Clothing retailers consider outsourcing

The Department of Labour made it clear at a meeting with manufacturers and labour this week that noncompliance would not be tolerated under any circumstances, and that manufacturers must pay minimum wages or close their factories.

More than 15 000 employees around the country will be affected, but the move is deemed necessary to protect 35 000 jobs at compliant factories.

Michael Lawrence, the executive director of the National Clothing Retailers Federation (NCRF), said the situation was a "major, major concern" for retailers, who were preparing for the busy Christmas season.

"This creates significant uncertainty in the supply chain, and it makes more sense to buy offshore," he said.

"Though we typically don't do work with noncompliant manufacturers, the reality of the supply chain is so complex that work gets passed on (to non-compliant factories)," said Lawrence. "It is not our job to do the policing."

CMT manufacturers will 'go bust in months'

Most of the noncompliant factories offer only cut, make and trim (CMT) services, usually outsourced from design centres or larger manufacturers, and do not deal directly with retailers.

According to the National Bargaining Council, the NCRF is regularly informed of retailers who use noncompliant manufacturers. The council said CMT manufacturers "will go bust within a few months" if they were forced to pay minimum wages, as the rates paid by retailers were not enough to cover the legislated labour costs.

Lawrence said retailers' prices were informed by the prices consumers were willing to pay, and that significant concessions were already being made to local manufacturers.

At the heart of the problem is the industry's wage bargaining agreement, which is decades old and has not kept track with the sweeping changes in the global industry, particularly the rise of China as a source of cheap clothing and textiles.

People are will to work under difficult circumstances

In August, Newcastle clothing workers stood in solidarity with owners in opposition to a bargaining council-driven clampdown on the failure to pay minimum wages, indicating their willingness to work for wages lower than the regulated levels.

"The reality on the ground is that people are willing to work under different circumstances," said Lawrence.

"People here are paid an hourly rate regardless of production output, while people in other parts of the world are paid per piece. We don't want to see wholesale exploitation of our labour force, but we need people to start taking pragmatic views on the matter before we completely erode the confidence in the local manufacturing sector."

Alex Liu, the chairman of the Newcastle Chinese Chamber of Commerce, said some factories were considering moving to Lesotho or Swaziland, but the majority remained committed to SA.

"We are hoping to negotiate a workable solution for everybody," he said.

Source: Sunday Times