Jobs carnage intensifies
. . . amid indications that another 2700 jobs will be cut in November
IT never rains for textiles conglomerate, Nien Hsing Textiles Group, and its workers.
This amid indications that the group’s C&Y Garments is planning to retrench 2700 employees in November.
Independent Democratic Union of Lesotho (IDUL) Deputy Secretary General, May Rathakane, said they had been informed by the Group’s management of the impending move to cut even more jobs.
“Last week, we were summoned to a meeting by the Nien Hsing Group management in our capacity as the workers’ union and we were informed that C&Y Garments would be closing by the end of November,” Mr Rathakane said in an interview with the Sunday Express yesterday.
“The management blamed the Covid-19 pandemic for the move. They said the outbreak of the pandemic had badly affected their markets in the United States (US), as there were reduced orders for their products.
“This means that 2700 jobs will be lost at the company,” Mr Rathakane added.
Although he was cagey about the issue, Nien Hsing Group manager, Ricky Chang, hinted that more job cuts were in the offing.
“There is nothing conclusive that I can share with you at this stage,” he said when asked about the unions’ allegations that they had been informed by the Group that 2700 workers will be retrenched by the end of November.
Only three weeks ago, Mr Chang revealed that they had begun retrenching 2500 employees at their denim wear manufacturing subsidiary, Nien Hsing International. He indicated that they would shut the subsidiary by the end of next month.
As if the Nien Hsing International job cuts are not bad enough for the workers and the economy, more jobs are in the offing at the Group, this time at C&Y Garments.
Both Nien Hsing International and C&Y Garments are part of the larger Nien Hsing Textiles Group, which originates from Taiwan. The group has textile manufacturing factories in Lesotho, which collectively employ about 10 000 workers. Apart from the two, others in the group are Global International and Formosa Textiles. There used to be five factories in all before Glory International closed last year and sent home 1500 workers in the process. Should C&Y Garments follow Nien Hsing International’s example and retrench 2700 workers, this means that by the end of November, the group would have retrenched more than 6700 workers in just a year.
These are massive jobs carnage considering that the Lesotho National Development Corporation (LNDC) reported that at least 6000 workers lost their jobs within the manufacturing sector from March 2020 to March 2021 mainly due to the Covid-19 induced slowdown in global economic activity.
An even bigger haemorrhaging of the entire textiles and garment factories as other employers are also considering laying off workers to manage their ballooning production costs.
Prior to last year’s retrenchments, the government had put the number of factory workers in the country at 45 000. Given the LNDC reports of 6000 job losses since last year, this means that the total number of those who would have been retrenched by end of next month will be 11200. In other words, a staggering 25 percent of the entire workforce would have lost their jobs since last year.
In addition, an “Industry Status Report for January to March 2021” prepared by the LNDC suggests that the Corporation was aware of the looming job cuts at the Nien Hsing Group earlier this year.
“…Nien Hsing has combined its five companies into three and planning to combine the three companies into one company,” the LNDC states in a section of the report titled “Closures”.
The jobs carnage in the sector could get worse after the Lesotho Textile Exporters Association (LTEA) last month warned that its members were considering laying off thousands of workers, as the recent salary hikes had made their operations unsustainable to retain all their employees.
More than two months ago, the government awarded a 14 percent salary increase to textile workers. Other sectors were awarded a nine percent wage increase for the 2021/22 financial year.
The salary hikes came on the back of violent worker protests for better pay from 10 May to 7 June 2021.
The workers complained that the cost of living had gone up since their last wage adjustment in 2019. They wanted a 20 percent salary increase for the current 2021/22 financial year, while their employers were offering six percent.
They were also demanding the retrospective publishing of the minimum wage gazette for the 2020/21 financial year which was never issued after employers pleaded that they were financially constrained due to the negative effects of Covid-19.
The majority of Lesotho textile factories export their products to the United States (US) under the African Growth and Opportunity Act (AGOA) trade concession. Others export to the neighbouring South Africa.
In an interview with this publication earlier this month, Nien Hsing Group’s Mr Chang alluded to the impact of the salary hikes and the consequent escalation of production costs as the reasons behind their move to lay off workers at Nien Hsing International.
Yesterday, he was cagey when asked about the reports of the planned job cuts at C&Y Garments.
He said there was “nothing conclusive to share at this stage,” when asked about the alleged plans to retrench the C&Y Garments workers by the end of November.
However, Mr Rathakane insisted that they had already been informed of the impending job cuts.
He blamed the government for failing to stop the job losses as per its promise to them.
“This government is incompetent. It has made so many promises to save our jobs but it has failed to deliver. It has failed to cushion investors to enable them to continue production. It has also failed to attract new investors to take over from those who have closed shop.
“All they are good at is erecting new factory shells with no occupants. What these job losses mean is that there will be high unemployment and our crime rates are going to skyrocket. There will be no one to blame but the government,” Mr Rathakane said.
He said they had held meetings with the Ministry of Trade and Industry and the latter had done “nothing to address the situation except release a press statement saying they were setting up an inter-ministerial taskforce team and we are still waiting”.
His sentiments were shared by Tšepang Makakole, the deputy general secretary general of the National Clothing Textile and Allied Workers Union.
“It is the responsibility of the government to ensure that there are investors in the country but all we see them doing is building empty factories shells. We wonder where the occupants will come from when those who are already there are leaving.
“The government is only interested in collecting revenue from rentals but failing to secure jobs for its people. We are headed for hard times where the crime rates are going to soar.
“People will steal from others in order to survive. We are likely to see a rise in human trafficking as desperate people do anything to survive,” Mr Makakole said.
Contacted for comment, LNDC public relations manager, Tiisetso Moremoholo, referred this publication to the corporation’s 12 August 2021 statement wherein it said it “troubled by the downscaling of operations by key players which has resulted in considerable job losses”.
“In an endeavour to save these jobs, the Corporation has engaged the companies that have downsized their operations through sizable layoffs. These companies have cited disruptions in the supply chain due to Covid-19 as the main driver behind downsizing. A progressively deteriorating investment climate has also been named as a factor which affects business negatively.
“The Corporation has initiated engagements with key stakeholders to jointly address issues that negatively impact on the investment climate. The Corporation has also resuscitated the Inter-Ministerial Task Team (IMTT), which is a high-level problem-solving forum led by the Honourable Minister of Trade and Industry (Thabiso Molapo) to address investors’ grievances. The main objective of the IMTT is to facilitate collaboration with key stakeholders to improve the investment environment to restore investor confidence.
“The corporation therefore wishes to assure workers and the public that it is exploring all avenues to preserve and create new jobs for those who have been retrenched, through operationalising expansion projects in its pipeline.
“Saving existing jobs is as equally important, if not more important to LNDC than creating new ones, particularly under these strained economic conditions. Looking after the welfare of existing investors to ensure that they thrive and create additional jobs for Basotho as reflected in the Corporations mandate remains a key priority for LNDC,” the LNDC statement says.