| Workshop Background Paper | ||
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50. The welfare of employees is one of the employer's responsibilities. It should not be confined only to Welfare Associations, death donations and like activities but should go beyond from a working environment to employees' living conditions.
51. Employees waiting for long periods to board a bus after the end of the working shift/day is a common scene near any factory. Transport problems are not a unique feature for TC industry employees. ~However, the fact is that, unlike other sectors, clothing industries in particular are concentrated in and around a few townships and in EP zones and a large number of employees end their working day almost at the same time. It is quite evident that the already stretched transport system cannot cope with the rush hour travel, and the result is an additional burden on the employees.
52. As practiced by some TC companies a fleet of buses, for the employees to travel to and from home to work, could mean a reliable welfare facility and lead to a more contended workforce. It can also increase the productivity levels as employees come to work with less stress and also can help in reducing absenteeism and labour turnover which at times are connected with transport difficulties.
53. The TC Sector is, as pointed out above, characterized by high number of female employees. Except in the case of some of the factories under the 200 Garment Factory Programme, most employees are migrant workers. They are concentrated in townships without adequate lodging/boarding facilities. Most of these migrant employees live in what possibly can be termed as "sub-human" conditions. A study done by Peter C.D. Razel "The Need for a HRD Perspective in the Garment Industry vis-a-vis the female factory worker" highlights the need for intervention by the industry and the state. This illustrates the gravity of the problem.
Box No. 9
"Outside of their work place life is yet another hell. The majority of these girls being migrants are separated from their loved ones and live in boardings like cattle, where sometimes as many as 10 share a single 1:50 Sq ft room, and where sometimes 30 in the boarding are compelled to use a single toilet. Restricted use of water for washing, bathing, and sometimes drinking further aggravate their existence outside of the factory. Transportation tc and from the factory is an ordeal, and having returned home in a fatigued condition they have little time to prepare a nutritionally balanced meal."
54. There are some legal requirements that are particularly significant to the labour force. Employees Provident Fund, Employees Trust Fund and Workmen's Compensation Ordinances can be cited as examples. The confidence the employees have that the legal requirements are complied with by the company will make them feel secure. In an industry where quality and delivery schedules are a vital factor for survival, commitment by the employees to the objectives of the company become a driving force for development.
55. Though there are automatic penalties for late or non-payment of EPF and ETF dues, when the companies have liquidity problems it is EPF and ETF payments that are first defaulted. Non payment of these dues deprive employees of a basic right and can be of considerable concern.
56. Every employee is a member of the ETF by virtue of the fact that his employer contributes 3% of the salary towards this fund. It is not only a forced saving but it also provides substantial benefits to employees. Non payment of ETF by the employer denies benefits to the member.
57. Members of the ETF are entitled to -
1. Refund of contributions, with interest and dividends.
2. Automatic life insurance cover 10 months salary maximum Rs. 50,000/-.
3. Total and permanent disability insurance cover maximum of Rs. 150,000/=.
4. Financial Assistance for heart surgery.
5. Intro Ocular lens implant - cost of lens maximum Rs. 3000/-.
6. Scholarships for year 5 children of members.
58. EPF contributions consist of two parts - employees' contribution and employers' contribution. Employees' contribution comes as a deduction from the salary. When EPF payments are defaulted the company not only defaults on their contribution but also withholds the contribution made by the employees from his salary. Not paying EPF is one thing, but not remitting the part deducted from the salary is a serious matter.
59. This Ordinance covers the compensation payment to employees in case of injuries or disabilities sustained on account of an industrial accident. The amount paid in today's context is inadequate. Further, in arriving at a percentage of loss of earning capacity, schedule 1 of the Ordinance is used.
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Table 7
Schedule I
List of Injuries deemed to result in permanent Partial Disablement
| Injury | Percentage of loss of earning capacity |
| Loss of right arm above or at the elbow | 70 |
| Loss of left arm above or at the elbow | 60 |
| Loss of right arm below elbow | 60 |
| Loss of leg at or above the knee | 60 |
| Loss of left arm below the elbow | 50 |
| Loss of leg below the knee | 50 |
| Permanent total loss of hearing | 50 |
| Loss of one eye | 30 |
| Loss of thumb | 25 |
| Loss of all toes of one foot | 20 |
| Loss of one phalanz of thumb | 10 |
| Loss of index finger | 10 |
| Loss of great toe | 10 |
| Loss of any finger other than index finger | 5 |
61. In an ever changing world, the focus on issues also keeps changing. Today sustainable development, responsible use of non-renewable energy sources, cleaner environment, have become new key issues. Notwithstanding the merits and demerits to have a cleaner environment is invariably a desirable and attainable goal. However it requires further awareness and commitment to achieve it. The TC Industry is widely known to be one of the high polluting industries. The spinning process pollutes air and wet processing mills have to deal with large amounts of waste water contaminated with dyes and chemicals which have to be treated before being released to the environment. Weaving is a noise polluter but it is generally confined to the Weaving shed.
