Manufacturers that pay the prescribed minimum wages say they operate at an unfair disadvantage and will have to close factories and shed jobs. Those that do not pay the prescribed minimum wages say they simply cannot afford to.
Andre Kriel, secretary general of the South African Clothing and Textile Workers Union (Sactwu), said: "A problem for the transformation of the industry is posed by the actions of local clothing employers. They are expending more energy trying to fight the union and existing wage models than on trying to transform their companies in line with the vision of state industrial policies."
A special general meeting is being held today, 9 July 2012, for members of the Apparel Manufacturers of SA (Amsa) in the Western Cape to discuss non-compliant factories that breach the bargaining council's minimum wage provisions.
Johann Baard, Amsa executive director, said the bargaining council system had become dysfunctional. "My prediction is that sooner rather than later we will have a deregulated labour market."
Decisions on pay and other employment conditions would then have to be determined at plant level or through the trade and industry minister.
Both options were "fraught with complications" on enforcement, said Baard.
Seardel, the country's biggest clothing manufacturer, shed 1500 jobs in April and May. Manufacturer Trubok retrenched 400 workers this year. This month, Cape Townbased Chelsea West and Baisch Knitwear closed.
About 40% of domestic clothing manufacturers do not pay the minimum wage. A machinist gets about R481 a week in non-metro areas, but non-compliant companies pay as little as R90 a week, said Baard.
Amsa has gone to the Labour Court to compel the bargaining council to serve writs of execution on 400 of the 450 non-compliant companies. If successful, it would lead to these factories closing down and about 12000 job losses.
But the United Clothing and Textile Association, which chairman Ahmed Paruk said represents about half of the non-compliant clothing sector that is non-compliant, said it was confident Amsa's application would not succeed. Sactwu has opposed the action as it would lead to many job losses.
"The clothing sector and the country cannot afford so many workers out of a job," Paruk said. Sidelining non-compliant factories curbed the industry's growth.
Local manufacturers are also battling rising imports. Amsa statistics show clothing imports were up 35% in the first quarter compared with last year's first quarter.
China supplied 68% of South Africa's clothing imports by value in the 12 months to March, up 10% or R700-million on last year.
Independent textile industry researcher Renato Palmi said retailers were assessing how to manage the risk of local suppliers being unable to supply goods. Retailers were looking to source more goods locally to allow for "fast fashion" and quicker turnarounds. Fast fashion generates higher stock turns and profitability.
Foschini Group sources 65% to 70% of its ladies apparel from South Africa. It bought a local cut-make-and-trim outfit to secure more goods locally.
"The local industry can't compete on price, but plays an important role in providing quick response and reduced lead times," said Martin Mendelsohn, the group's retail director.
Mr Price Group said procurement from local manufacturers rose 21% in rand terms in the past financial year. It is reducing its reliance on China in favour of Bangladesh, Cambodia, Vietnam, Mauritius and South Africa.
The average lead time to get goods from China is about six months. So retailers use local manufacturers, and those in Mozambique and Lesotho, for faster turnaround.
Source: Business Times
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