By Bernie Cahiles-Magkilat
The labor-intensive garment manufacturing industry, which employs roughly 250,000 people, has warned of massive layoffs, with immediate impact on the small firms, should the current TRABAHO Bill is passed into law, which could be the last blow to their already declining export performance.
This was shown in a survey conducted in September last year by the Confederation of Wearable Exporters of the Philippines (CONWEP), composed of the country’s largest apparel manufacturers, on the request of the Senate Ways and Means Committee during the 17th Congress for industry groups to provide an impact study on the displacement of workers and closure/s of businesses under the proposed TRABAHO Bill, which seeks to overhaul the country’s incentive regime to investors.
CONWEP Executive Director Maritess Jocson-Agoncillo said the survey showed that small firms would be the first to succumb under the bill.
According to Agoncillo, the survey showed that a company with 1,500 workers and below, the impact is an immediate shutdown within 6 months to one year.
“It is that quick because their margins are small,” said Jocson-Agoncillo. Those producing mid-sized products, like jeans, the displacement of workers would be 50 percent in 12-18 months. These are medium-sized firms employing 3,000 to 5,000 per factory.
For firms producing higher end products, like suits, the displacement threshold is 30-32 percent in 12 to 18 months.
She noted that the TRABAHO Bill comes on the heels of a declining apparel exports. Apparel exports decreased by 16 percent last year to $928 million from $1.099 billion in 2018.
CONWEP is composed of 2 sectors – apparel and leathergoods. The entire garment industry, including shoes and travel goods, is estimated to employ 250,000 people.
In terms of export value, CONWEP’s apparel members represent about 68 percent of the country’s total FOB (freight on board) export performance of $ 1.081 billion in 2017.
They also account for the biggest chunk of 62,800 workers or 35 percent of the estimated 180,000 direct employment in the apparel sector alone.
In addition, CONWEP’s membership in the leathergoods sector accounts for 31 percent of the country’s total FOB export. They also account for 19.5 percent out of the 68,000 workers employed in the leathergoods sector.