshops have we had over the past years and we still have not even “developed a base?” The general manager then goes on to say something extremely concerning and contradicts the entire theme of the article.

He basically is pleading for local designers to use local suppliers and  fabrics. This should be a prerequisite for any designer participating in any South African fashion week. I have heard of stories where prominent designers outsource their production to Asia bring back the finished garments, add a few trims  and add their label with a Made in SA label.

One just needs to visit YDE stores and you will note that most of the designers use imported textiles. There is great potential for fashion designers to feed into the local textile and apparel value-chain. However, the onus to ensure this happens is the responsibility of the fashion event holders.

South Africa fashion stitch in time for troubled textile

(Reuters) - South Africa's slowly dying textile industry could receive a shot in the arm from a burgeoning fashion market in Africa's largest economy that is looking for home-grown fabric and stitching for its internationally known designers.

The 8th Africa Fashion week in Johannesburg this week brought together the glamour and chaos of countless fashion shows and the hopes of thousands of jobless textile workers living in poverty.

The textile industry for decades had been a mainstay of Africa's biggest economy until about 20 years ago when cheaper imports from Asia began saturating the market, with factories closing down.

"There have been about 160,000 jobs lost in the industry since 1996, the height of employment in the industry. However, the rate of job losses appears to be slowing down," said South African Textile Workers Union (SACTWU) researcher Simon Eppel.

The number of workers brought back to work from an African fashion success is still small but workers are hoping that as African designers gain in global stature, more jobs will return.

Thula Sindi, an established South African designer showing his line at fashion week, uses co-operatives of skilled seamstresses in the factory areas of Johannesburg to produce many pieces in his line.

"The good thing about co-ops is that you are outsourcing to smaller factories in the city. We work according to demand. It's one way to create and save jobs because the advantage is being able to deliver clothes on time," Sindi said.

To encourage more of these tie-ups, a trade expo was launched concurrently with the fashion week to bring designers, retailers and manufacturers together.

"In the rest of the world, high-end designers with their own businesses contribute hugely to the GDP. In South Africa we don't have a developed base yet for these designers to have such a great share," said Grant Blackbeard, general manager of African Fashion International.

The swimwear and lingerie line from Durban-based Dax Martin had an ocean theme produced by local craftsmen. His works have been used in global beauty contests and sold internationally.

Blackbeard said designers branching out globally should think about producing locally.

"We have to look at the starting point which is fabric. With a lot of our mills being put out of business from the cheaper Chinese fabrics coming in, we need to strengthen our mills so we don't have to purchase our raw materials from abroad."

Reference: By Mmathabo Tladi, IOL, Fri Oct 21, 2011 1

Labour Costs -Clothing Industry

Will the temporary new entry-level wage structure for the clothing sector have any real effect on the efficiencies of this sector? Is this not just a short-term strategy to appease certain political constituencies? There is no evidence that increasing labour, albeit initially cheaper will provide the space for a clothing operation to become more productive and sharpen its productivity output. In fact my not the cost of manufacturing actually increase thereby pricing a company out of the market?

How competitive is South Africa’s apparel labour wage compared with overseas? On the other hand increase in labour costs and delivery delays and rising cost in Asia provides an opportunity of South Africa to maybe recapture some of its own market.

The increase of cost of labour in China is have impacting on the apparel and even textile sector and China is having to face new threats from its neighbours and find mechanisms to realign these sectors. Some statistic reflect 5-15% increase in 2010 alone. The prosperous Southern coastal province of Guangdone has had a 20% monthly increase in labour. The input cost of labour in apparel production is 15-22%. Big retailers like Guess Inc, AnnTaylor Stores Corp and JC Peeny are contemplating relocating some of purchasing dollars to India, Bangladesh, Indonesia and Cambodia and Vietnam. It now costs about four times more to employ an apparel worker in China than it does in Vietnam.

