• No closing of operations, only demand reduction: JAAF

Over 30,000 garment companies – small, medium, and large-scale – have wound down their operations in Sri Lanka since 2019, according to Inter-Company Employees’ Union (ICEU) President Wasantha Samarasinghe.

He told The Sunday Morning that as a result of factory closures, over 500,000 employees had lost their jobs over the past four years.

The factories that had shut down operations included several mega-scale factories that had exported Sri Lankan-made apparel to the international market, he claimed.

“Several mega-scale factories have closed down their operations. Those factories were producing several international-level items. They had to shut down since they lost orders. Even some world-renowned brands being made in Sri Lanka are gradually withdrawing their orders, causing a serious impact on the country’s apparel industry,” Samarasinghe said.

He further explained that since 2019, Employees’ Provident Fund (EPF) contributions of 500,000 employees had stopped while over 30,000 employers had stopped their contributions.

“This is a very serious situation. The apparel industry is one of the main foreign exchange earners of the country. Many people depend on this industry and most of them are poor people. Since factories are currently closing down, there is a huge demand for the available jobs in the market. Some are even staying in queues for hours just to get some work, since they need to find employment somehow,” Samarasinghe lamented.

Despite the situation now worsening, the Government had turned a blind eye to the troubles in the sector without taking any measures to rectify the issues, Samarasinghe charged. 

“This started in 2019 with the Easter attacks. Then came Covid-19 and now the economic crisis. The industry is going through a turbulent period and it needs Government assistance to survive, which isn’t forthcoming,” he said.

However, disputing Samarasinghe’s claims, Joint Apparel Association Forum (JAAF) Secretary General Yohan Lawrence stated that Sri Lanka only had around 350 apparel companies, with some 350,000 employees in total.

Lawrence also denied that the companies were closing down operations and noted that there was instead a reduction in demand and that some businesses were restructuring their operations.   

“Right now, there is a demand reduction. Some restructuring of businesses is taking place, but it is incorrect to say that companies are closing down their operations,” he said.

Commenting on the impact on the industry due to the ongoing economic situation and related infrastructure issues, including electricity prices, the JAAF Secretary General noted that the main outcome had been a reduction in demand.