62. Though the Central Environmental Authority (CEA ) has laid down specific requirements on pollution levels and the release of polluted waste water to the environment, the Textile Industry is known to be an offender of these regulations. In some exceptional cases the CEA has obtained court orders to close down textile factories. By not adhering to environmental standards as specified by CEA, what the TC industry does, is to transfer the cost on to society. Instead of reducing or eliminating and treating waste at source, the industry passes the problem on to an "end of the line". As is always the case, "end of the line" solutions are time consuming and expensive. In this case it is the health and well being of the population that is affected and the state has to spend large sums of money to rectify these errors by way of health services and refuse collection and disposal systems etc.
63. The TC industry can easily be a responsible partner in pollution control by adhering to the 3 Rs of pollution control. These are, Reduce, Re-use and Re-Cycle. It is also important that the industry take note of the presently voluntary "Eco-label" marks. The European Union (KU) has set out guidelines on the use of resources and chemicals in the TC industry. Though not compulsory at present, it is very likely that these norms will become compulsory requirements for exports in the near future. Therefore, the sooner the industry recognizes these needs and prepares itself, the better.
64. The Textile and Clothing Industry employs over 300,000 persons. Though reliable comprehensive data on labour turnover is not available, information received from TC industries suggests that the average annual labour turnover is around 15% and more. Some companies in the EPZ have reported a 3% monthly labour turn-over which amounts to 1/3 the employees at any given time being 'new'. At an annual average of 15% labour turnover, the industry needs around 45,000 new recruits per annum to keep up with the present level of operations. It is also a fact that labour turnover does not necessarily mean that all employees leave the industry completely. Some of them move from one company to another. (Reliable data is unfortunately not available).
65. In addition the clothing industry is expected to grow during the next 5 years, though the Primary Textile Sector is said to register a decline in employment while maintaining the production levels. The growth in the clothing sector will generate additional employment positions.
Table 8 - Future Demand
Indicative Plan Under Accelerated Conditions
| 1995 | 1996 | 1997 | 1998 | 1999 | 2000 | |
| Export Value Mill US $ | ||||||
| Clothing | 1655 | 1724 | 1900 | 2230 | 2622 | 2993 |
| Textile | 199 | 201 | 204 | 209 | 216 | 224 |
| Total | 1854 | 1925 | 2104 | 2439 | 2838 | 3217 |
| Value added (Mill US $) | 630 | 654 | 715 | 853 | 1021 | 1190 |
| Employment | ||||||
| Clothing | 262,000 | 262,000 | 266,500 | 271,000 | 276,000 | 281,000 |
| Textile | 74,000 | 71,000 | 66,000 | 65,800 | 66,400 | 67,000 |
| 336,O00 | 333,000 | 332,500 | 336,800 | 342,400 | 348,000 |
(Textile and Garment Sectors -December '96)
66. The Industry's growth and the resultant labour turnover demands around 50,000
new recruits per annum to the TC industry. In this respect the industry has the responsibility to
1. Train new recruits.
2. Provide career development opportunities
for employees.
3. Reduce labour turnover to ease the pressure.
These requirements can only be approached through Human Resource
Development and Management.
67. In order to encourage enterprises to introduce modern technology a special
incentive scheme is on offer. Accordingly, a large number of TC industries have applied for
concessions.
26
Table 9 - New Projects under Advanced Technology Incentive Scheme
Textile, Apparel and Leather Products
| No. of Projects approved | New | - 14 |
| Existing | -27 | |
| Total | -41 | |
| Investment (Rs.Mn.) | New | -880 |
| Existing | -434 | |
| Total | -2488 | |
| Investment on Machinery Rs. Mn | - 450 | |
| Employment Potential | - 2757 |
68. These new technologies demand higher skills at entry level or re-training for existing employees. New equipment and technology require higher initiative skills rather than manual skills. Advanced technology require large investments and only proper training or retraining of employees, can lead to these investments be effectively utilized.
69. Introduction of new technologies and training, leads to greater disparity between skilled and unskilled employees or even between skilled employees who are working with 'old' equipment and 'new' equipment. Additional training for unskilled or semi-skilled operators will open up avenues for career development within the organization or sometimes through migration. The TC industry has shown a deplorable resistance for undertaking training (it is critical in the Primary Textile Sector) lest it loses trained employees to competitors. However, if all enterprises engage in training loss by one of trained employees will be compensated by a gain of trained manpower from another enterprise.
70. The growth of the TC industry, particularly the clothing sector, was so rapid, that
human resources could not be developed at the same pace. This differential growth rate resulted in rapid career promotions to lower and middle level managers. But the industry at its infancy failed to recognize the need for proper training at all levels. Due to lack of knowledge and skills, the supervisors resorted to pressure tactics on operator level employees to keep to production and quality targets. Training at ali levels on technical and management skills will not only improve labour and capital productivity, but also will reduce mental pressure for lower level employees resulting in reduced absenteeism and low labour turnover.
71. TC industry is a major player in the economic activity of Sri Lanka. Its present vibrant nature is a combination of its own initiative and facilities granted by the Government. Industry enjoys benefits and Government gets a revenue. Both these parties have a stake and therefore have a specific role to play on labour issues.