Labor costs are high in Lesotho compared to other Sub-Saharan African countries. Hourly wages range from approximately $0.14 to $1.80 in apparel-producing African countries as well as in several non-African coun- tries with significant apparel sectors such as Bangladesh, China, and Sri Lanka. Wages in Lesotho average $0.46 an hour, lower than those in Mauritius and South Africa but significantly higher than those in Ethiopia, Kenya, Mada- gascar, Mozambique, and Swaziland. Even when productiv- ity is taken into account (labor costs per shirt), Lesotho still is an expensive manufacturer compared with Ethiopia, Kenya, Madagascar, and Mozambique (reference: Apparel Exports Lesotho, Chapter 13, 2009)

Labour costs (hourly compensation) in the clothing industry in selected countries (US$/hour, 2002)


Bangladesh 0.39, China 0.68-0.88, Egypt 0.77, India 0.38, Kenya 0.38, Madagascar 0.33, Mauritius 1.25, Mexico 2.45, South Africa 1.38, Sri Lanka 0.48  Source: Economist Intelligence Unit (2004)




Country Hourly Wage


United States $8.25-14.00 , United Kingdom $7.58-9.11, Venezeula $2.73 , Costa Rica $2.19 , Guatemala $1.21 , Colombia $1.20 , Honduras $1.02 , Philippines $0.94-1.00 , China $0.93 , Peru $0.92 , El Salvador $0.92 , Jordan $0.74 , Malaysia $0.73 , Nicaragua $0.65 , Bahrain $0.57 , Thailand $0.56 , India $0.55-0.68 , Mauritius $0.55-0.65 , Vietnam $0.52 , Egypt $0.50-0.87 , Mexico $0.50-0.53 ,
Sri Lanka $0.46 , Pakistan $0.37 , Indonesia $0.35 , Cambodia $0.24 , Bangladesh $0.21  

Reference: Institute for Global  Labour and Human Rights, 19 August 2010

South Africa: New wage -reflecting the entry-level wages 1 Sept 2011.

Sactwu speaks about new entry-level wages

South Africa
Clothing union speaks about  the new entry-level wages.

Responsible media coverage of clothing & textile sectors. 
It is absolutely imperative that media report on the clothing and textile sector in a responsible manner. Instead their misunderstanding and or integration of the words clothing and textiles in their reports sews further confusion and leads to misrepresentation.
The new entry-level wage agreement is NOT for the textile sector. The Apparel Manufacturers Association (AMSA) does not represent the textile industry. This agreement is only for the apparel industry.

Sactwu’s General Secretary answers questions posed by South Africa’s textile federation regarding the new entry level wages for the clothing sector.

Date: 13 October 2011

Question:

Why is there this change from SACTWU? A wage proposal albeit linked to productivity was tabled over a year ago but was rejected by SACTWU?

Answer:

THERE IS NO CHANGE FROM SACTWU. WE HAVE FOR A LONG TIME BEEN EXPERIMENTING WITH THE CONCEPT OF A LOWER ENTRY RATE, BEFORE INTRODUCING IT INTO THE CLOTHING INDUSTRY. FOR EXAMPLE, IF YOU SPEAK TO SOME OF THE EMPLOYER NEGOTIATORS IN THE TEXTILE SECTOR, THEY WILL TELL YOU THAT FOR QUITE A FEW YEARS, IN SOME OF THE SECTORS, THAT CONCEPT EXISTED. WHAT IS NOW NEW IS THAT IN THE CLOTHING AGREEMENT IT IS FIRMLY LINKED TO EXPLICIT JOB CREATION COMMITMENTS.

WE HAVE NOT REJECTED PRODUCTIVITY LINKED WAGES IN CLOTHING. IN FACT, SACTWU HAS CHAMPIONED IT. THE CURRENT CLOTHING MAIN AGREEMENT'S WAGE STRUCTURE PROVIDES FOR WAGE LEVELS WITH AND WAGE LEVELS WITHOUT PRODUCTIVITY INCENTIVES. WHAT IS SAD IS THAT EMPLOYERS HAVE FAILED TO IMPLEMENT IT, AND IT ONLY GETS IMPLEMENTED WHERE THE TRADE UNION PUSHES IT.

