Garment industry sees retrenchments

The continuing global economic slowdown is expected to displace a maximum of 10 percent of the 280,000 estimated total workers in the apparel, textile, garments, and leathergoods industry in the country.

Marites Jocson Agoncillo, executive director of the Confederation of Wearable Exporters of the Philippines (CONWEP), said during a virtual press briefing that 3.5-4 percent of workers have been temporarily retrenched, including the 4,000 from five garment firms in Cebu.

“If conditions worsen, we can go high of 8-10 percent,” said Agoncillo. Already, Agoncillo said CONWEP will be meeting with the Department of Labor and Employment and the Department of Social Welfare and Development to help the affected workers.

She explained that the slowdown is largely because the US, the biggest market of Philippine apparel, textile and leathergoods, registered a low monthly consumer confidence index as of August this year. “This is an indicator that the average US consumer is not confident to spend as they are worried about another possible recession. They would rather hold back spending in the next 12 months,” said Agoncillo.

Aside from the global economic slowdown, Agoncillo cited disruption in global supply chain, labor cost, access to raw materials, logistics and compliance risk issues.

In fact, the second tranche of the wage order is yet to take effect late this year and into early next year, adding burden to factory owners.

“Goods are not moving out of the shelves, as it should. And it is for this reason that customers and brands have to take conservative posture and cut back on your other projections. This was exactly what happened to our member in Cebu where the projection of the buyer with a major investment did not materialize,” Agoncillo explained.

This is the reason that customers and brands have to take a conservative posture and cut back and cancellation of order projections. Brands and buyers would rather move their existing inventories in the stores. “This is what we are up against when orders are canceled midstream,” she said.

“Some exporter/manufacturers are still struggling to maintain full operations and thus, there is a need to lay off protect the majority... that affected buyers and affected brands are buying less,” she added.

Agoncillo said they met with the buyers in the US on the occasion of President Ferdinand Marcos’ visit last month.

They presented to the President some intervention measures to help the industry. These include forging bilateral free trade deal with the US, which could be through a sectoral FTA or revival of the previous Save Act proposal, and the ratification of the Regional Comprehensive Economic Partnership (RCEP).

CONWEP is also pushing for the expansion of the list of garment products to be eligible for zero-duty under the US-Generalized System of Preferences. In fact, she said, there are only 24 tariff lines for the leathergoods under the US-GSP.

The industry is also seeking for amendments on the incentives under the CREATE Law. “The lifespan of our incentives was cut short for a window of seven years. And even if there are revisions in the CREATE Law IRR, we just really want to call on the government to extend this as the rules of engagement for an investor is too cumbersome and we fear that we may really discourage investments with this kind of life span of seven years,” she added.