Textile & clothing sector wobbles due to meltdown

01 Dec '08

3 min read

The textile industry plays a significant role in the economy of the Republic of Macedonia. It is an inevitable fact that the textile industry is the most widespread branch of the Macedonian economy. The textile industry in Macedonia has a long tradition and is located all over the country. While every large municipality has a company connected with the garment industry, there are 11 major regions or areas in the country.

The textile industry employed 39,134 employees in 2006, predominantly women, which represents a significant 35.53 percent of the total number of employees in the industry with the garment industry alone accounting for as much as 31.1 percent of all jobs in the country and there were 267 textile manufacturing enterprises and 1,168 garment units. According to data available for 2006, the sector accounted for 26.4 percent of the total exports and 8.8 % of the total employed workforce along with a share of more than 2.8 percent of GDP in the country.

But with the advent of the post quota era from January 2005 and emergence of countries like China, Bangladesh, Vietnam, India and many other cost competitive Asian countries in the global textile and garment arena, the industry like its other European counterparts started floundering. The first to be affected were the small and medium size manufacturing units.

Now it is the economic meltdown and the resultant recessionary trends which is bringing the industry to its knees. According to reports emanating from the industry, many Macedonian textile and garment units are on the verge of closure, or are down sizing their operations, thereby putting employment of over 20,000 employees in jeopardy. Around 1,500 people are thought to have lost their jobs in the town of Stip, which is considered the nerve centre of the industry in the country.

The small units run the risk of being completely wiped out in the new unfolding global scenario. According to reports even the big textile units are holding orders in hand for only the next few months and no new orders are coming their way which raising fears of over 300 registered units shutting operations over the next few months. This is raising fears of mass scale unemployment as the sector accounts as mentioned above, for a large chunk of the working population.

The government on its part is trying to help the sector in its own way but they may not be adequate. The package which was unveiled last week lists ten preventive measures aimed to get Macedonian firms back into shape. The plan projects writing off or restructuring debts and accumulated interest of companies which arose due to unpaid pension insurances, value-added tax, personal and income tax and health insurance contributions.

In addition, the government has also proposed cuts in taxes on profits and custom duties. The government had earlier announced that it will tackle the worldwide crisis by increasing budget investment in capital projects for 2009, meant particularly for those companies who have lost their export markets.

Fibre2fashion News Desk - India