Question:

Does this new wage proposal only pertain to compliant clothing companies? Or does it also apply to non-compliant clothing companies?

Answer:

IT APPLIES ONLY TO COMPLIANT COMPANIES

Question:

Will companies have to increase new personnel to 100% of bargaining council wages within a certain period or will there be an incremental > increase in wages?

Answer:

INCREMENTAL, BUT THE END POINT IS 70% OF THE CURRENT QUALIFIED (METRO AREAS) AND 80% OF CURRENT QUALIFIED IN NON-METRO AREAS.

Question:

Are there other conditions that employers have to comply with?

Answer:

YES. THEY CANNOT RETRENCH CURRENT WORKERS AND REPLACE THEM WITH NEW EMPLOYEES ON A LOWER RATE. THEY MUST GROW EMPLOYMENT IN COMPLIANT COMPANIES BY 15% BY MARCH 2014, AT A BENCHMARK RATE OF 3% EVERY 6 MONTHS WITH EFFECT FROM 1ST SEPTEMBER 2011.

Question:

Cosatu is, according to Patrick Craven, still "looking into the agreement to find out what it is about." Is there a possibility that Cosatu will not endorse it?

Answer:

I AM LIAISING WITH COSATU REGARDING THE MATTER AND AM CERTAIN THAT AT THE APPROPRIATE TIME SOME SORT OF PRONOUNCEMENT OR COMMENT WILL BE MADE BY THE FEDERATION. SACTWU IS PROCEEDING WITH THE IMPLEMENTATION OF THE AGREEMENT THOUGH, AS WE SPEAK, AS IT IS AN AGREEMENT THAT HAS BEEN LEGITIMATELY REACHED IN TERMS OF OUR COLLECTIVE BARGAINING PROCEDURES. I UNDERSTAND COSATU'S CONCERN AND WILL WORK WITH THE FEDERATION TO HELP ADDRESSING IT.

Question:

This agreement provides a legal framework for employers in the already stressed textile sector to seek a similar agreement. Can this agreement be extended to the textile industry?

Answer:

NO, IT DOES NOT PROVIDE A LEGAL FRAMEWORK FOR EMPLOYERS IN THE TEXTILE SECTOR TO SEEK A SIMILAR AGREEMENT. THE AGREEMENT IS ONLY LEGALLY BINDING ON THE CLOTHING INDUSTRY. CONDITIONS ALSO DIFFER: FOR EXAMPLE, IN THE CLOTHING INDUSTRY THERE IS ONE NATIONAL BARGAINING COUNCIL COVERING THE WHOLE SECTOR.

THIS IS NOT THE CASE IN TEXTILES, WHERE FOR EXAMPLE FABRIC KNITTING EMPLOYERS HAVE FOR YEARS REFUSED TO BE COVERED BY THE SCOPE OF THE TEXTILE BARGAINING COUNCIL. FURTHER, IN SOME TEXTILE SECTORS, THERE IS ALREADY A SIMILAR DISPENSATION IN PLACE (IE ALOWER ENTRY RATE) BUT WITHOUT SPECIFIC JOB CREATION TARGETS. ALSO, AS AN EXAMPLE, THEIR IS QUITE A SOPHISTICATED MULTI-TIERED WAGE REGIME IN PLACE IN THE CLOTHING SECTOR (FOR EXAMPLE, AT LEAST 60 DIFFERENT WAGE CATEGORIES FOR A MACHINIST, DEPENDING ON GEOGRAPHIC AREA, LENGTH OF SERVICE, ETC, WHICH IS NOT THE CASE IN THE TEXTILE SECTOR)

ALSO, IT IS MUCH CHEAPER TO CREATE A JOB IN THE CLOTHING SECTOR THAN WHAT IT IS TO CREATE A JOB IN THE TEXTILE SECTOR. HOWEVER, NOTHING OF COURSE PREVENTS TEXTILE EMPLOYERS FROM TABLING ANY PROPOSAL DURING THE ANNUAL ROUND OF WAGE NEGOTIATIONS. IT IS THEN UP TO THE NEGOTIATING FORUMS TO DEAL WITH IT.

