Photo courtesy of industriall-union

“From my, and perhaps your, perspective, it is important because many of us think in terms of workers structural and associational power – at the point of production to broader society. But, capital wields so many forms of power – and this is one of them….Keeping wealth out of the reach (and sight) of workers….” Ben Selwyn, personal correspondence (March 13, 2023)

My exchange with friend and colleague Ben Selwyn came out of sharing union statements on illicit transfer of capital out of Sri Lanka’s corporate world. These numerous statements have a bearing on resolving the debt crisis itself but also on the welfare of the apparel industry too. Selwyn’s correspondence underlines how labour scholars have primarily focused on workers structural and associational power at the point of production.  However, capital is highly malleable and mobile and illicit transfer out of the country also has an effect not just on workers, as Selwyn highlights, but on the industry’s existence itself.

In contrast to the resilience agenda Selwyn remarks as needing attention, equally important in Sri Lanka is to ask if SMEs and workers – the backbone of foreign exchange earnings – are compelled to bear the costs of the interlocking crisis. It is a predicament in which Sri Lankan capital is complicit to some degree or another; does this culpability affects the apparel sector and if so, how?

In Mallika Shakya’s book A Death of an Industry she underlines how Nepal’s garment sector saw its steady decline and demise due to market-oriented logic not appreciating the industry’s embedded eco-system. Is Sri Lanka’s apparel industry too risking such an outcome?

The past few weeks has witnessed a flurry of tweets and misinformation that portended the demise of Sri Lanka’s apparel sector. Not so, we are assured by Yohan Lawrence, speaking on behalf of  the Joint Apparel Association (JAAF), to AdvoChats. He notes that there is a global contraction affecting the apparel supply chain across the world and accentuates how Sri Lankan apparel is not alone in facing a slowdown. Countries such as Bangladesh, India and Cambodia also face a similar downturn.

The peaks and slumps of global trends is dutifully acknowledged in this 35 minute engaging and enriching interview that offers important insights into how the Sri Lankan apparel industry and the conglomerates are thinking. Invoking, Churchill’s infamous observation “Never let a good crisis to go to waste”, Lawrence outlines how managing global fluctuations is difficult, but within the country crisis moments offers opportunities for change.

Crisis, however, is not unusual to Sri Lanka. Lawrence in the interview profiles three significant calamities that afflicted the industry in the recent past: Easter Sunday attacks (2019), COVID (2020), and in 2022/23 debt crisis against a backdrop of a global recession. These moments are heightened episodes against 30 years of war.  The current opening thus offers industrialists – and employers more generally – and a pro-business government without mandate to focus primarily on labour law reforms.  However, is the solution proposed novel or are the employers using a crisis to package an existing proposition and present it as new and carry out public consultations on a done deal? Undoubtedly, dramatic changes both within and outside of Sri Lanka inescapably offers openings for fresh insights to be promoted but how novel or grounded are these labour reform proposals?

In a nutshell, the employer position – one that has the backing of the government – focuses on presenting labour reforms as a bid to bring more workers into the formal sector. Using the growing presence of manpower workers in Free Trade Zones (FTZ) in particular, an amalgamation of labour laws and labour reform is proposed to create labour market flexibility. The need to eliminate the role of manpower agencies is also mentioned. The offer is for more workers to enter the formal labour market but on flexible terms: part time, full time, seasonally, permit night time work. The caveat is that employers likewise can expand and contract their workforce and have a trained workforce that it can draw on, depending on seasonal variations or global vagaries.

While Katunayake FTZ workers are used to exemplify the need for flexibility from the viewpoint of workers, Lawrence himself underlines that no more than 10% of apparel sector workforce are found in zones. Most apparel sector workers then labour outside of zones and this aspiration for flexibility from the viewpoint of a limited cohort of workers (from the EPZ) may or may not hold ground and requires substantiated research. This aside, assuming bringing more workers into the formal sector a worthwhile ambition, why do these proposals provoke anxiety amongst labour rights activists? Indeed, are these proposals even new?

In 2018 when I was doing research to complete my book Garments without Guilt?, I was particularly keen to unlock the country’s neglected labour histories, past and present, to underscore how labour agency also helped Sri Lankan apparel to craft its niche position. At that time too the same set of labour reform proposals were percolating around. They were being proposed and indeed drafted not by National Labour Advisory Council and/or even the the Department of Labour; instead the labour reform proposals came to Sri Lanka via an USAID funded consultancy group.[1] The labour reforms were piggy backing on Sri Lanka’s abrogated ILO convention 089 [Nightwork Convention (Women)], when Sri Lanka’s neighbouring competitors, Bangladesh, India and Pakistan, uphold it. With an unelected politician at the helm, Ranil Wickremesinghe, the same proponent of earlier labour reform policies in 2018 is strident in sponsoring labour proposals that may also end up trampling worker rights. In an already impoverished country where 31% of people live below the poverty line and one third of the population are malnourished, it is worthwhile asking if placing the burden on workers for Sri Lanka’s interwoven crisis a fair one?

Global contractions, inequities and recessions are almost certainly beyond the control of Sri Lanka.  However, it is also the case that the country’s close integration into the global economy and the set of economic policies embraced also constrain or enable the lives of working communities. The introduction of market-based pricing of electricity, which JAAF rightly contested earlier this year, is one such instance.

On February 8, 2023, Lawrence presented JAAF’s oral submission to the Public Utilities Commission of Sri Lanka (PUCSL) on the proposed electricity tariff for 2023 raises legitimate questions on the electricity price hikes. He pointed out that apparel is a $6 billion industry and the single largest industry and exporter. He raised rightful issues on the assumptions made by PUCSL on overestimation of demand against an impending global recession.

