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Sri Lanka’s Garment Workers Struggling to Survive ‘Galloping Inflation’

Plagued by Sri Lanka’s monthslong political and economic turbulence, millions of garment workers are grappling with volatile incomes, high prices and low savings that have pushed them to the brink of survival, though their lack of a living wage is partly to blame, some insiders said Wednesday.

Conditions in the South Asian nation are becoming increasingly fraught. While protestors have succeeded in running embattled former president Gotabaya Rajapaksa out of the country, the debt-ridden island has struggled to shell out for imports of essential goods such as food, medicine and fuel, which remain scarce. It has burned through its foreign reserves, and inflation has spiraled to a record high of 60.8 percent from the year before.

“Since April, we have been struggling with daily power cuts and [a] severe shortage of basic needs such as fuel, food and medicines,” Shanti, a young garment worker, told Vishmee Warnachapa, Sri Lanka country coordinator at the Asia Floor Wage Alliance (AFWA).

“While our wages have fallen, the prices of vegetables, rice and fish have doubled,” she said. “There are days when I have stood in long queues for cooking gas, kerosene oil and other necessities—only to come back home empty-handed. Many women workers are walking 3 to 4 kilometers every day to buy medicines and other necessities, and they hardly have a proper meal a day.”

Sri Lanka’s garment industry is still in traction from the Covid-induced recession, Warnachapa said. Without sufficient fuel to transport raw materials or operate machinery, factories have been unable to operate at full capacity or dispatch orders on time, she said. Garment workers Warnachapa has spoken to have reported cutbacks in working hours and increasing layoffs. Many of them say they live in fear that their employers will shutter operations.

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“While garment factories are still providing food, its quantity and quality have declined. Wages of workers are falling as working hours have reduced due to the fuel crisis,” Chamila Thushari, of Dabindu Collective Union, one of the AFWA’s trade union partners, told Warnachapa. “We have heard that many factories are laying off manpower workers who already lead very precarious lives.”

Yohan Lawrence, secretary general of the Joint Apparel Association Forum, the country’s trade group for garment manufacturers, told Sourcing Journal that he agrees with the industry’s portrayal, but only to an extent.

“The crisis has come when Sri Lanka’s economy was at its weakest, in the wake of a debilitating pandemic,” he said. “Just as we were barely recovering from it, the economic crisis came as a body blow. Under any other circumstances, the government would step in to ensure that the most vulnerable are protected; however, at this time, the public services provision function is broken.”

He rejected the view that manufacturers were laying off people, however. “The apparel industry would not be able to achieve the good results seen in the first half of 2022 in export numbers if the industry was laying off people,” Lawrence said. “In fact, most factories are actively hiring, and work overflow from the larger factories [is] being shared by the SME sector.”

Clothing and textile exports rose nearly 37 percent to $566.7 million in June, according to the Export Development Board. Sri Lanka’s manufacturers are still eyeing $6 billion in exports this year.

Lawrence also said that the industry has moved away from the use of manpower workers, who work on a contract basis, over the past few years and that they represent a “very small percentage” of its employment footprint.

Still, Tharushi said that she and many other women garment workers have already exhausted their savings powering through the pandemic, when brands pared back their orders and paychecks took a hit. She was trying to repay the massive debts she racked up when Sri Lanka’s worst financial crisis in decades struck.

“I have friends who pawned their little gold jewelry, the only heirloom in their life to pay for their children’s school fees or to meet their medical needs during the pandemic,” Tharushi said. “They now have no assets or savings to overcome this economic crisis.”

Warnachapa said that while many recognize that the current predicament is a result of longstanding economic mismanagement and corruption, garment workers believe that their increased vulnerability to it is a “result of the business model of global fashion brands.”

“Workers…feel that the unwillingness of global fashion brands to ensure living wages and social security for their supply chain workers or even contribute to emergency efforts like the AFWA supply-chain-relief contribution during the Covid-19 pandemic have contributed to their inability to meet this economic crisis,” she said.