Question:

When will this new entrant wage proposal be implemented?

Answer:

THE AGREEMENT IS EFFECTIVE RETROSPECTIVELY TO 1ST SEPTEMBER 2011.

ENDS

On 13 October Sactwu’s General Sectary was interviewed by the Financial Mail.

Q & A - Sactwu general secretary, Andre Kriel

Of mutual gain

Claire Bisseker speaks to SA Clothing & Textile Workers’ Union general secretary Andre Kriel about the wage deal with employers allowing them to pay new entrants 30% less than existing workers.

 Q: What made Sactwu agree to the new model, given that labour has long opposed a two-tier labour market?

Among other things, it was the realisation that we need to embark on an extraordinary effort to ensure the repatriation of foreign orders linked to domestic job creation, further attack non compliance and grow trade union membership.

Q: Did you consult with Cosatu before signing it?

No, there was no need to. This agreement does not transgress Cosatu policy.

Q: Is Sactwu happy with the agreement or do you still harbour suspicion about a two-tier labour market?

We will, of course, remain vigilant against any possible abuses and will regularly monitor implementation progress. We are committed to make it work. This is an example of a settlement where both parties have their concerns but, on balance, each feels it is of mutual gain. Like any virgin agreement, there will be controversy and debate. This is healthy to help strengthen the developmental mandate of our labour market policy.

Q: Could the economic downturn derail the agreement?

Employment levels in compliant companies must grow by 15% over 30 months, failing which the agreement is automatically cancelled. This provision is not subject to any factors such as economic downturns. Employers will have to find innovative ways of meeting their job creation commitment if any challenges arise.

Q: Can Sactwu account for R100m in provident fund money which it allegedly invested in Canyon Springs Investments?

The provident funds are stand-alone funds, independently controlled by a board of trustees. Sactwu has never been part of the investment decisions of the board of trustees. Nevertheless, we’ve taken steps to initiate and lead a section 417/418 Companies Act inquiry into the missing money. We are determined to find out what has happened to the money and to bring any guilty party to book.

ENDS

The ReDress comments that the lowing of wages may have an impact on unions and bargaining councils in other industry sectors. This was endorsed by Sacci.

On the 10 October it was reported that the SA Chamber of Commerce and Industry said that the new clothing wage model could be followed by other industries.

The lowering of the minimum wage in the clothing and textile industry can serve as a model to other industries, the SA Chamber of Commerce and Industry said on Monday. The agreement to lower the minimum wage by 30 percent within the clothing and textile industry is a model that can be implemented to increase South Africa's competitiveness and employment creation," Sacci president Chose Choeu said in a statement.

Walmart: The cheap, the imported and the truth

South Africa

More shots were fired this week in the war over the supermarket trolley, with the government, unions, economists and analysts all weighing in, but there was little agreement about who should own the trolley and how its contents should be sourced.

Union federation Cosatu said that Walmart's unmatched global buying power and ability to source cheap goods posed "an unprecedented risk to local industries". It said all retailers should be required to source 75% of its stocks locally.

Massmart-Walmart said it anticipates spending an additional R60-billion on food and fast moving consumer goods (FMCG) procurement over the next 5 years, most of which will be produced locally and therefore of benefit to local food and FMCG manufacturers.

Stephen Gelb, professor of economics at the University of Johannesburg, said the same retailers that were complaining about Walmart had been importing goods from China for years. "It's entirely the same scenario as far as I can see. The problem is simply that locals don't want more competition, especially not from a bigger, badder foreign company."

A comprehensive strategic partnership agreement between South Africa and China was formed last year and agreements were made pertaining to a variety of sectors.