72. Present economic order is such that the Government does not play the role of a policeman but that of a facilitator. Yet Government still has to monitor certain activities like payment of EPF, ETF environmental issues, safety standards etc. on the wider interest of the nation and to maintain its own credibility on governance. Government can in this respect use its agencies to educate the employers on such issues and also be an active partner in solving problems faced by the industry. Further Government should co-ordinate its activities particularly on skills development at all levels to enhance the competitiveness of this vital industry. Though state spends large sum of money on skills development, its uncoordinative and fragmented approach has made the results less effective.
73. In contrast the TC industry can make its own contribution by using its financial stability and dynamism to improve the working environments of its employees. It is also a fact that the clothing sector in particular provide its employees a free or a heavily subsided meal. Yet this is not adequate compared to the benefits they draw from its employees. The issues discussed earlier are not unknown problems, a plethora of studies have been made and volumes of reports written on these issues. Yet they remain unsolved or limited to superficial attention. This paints a very sad picture for those who contributed Rs. 105 billion by way of export earnings in 1996.
74. In the final analysis, if say 0.5% of the annual export earnings were diverted to the welfare of its employees, the picture would be much different today. 0.5% of 1996 export earnings amounts to Rs. 500 M - a large sum; but however appears to be affordable in relative terms. However, one may argue that since Government charges a levy on export of garments, looking after the welfare of the employees is a matter for the Government. Nevertheless the fact remain that in the better interest of the nation the problems of the TC employees should be urgently looked at and solved and perhaps again in this case too Government and the industry can be joint partners.
75. The Textile and Clothing Industry is by far the leader in industrial development in the recent past and is poised to remain so in the foreseeable future The present status however suggests that the industry has to review source of its tenets and concepts if it desires to remain a true leader. From the foregoing analysis, it is clear that the industry, knowingly or unknowingly, falls short in terms of respecting some of the basic human rights of its employees. The industry is in a position to correct these shortcomings and also to improve the living standards of its employees. The underlying theme of this presentation is to look at the TC industry from a labour point of view and eventually to lay the foundation for the formulation of a voluntary code of conduct for the Textile and Clothing Industry.
76. It makes no sense to establish a code of conduct which no one implements but everybody keeps talking about. Therefore, solutions should be found which can be 'implemented'. The issues under consideration can be classified broadly into the following groups:
77. Whatever the code of conduct that is agreed to by the TC industry, it is not worth the paper it is written on if a voluntary monitoring system is not agreed upon. Further, it is not just the letter that is important but the spirit of the code.
78. The approach therefore, should be for the employee organizations or trade unions, company management (Employer) and Government agencies to form a tri-partite alliance designed to develop a voluntary code of conduct which associated with self monitoring. could perhaps be
79. However, it is necessary in the formulation of a voluntary code of conduct that none of the parties raises issues that are impractical at this initial stage or agree for the mere sake of agreeing but with no intention of implementation. It is better to agree even on small issues initially and to review progress and then progressively include more difficult issues Success or failure of a voluntary code of conduct depends not on how elaborate the code is but how practical it is. Therefore, it is recommended, initially for the industry, to form joint committees between, employer and employees and their representative trade unions, to look into areas where agreement could be reached. These committees can then meet other such committees within zones or on provincial basis or trades and formulate a widely acceptable code of conduct which all parties willingly agree to implement.
80. Representatives of zonal provincial or trades committees shall then form into a core body which will be the "national co-ordination committee". This committee after gaining official recognition will make recommendations to the Government on changes needed in various Acts, in order to rectify any anomalies or shortcomings that exist or to amend the laws to suit modern day requirements.
81. It is distinctly clear that the Textile and Clothing Industry has economic and social responsibilities towards the society. The industry can discharge its obligations only if it is disciplined and act responsibly as a true leader. The behaviour of industries performance must not be confined to meeting legal requirements but must go beyond towards broader social responsibilities. The following issues can be incorporated in a voluntary code of conduct. Shared commitments Discrimination and Human Rights Workplace environment Workplace safety and health Environmental concerns Wages and Benefits Freedom of association Equal opportunity and Employee training and development Community Relations Employee living conditions Corporate contributions Legal and Ethical standards Sub-contracting Use of child and forced labour Gender Equability.
1. Central Bank of Sri Lanka - Annual Report.
2. Building Sri Lanka Competitiveness - A Strategy for Manufacture Export Growth.
- Sanjaya Lal, Rao, Wignaraja, Addario, Akinici.
3. Uruguay Round & MFA Quotas.
- The Textile and Garment Industries in Sri Lanka T he next 10 year Chris Edwards.
4. Globalization of the footwear, textile and clothing industries.
- ILO TM/FTCI/1996.
5. Note on proceeding - Tripartite meeting on the Globalization of the Footwear, Textiles and Clothing Industries:
Effects on Employment & Working Condition. ILO TM/FTCI/1996/1 1.
6. Economic Review- various issues.
7. Policy Issues on Promoting Backward Linkage from the Garment Industries in Sri Lanka
- Saman Kelegama & Fritz Foley.
8. Sri Lanka Labour Gazette.
Vol. 46, No. 1, Jan. - March 1995