The industry’s “paltry” wages couldn’t meet additional expenses such as medical emergencies even during “normal times,” said Anusha, a garment worker and mother of two young children, who blames her poverty pay for the fact she has no savings to afford even two meals during the current crunch. The bulk of her 25,000-rupee ($69.74) income goes to buying food, she said. The monthly minimum wage in Sri Lanka is 12,500 rupees ($34.87), though a living wage would be closer to 75,601 rupees ($210.89), the AFWA estimates.

“We have spent hundreds of hours standing in factories and stitching for global brands like Next, Victoria’s Secret, Levi’s, Nike and so on, yet, our wages are suppressed so that brands and their owners can amass huge profits,” she said. “I refuse to believe that we did not deserve a living wage for our hard labor. Brands can pay us a living wage, but they choose to watch us starve.”

Speaking on behalf of the JAAF, Lawerence said that employees in its member companies earn “well over” the minimum wage and are also afforded social protection through the Employee Provident Fund and Employees’ Trust Fund schemes, which are the “law of the land.”

Several factories, he noted, pay workers a cost-of-living allowance to help them navigate price hikes and shortages, though certain factors born of inflation, such as the rising cost of fuel, are beyond their control.

“The plants are providing and absorbing the considerably high costs of both meals and transportation as a value addition to employees, despite these costs being considerably higher than forecast, given the galloping inflation,” Lawrence said. Many factories are providing an additional two or three packs of food per employee to alleviate their burdens, and several have begun doling out emergency packs of essential rations as well, he said.

Meanwhile, Warnachapa said that Sri Lankan workers and their unions are urging both suppliers and brands to engage in dialogue and work collaboratively with them so that workers “do not bear the entire brunt of this crisis alone.” The unions will soon be releasing a charter of demands, she said.

“We do not want fashion brands to cut and run from Sri Lanka during this economic crisis,” Tharushi said. “Instead, we want them to support suppliers and workers by providing longer lead times, and offering an urgent humanitarian financial contribution to all their workers in Sri Lanka so that they and their families can at least afford two meals a day.”

A ‘test of resilience’

Verisk Maplecroft, a risk-analysis firm, said that the political and economic crisis in Sri Lanka is “perhaps the biggest test of resilience for the country’s highly lucrative garment manufacturing sector.”

Its mostly female workforce, senior human-rights analyst Sofia Nazalya told Sourcing Journal, will be the most affected as increased pressures to meet production quotas will drive overtime and wage violations. Factory closures are also likely to increase given shrinking profit margins, leaving many destitute, she said.

“For Western brands, the situation is yet another example of how operating in countries hamstrung by poor governance come with significant disruption risks,” Nazalya said. “Producing low-cost garments in countries beset with governance challenges comes at its own expense. We have seen a similar picture in Myanmar, where political turmoil has raised serious ethical questions for the garment sector.”

Apparel companies sourcing from Sri Lanka, she added, will continue to face uncertainty so long as political instability persists. “It will likely be a long waiting game before the country’s deep-rooted structural issues are addressed,” Nazalya said.

In an open letter this week, a group of labor-advocacy organizations, including the Clean Clothes Campaign, Labour Behind the Label, Maquila Solidarity Network, War on Want and Workers United, urged national governments, international financial institutions, brands and other stakeholders to support a program of emergency relief and mid- and long-term financial support, along with a “democratic political solution to the crisis,” especially since a loss of buyers’ confidence in the industry is a “real risk.”

“This is the result of a crisis driven by international debt that has been unfolding for decades and mismanagement by the previous Sri Lanka government,” they wrote. “This has caused catastrophic inflation and the loss of purchasing power; failure of public services including health services, education and public transport; disruption of economic activity; and scarcity of fuel, cooking gas and oil and many basic commodities. Importantly, it has caused great hardship for the 300.000, mostly female, garment workers and their families.”

The organizations expressed their solidarity with the people of Sri Lanka, adding that they stand with them as they “confront the political, social and economic crisis that has engulfed their country, causing extreme hardship and grave concerns for the future.”