Political analyst Moeletsi Mbeki said, after South Africa joined the World Trade Organisation in 1995, industries were subjected to competition before they were ready to fend for themselves against cheap imported goods. He said one consequence was the footwear industry collapsing almost completely.

Data from the South African Footwear and Leather Industries Association indicated that, in 1985, 78% of footwear sold in the local market was made in South Africa. By 2005 only 17% was made locally and 83% was imported.

The scapegoat

The idea was to make consumer goods cheaper for South Africans, said Mbeki. "But what is the point of having affordable shoes if you are unemployed? I don't think one can turn around and say it is Walmart's fault -- those industries were dead already. Unions and the government are looking for a scapegoat," he said.

Neil Rankin, co-ordinator at the African Microeconomic Research Umbrella, said that despite years of trade with China and other countries resulting in job losses, the outcry over Walmart was because the people affected belonged to important political constituencies.

He said all three ministers who opposed the merger (Agriculture Minister Tina Joemat-Pettersson, Economic Development Minister Ebrahim Patel and Trade and Industry Minister Rob Davies) had strong labour constituencies.

But Davies told the Mail & Guardian that the competition authorities acknowledged there would be an increase in imports with the Massmart-Walmart merger.

The main concern was that retailers who sourced some products locally would be forced to go outside South Africa to compete with Walmart prices, he said.

"Consumption sectors have been growing twice as fast as production sectors. We have got to stack the deck in favour of local producers."

South African tyre-makers recently lost an anti-dumping case against the flood of cheap Chinese imports, the M&G reported last week. The cost of passenger tyre imports from China to South Africa had increased to an average of R214 each, compared with R588 a tyre from Europe. South African-made tyres are usually priced at about the same level as European tyres.

Manufacturers complained that the government did not appear to be interested in protecting South African industries against Chinese imports because of the cosy relationship between President Jacob Zuma's administration and the Chinese.

Davies said exports had also grown faster than imports, although exports were largely primary goods such as metals and minerals, whereas imports were value-added products such as clothing and appliances.

He said the department now hoped to correct the imbalance: 10 value-added products had been identified and China was asked to send its buyers to an exhibition of these goods.

Value-added goods

Christopher Gilmour, an analyst at Absa Investments, said 97% to 98% of produce sold at retailers like Shoprite and Pick n Pay were sourced locally. But when it came to value-added goods such as clothing, appliances and computers, South African industry could not compete.

"The government has this idea that value-added [goods] is a good idea, which is fine as long as you can compete," he said. "It is about comparative advantage; you have to produce what you're good at."

Gelb said the emergence of Walmart in South Africa would intensify competitive conditions. "The basic problem is that our cost of production is higher than those [countries] we are importing from and it's up to us to keep our costs down." The costs involved are not just wages, but also high overheads and profit margins.

Gelb said the big question was: "How do you weigh up the competing but not easily comparable costs and benefits -- jobs lost in the past and those that may be lost in future -- versus consumer benefits, but with less of a benefit per individual."

Davies said struggling industries were partly caused by trade liberalisation, but also by insufficient industrial development.

"The thinking was that the competitive environment would encourage a more competitive nature, but a lot of these guys just put their hands up and went under."

Peter Draper, adjunct professor at Wits Business School, said the debate about trade with China was occurring in resource-dependent countries such as Brazil and Russia as well because none of them could compete with the manufacturing powerhouse.

"The resistance against Walmart is from those who are developing trade policy and are protectionist in their views," Draper said, adding that this did not make sense for a country with a poor population that had little buying power, such as South Africa.

He said the government should not aim to drive the development of an entire sector but should rather look at niches in which South Africa could compete.