These are fair concerns. Feminist economist Jayati Ghosh stated a similar point during her intervention at the Verite Research hosted public discussion on Improving the Solutions for Sri Lanka’s Debt Crisis: what about the intermediate effects of raising electricity tariffs? Lawrence makes it unmistakably clear that increasing electricity prices will likely negatively affect the SMEs in the apparel industry. Given that Shantha Devarajan and Sharmini Cooray (IMF Policy Advisors) at the same event were bemoaning the contraction of the industrial sector in the country, attentiveness to intermediate effects should be a priority.

MAS, Brandix and Hirdaramani Group and other large factories may carry the flag for the country but the foot soldiers are the SME factories underpinning the health of the industry. From doing sub-contracting to taking on small orders to producing accessories they too are part of the eco-system that Shakya refers to in her work for Nepal. Wither the SMEs, the chances of further contraction in our industrial sector are very real. Yet assessing the impact on intermediate inputs in the apparel industry appear disconnected and far-fetched to our policy analysts. The disjointed dots also stretch from high electricity prices to mis-invoicing, which the apparel sector and corporates are culpable of, but opt to downplay.

Appreciating the likely stresses on the SMEs in the apparel sector also requires us to reflect around charges of mis-invoicing, illicit transfer of capital and electricity prices. Instead, the burden is pushed downwards – labour flexibility but without any social state mechanisms in place to protect workers when they are seasonally laid off. Lawrence towards the end of the interview does raise the need for social protection but as visionary industrialists – as often portrayed by the media – should JAAF not do more than pay lip service social protection?

Without living wages to workers and allegations of wage theft by Asian Floor Wage Alliance, not just in Sri Lanka but in the entire Asian region, the labour market flexibilization proposed is not courage to change (to invert MAS’s tag line); rather it pauperises workers further. Workers become the shock absorbers that cushion Sri Lankan corporates from global business cycles. Is this a fair strategy for an industry that positions itself as an ethical producer? To get the laws rigged and in so doing, the undermine the spirit of ethicality and social justice.

Crisis conjunctures do offer opportunities for rethought and reconstruction; they do, however, need to be driven by a strong sense of political ethics and values around egalitarian politics. If corporates are as committed to democracy and do not use Sri Lanka’s on-going political turbulence to push an agenda via an unelected politician and a government without a mandate, thus cementing the rise of fascism, they should look to crisis prone countries in the past and explore alternative imaginings.

Sri Lanka is at a catalytic moment where people were looking for system change. It is a moment to advocate democratic policies that connects labour reforms to bring workers into the formal sector alongside a commitment to living wages and social protection benefits. Shielding workers during furlough at living wages is a bare minimum.  Gunnar Myrdal (1973), an architect of the Swedish social democratic model, put it thus: “well-planned egalitarian reforms would be preventive, prophylactic and thus productive”.

It is this kind of vision that the Sri Lanka’s corporate sector needs to promote, where public investment in education, health and public infrastructure are necessary foundations for an equitable and ecologically sensitive economy. It does mean progressive taxation, where those with the broadest shoulders pay, and democratic participation. Democratic strengthening means labour reform consultations must be inclusive of all union representatives. Excluding elected representatives on moot grounds, as Labour Minister Manusha Nanayakkara states at public consultations on labour reform policies, weakens further an eroded democratic fabric.

As neoliberalism flails, fault lines heightened with a global debt crisis and Jake Sullivan, National Security Advisor to the White House, calling it a day on the concentration of wealth and power, Sri Lankan corporates and policy makers too need to take heed. If we explicitly acknowledge that Sri Lanka’s socio-polity too has witnessed concentration of wealth inequity and heightened relative inequality since 1977, then the measures needed to tackle global vagaries require a different hymn book. It entails Sri Lanka understanding global debates calling for a return of progressive taxation and to accept that inequality is no accident but a product of the neoliberal order, to paraphrase Thomas Piketty. To institute system change, the apparel sector and the larger conglomerates needs to facilitate public consultations that take a holistic view of all citizen rights underpinned by sound safety nets and publicly funded care facilities for working women. It requires putting in place progressive direct and wealth tax to tackle Sri Lanka’s growing inequality, rising poverty and malnourishment, job creation through climate friendly industrial policy and living wages.

Consultations on labour reforms that let workers “adjust”, to quote Lawrence from Advochats, fails to recognise that if workers succeed, the entire country flourishes and enjoys stability and equity. Conjoined policies that lift the boat for Sri Lankan workers, who have kept the country ticking through multiple crises and the war years while earning foreign exchange, is what is needed; not singular labour reforms that pushes the burden back onto workers. Without living wages, well-funded social protection policies and frank discussions on illicit capital transfer flows, any proposals and consultations for labour reform risks impoverishing workers and lowering labour rights. Otherwise, as in neighbouring Bangladesh, we will fail our workers even more as Rebecca Prentice, Dina Siddiqi and Hasan Ashraf point out. The backdrop of the aragalaya and on-going debt crisis is a moment to ask does Sri Lanka take the low road or the high road? Expecting workers to be shock absorbers, as public consultations on labour reforms are implying, is a recipe for further social, economic, and political turbulence, and not less. Let us not let a crisis go to waste but this requires a vision where courageous change is the motto to take the country’s working poor out of the shadow lines.

This article is connected to a research fellowship awarded by the Bromanska Foundation.

[1] The Ministry of Labour was abolished by the then Prime Minister Ranil Wickremesinghe, signalling his lack of interest in protecting the rights of worker citizens that have kept the Sri Lankan economy ticking through multiple crisis – from the war years to current times.