Things are not going to get easier in 2022. So, the apparel industry will just have to get stronger

Despite having faced down 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 put 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 that firms in the industry have taken indicate how the industry is poised.

Following 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 around 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 between the US, and 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 $5.2 billion1, 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 $3.93 billion. In 2021, garment exports jumped back up by 21.5 per cent at September-end to $3.54 billion2. They will fall just short of the targeted $5.1 billion. 

The 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 also put safety protocols, redesigned shop floors to enable social distancing, strictly monitored masking, personal protection, and employee behaviour. 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 them off by the thousands. But as events later demonstrated, these accusations were totally unfounded, and ran contrary to the actual situation on the ground.

First, in cooperation with the government andrepresented by JAAFSL, workers who could not come to work because they weresick were paid LKR 14,500 a month whether they came to work or not. That is 45per cent more than the minimum wage mandated by law, even when they were notworking.

Second, as noted previously, an acceleratedvaccination programme was implemented and acted upon. Worker safety was ensuredwith strictly enforced mandated safety protocols. The enforcement of theprotocols were extended even to non-direct apparel workers such as canteenworkers and other suppliers and vendors.

One number helps make the point. One importantstudy on the impact of COVID-19 on the apparel industry estimated thepre-pandemic workforce at roughly 350,00033. The strength of the workforce atthe end of 2021? Contrary to reports of layoffs and resignations made publiclyby 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 todevelop solutions to new problems. Consider samples. Fashion changes are fairlyfrequent, so buyers require samples that they test and then approve formanufacture. As transport was disrupted and flights restricted, some firms used3D technologies that could be created at the buyers’ end and approved.

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

On December 23, 2021, the industry took the nextstep in its emphasis on prioritising workers. JAAFSL signed two historicagreements with trade unions. The first enjoins both trade unions and factoryowners to monitor the pandemic’s impact jointly. Trade unions will be representedon the Bipartite Health Committees at each manufacturing plant.

These committees are responsible for implementingMinistry of Health’s guidelines strictly. The MoU also recognises employees’freedom of association and their rights to collective bargaining. The secondMoU lays out how employers and the unions will collaborate to assess andcoordinate their efforts to manage the negative impact of the pandemic on allstakeholders. Both MoUs cast JAAFSL and the unions as partners in these efforts.

Resilience notwithstanding, there is no place forcomplacence. The emergence of the Omicron variant has shown that the pandemichasn’t yet run its course. JAAFSL is in discussions with the government onapproaches to provide booster shots for workers – and perhaps their families –as expeditiously as possible.

Ensuring the retention of GSP privileges with theEuropean Union (EU) and other key trading partners is critical. Before theadvent of COVID-19, it was probable that Sri Lanka would ‘graduate’ from theGSP regime; the pandemic, however, changed that dramatically. Now, retainingthose privileges beyond December 2023 will be advocated forcefully andintensely.

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

About the author

The author is the Chairman of JAAF and started hiscareer in the fashion industry 3 decades ago. He presently holds the positionof Managing Director of Star Garments Group and is also a fellow member of theInstitute of Chartered Accountants of Sri Lanka and is also a fellow member ofthe Chartered Institute of Management Accountants of the United Kingdom.

About JAAF

The Joint Apparel Association Forum is the apexbody which guides Sri Lanka apparel towards its ultimate goal of being theworld’s number one apparel sourcing destination. JAAF represents fiveassociations that cover supply chain partners, the export-oriented apparelmanufacturers, buying offices and representatives of international brands inSri Lanka.