Source: Mail & Guardian Online
LISA STEYN

JOHANNESBURG, SOUTH AFRICA - Oct 14 2011 15:03

Details of new wage proposal must be explained

Comments from The ReDress Consultancy

The announcement of a new wage structure for South Africa’s beleaguered clothing sector is welcomed. However, there are a number of questions and uncertainties meandering through the industry. It would be prudent for the union and the clothing industry representative body, AMSA to unpack the new wag structure. Furthermore, it is imperative that the media covering the industry also ask pertinent questions and excavate this “landmark agreement.”

But before the media do this they need to define the industry they are writing about. The media intertwines textile and clothing. They may fall under the broader definition of the industry but they are very distinct industry sectors. The new wage structure is not for the textile sector it is for the clothing sector. Maybe we are being pedantic.

Let’s move onto some questions pertaining to this “most important development in collective bargaining since the introduction of the labour laws in 1995.”

1. Why the sudden change from the union? A wage proposal albeit linked to productivity was tabled over a year ago but rejected by the union?

2. What was secretly agreed for the union to endorse this concept? The removal of duties on all textiles – imported or made locally- which will invariably lead to more unemployment and diminish the competiveness of the clothing sector?

3. Does this wage structure only pertain to compliant clothing companies? Or can the irksome non-compliant companies employ at 30% less?

4. Will companies have to increase new personnel to 100% bargaining council wages within a certain period or will there be an incremental increase in wages?

5. What other benefits do employers have to contribute which could or will erode the 30% lower wages?

6. Will new entrants have to become union members? A very convenient way to grow membership.

7. Employing more people will not increase efficiency –again a singular focus on labour when there are other critical factors that contribute to the clothing sector.

8. Sactwu’s parent, Cosatu is, according to Patrick Craven, still “looking into the agreement to find out what it is about.” And if they do not endorse it?

9. This agreement provides a legal framework for employers in the already stressed textile sector to seek a similar agreement. This “landmark” agreement can and will percolate through South Africa’s entire labour market and we believe no union or bargaining council will have a legitimate reason to deny or refuse similar agreements.

We hope the parties who constructed this agreement will explain the minutiae of this agreement to avoid any ambiguity.

The onus is on the industry to ensure this occurs

New Wages for SA Clothing Industry

5 October 2011

Breaking News from The ReDress Consultancy

New Wages for SA Clothing Industry announced.

It is understood that South Africa’s clothing union, Sactwu has agreed on a new wage structure for the clothing industry. The new wage structure is effective as of 1 September 2011.

According to resources the wage breakdown is as follows:

Metro Areas: An increase of 6.5% to company for all categories in sector.

Non-Metro Areas: The new wage equates to roughly R45.00 per week increase for a General Worker & Qualified Machine Operator. Other categories equates to a 9.2% increase – this is cost to company.

New Entry Wage Structure:

A new wage structure agreed for new employees (industry entrants) with no prior industry experience. This new structure will also cover potential employees who have experience but have been out of the industry for (3), three or more years.

Metro Area: 70% of the New Gazetted Wages for relevant category.

Non Metro Area: 80% of the New Gazetted Wages for relevant category.

Comment:

Wage increases onto  an already burdened and stretched industry is of concern. More so when the bargaining council has admitted that companies who undertook in principal to meet the Phase-in regulations are failing to do so.  One wonders how many companies will be in a position absorb these increases and what effect it will have on existing labour in the industry.

The notice that the union has accepted a new entry wage structure to encourage up-take of employment is welcomed. However, a similar proposal with the same objective was proposed over a year ago and the union rejected this initiative. The consequences of this rejection have reverberated throughout the industry and are well documented.

Why the change at this time in regard to entry level wages?

The new Entry Wage model needs more excavation and evaluation to be fully understood.

1. How long will the new Entry Wages be in effect?
2. After one year of employment will a new employee move to 100% or is there a structured wage increase over a specific period?
3. What other benefits do employers have to pay that is not included in the new wage structures.

The new two level wages formal and Entry Level have been negotiated between the industry body that represents compliant clothing companies and the union. Will the non-compliant companies agree with the new wages or will they reject both levels due to them being excluded from negotiations?