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Philippines Could Furlough Up to 30% of Garment Workers by 2021

The Philippines is poised to furlough as many as 54,000 garment employees—or roughly 30 percent of the sector’s workforce—until 2021 due to pandemic-induced pressures, an industry group announced Tuesday.

The news comes less than six months after the Southeast Asian nation laid out a 10-year roadmap to revive its once-competitive textile industry by earmarking capital and land to increase production, establishing a dedicated trade office and putting an end to the proliferation of used-clothing imports from North America and Europe that vie with domestic suppliers.

Covid-19 has all but scuppered these plans. Maritess Agoncillo, executive director of the Confederation of Wearable Exporters of the Philippines, said garment factories are operating under capacity to comply with safety protocols such as social distancing. Demand has seen a precipitous decline, too, as brands and retailers continue to be gun-shy about placing orders for products that may end up gathering dust in warehouses.

“We are trying our best to maintain status quo within the workforce,” Agoncillo said. “Since capacity for third quarter is projected to be down at 40 percent, we expect around 20 percent to 30 percent of regular workers may be on furlough until end-year.”

Many factories have rushed to repurpose their assembly lines for the production of medical-grade personal protective equipment (PPE). The recently formed Confederation of Philippine Manufacturers of PPE announced this month that it has allocated $35 million in investments in the production of PPE in the Philippines, saving 7,450 textile jobs in the process.

The Philippines had just one PPE exporter when it recorded its first Covid-19 case in February. Now, the country boasts a monthly capacity of 57.6 million N88, N95 and KN95 surgical masks and three million medical-grade coveralls and isolation gowns.

Still, the ramp-up in PPE production may not be enough to make up for lost business. To retain staff, some facilities have instituted work on a rotational basis, employing available workers for two weeks at a time. “It may not be enough but at least a worker earns half of the base salary within a month,” Agoncillo said.

The Philippine garment industry, once considered a “sunrise” sector in the 1990s, has seen its market share eroded by neighboring Bangladesh, Cambodia and Vietnam over the decades, but it was still anticipating a 10 percent to 20 percent boost in exports, up from $1.02 billion in 2017, amid the U.S.-China trade war.

In March, the Philippine government’s Board of Investments outlined a plan to position the island nation as one of the top 10 global garment and textile exporters with an annual export growth of 45 percent by taking advantage of free trade agreements and the country’s Generalized System of Preferences status.

The roadmap had also recommended resolving infrastructure gaps and logistical bottlenecks, investing in product development and marketing, including loom weaving in school curriculums and increasing regulatory oversight of chemicals and other substances in the local textile supply chain.

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