Vision for the apparel industry to rise to the challenges of 2022

By A. Sukumaran | Published: 2:00 AM Jan 15 2022
FT Vision for the apparel industry to rise to the challenges of 2022

By A. Sukumaran 

Despite having faced another tumultuous year, the Sri Lankan apparel industry has shown remarkable resilience in 2021, and we believe the advances we have made over the past year have placed the entire sector in a much stronger position to weather the escalating challenges of 2022. A review of the data from 2021 and the measures taken by players in the industry, indicate how the industry is poised.

In the wake of unprecedented economic disruptions for Sri Lanka – and the rest of the world – caused by the second and third waves of the Covid-19 pandemic, we now see some persistent uncertainty surrounding prospects for 2022. Driving this volatility so far is the emergence of Omicron which is reportedly the most highly transmissible variant of Covid-19, and in the backdrop of rising geopolitical tensions among  the US, China and Russia. If any one of these factors is exacerbated, further disruptions to global trade are inevitable.  

Consider exports. In pre-pandemic 2019, apparel exports amounted to US$ 5.2 billion, almost 48 per cent of all merchandise exports (which makes it a crucial contributor to trade and external finances). In 2020, the pandemic’s spread led to a steep decline in trade and travel, and ultimately global GDP; no country was spared.

Sri Lanka’s garment exports also declined sharply in 2020; nationally enforced lockdowns hit production, and order cancellations were high. Exports fell by almost a quarter (more than 24 per cent) to US$ 3.93 billion. In 2021, garment exports bounced back up by 21.5 per cent at September-end to US$ 3.54 billion . They will fall just short of the targeted US$ 5.1 billion.  

A remarkable progress was made possible by an accelerated vaccination programme with the support of the Government and the logistical capability of our military. The Joint Apparel Associations Forum of Sri Lanka (JAAFSL), an apex body of apparel industry associations, played a crucial coordinating role.

For business owners, worker safety is a high priority. Factories and places introduced safety protocols, redesigned shop floors to enable social distancing, strictly monitored ‘masking’, personal protection, and employee behaviour. Due compliance was strictly implemented with surprise checks by officials from the Ministries of Labour and Health.

Yet, during the course of the pandemic in 2020 and 2021, business owners were faced with false accusations that workers were not being paid and were instead being laid off, by the thousands. But as events later demonstrated, these accusations were totally unfounded, and ran contrary to the actual situation on the ground. 

At the outset, with the cooperation of the Government and representation made by JAAFSL, workers who could not come to work because they were sick were paid Rs 14,500 a month, immaterial  of whether they had reported for work or not. That is 45 per cent more than the minimum wage mandated by law, even when they have not been working.

Thereafter, as noted previously, an accelerated vaccination programme was implemented and acted upon. Worker safety was ensured with strictly enforced mandated safety protocols. The enforcement of the protocols was extended even to non-direct apparel workers such as canteen workers, suppliers and vendors.

One number helps make the point

One important study on the impact of Covid-19 on the apparel industry estimated the pre-pandemic workforce at roughly 350,000, arguably the strength of the workforce at the end of 2021. Contrary to reports of layoffs and resignations made public by some parties during the pandemic, the workforce is now back at 350,000.

That’s not all. During the course of the pandemic, both large companies and smaller firms adopted and adapted technology to develop solutions to new problems. Consider samples. Fashion changes are fairly frequent, so buyers require samples that they test and then approve for manufacture. As transport was disrupted and flights restricted, some firms used 3D technologies that could be created at the buyers’ end and approved. 

That was just one instance where technology was used innovatively to overcome logistical challenges. There are many others, aligned with the vision of making Sri Lanka a global hub for innovative apparel making. And the same spirit of innovation is pervasive in the apparel industry’s sustainability agenda that sets a global benchmark for ethical, environmentally responsible manufacturing.

On 23 December 2021, the industry took the next step in its emphasis on prioritising workers. JAAFSL signed two historic agreements with the Trade Unions. The first enjoins both the Trade Unions and the Factory Owners to monitor the pandemic’s impact jointly. Trade Unions will be represented on the Bipartite Health Committees at each Manufacturing Plant. 

These committees are responsible for implementing health guidelines strictly. The MoU also recognises employees’ ‘Freedom of Association’ and their rights to ‘Collective Bargaining’. The second MoU lays out how Employers and the Unions will collaborate to assess and coordinate their efforts to manage the negative impact of the pandemic on all stakeholders. Both MoUs cast JAAFSL and the Unions as partners in these efforts.

Resilience notwithstanding, there is no place for complacence. The emergence of the Omicron variant – the most transmissible form of Covid-19 thus far- has shown that the pandemic hasn’t yet run its course.  JAAFSL is in discussions with the Government on approaches to provide booster shots for workers and perhaps their families, as expeditiously as possible. 

Ensuring the retention of GSP+ privileges with the European Union (EU) and other key trading partners, is critical. Before the advent of Covid-19, it was probable that Sri Lanka would ‘graduate’ from the GSP+ regime; the pandemic, however, has changed that dramatically. Now, retaining those privileges beyond December 2023 will be advocated forcefully and intensely.

Contrary to what Albert Einstein said, we have to both prevent and prepare for the next crisis. 

About the author:

The author is the Chairman of JAAF and started his career in the Fashion Industry three decades ago. He is the MD of Star Garments Group and a fellow member of the Institute of Chartered Accountants, SL and the Chartered Institute of Management Accountants, UK, respectively.

About JAAF:

The Joint Apparel Association Forum is the apex body which guides Sri Lanka apparel towards its ultimate goal of being the world’s number one apparel sourcing destination. JAAF represents five associations that cover supply chain partners, the export-oriented apparel manufacturers, buying offices and representatives of International Brands in Sri Lanka.

By A. Sukumaran | Published: 2:00 AM Jan 15 2022

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