(Published in MTimes 15 03 2019)
But the true mismanagement is the sudden implementation of the minimum wage, that followed the generous wage awards of 5.3%, 2.5% and 1.6% in 2015, 2016 and 2017 respectively. From Table I below, we can see that these were not accompanied by increases in productivity. The unit labour cost soared to an increase of 8.1% in 2016.Though it was only 1.9% in 2017, the appreciation of the rupee made things worse.
The decrease in industry growth since 2015 ( -3.1%,-5.1%, 0.3 % and -4.0%) can be attributed to declining overseas orders and to labour as well as other costs rising too fast. Increasing labour costs have, to some extent, undermined the international competitive advantage of the textile industry.
The minimum wage should have been awarded on a phased basis giving time to the textile sub-sector of the Export Oriented Enterprises to adjust and boost productivity. The textile sector operates in a highly competitive world market. For the flagship textile companies, they can to a large extent absorb the increases in costs through new orders, higher prices of their products or increases in labour productivitybut for the small ones, they are mostly price-takers and they have little choices but to wind up if they are not given enough time to adjust.
It was in that sense that Ajay Beedasee, spokesperson of the Textile and Apparel Manufacturers Association, was alerting us to the fact that the situation is really alarming in the textile sector. Mr Beedasee is not the CEO of a company like Palmars Ltd; for him more than others, the cost of labour is turning out to be too expensive. Many more textile factories will be closing down. The Textile and Apparel industry presently needs a Marshall Plan and like the sugar sector it is fighting for its survival… These are not “des propos simplistes.”
