JOINT MEDIA STATEMENT BY COSATU, SACTAWU AND CEPPAWAWU JOB LOSSES IN THE PLASTIC BAG, CLOTHING,TEXTILE AND LEATHER INDUSTRIES

7 August 2003

Over the past six months, job losses in the clothing, textile and leather industry have reached critical levels.

Thousands of jobs are now also at risk in the plastic bag manufacturing industry. The unions in both industries are issuing Section 77 Notices to NEDLAC to enable their members to take action in defence of their jobs. COSATU is giving its full backing to both unions.

Clothing, textiles and leather

COSATU and SACTWU are shocked and angry that between 1 January and 30 June 2003, about 6 000 jobs were lost in the industry. This is on top of the loss of at least 17 000 jobs during 2001 and 2002. The result is increased poverty and hardships for retrenched workers.

"More than one thousand jobs are lost a month in the clothing, textile and leather industry", says Ebrahim Patel, General Secretary of the SA Clothing and Textile Workers' Union (SACTWU), a COSATU affiliate.

"We have now decided to lodge a notice, in terms of the Labour Relations Act, against a range of retailers, banks and finance asset managers, in order to address the crisis", he said.

"This job loss will aggravate poverty and the crisis facing our communities, and decisive action is needed", says Zwelinzima Vavi, General Secretary of COSATU.

The clothing, textile and leather industry is the most labour intensive part of the manufacturing sector. For a number of years faced with declining import tariff levels, large numbers of jobs have been lost, companies closed and sweatshop working conditions grew. Following some temporary relief when the value of the Rand declined, the industry is again contracting massively in the context of a strong Rand. The strong Rand weakens exports and makes imports cheaper, and hence a strong Rand destroys jobs in the fashion manufacturing sector.

The SA Labour Research Institute, in collaboration with SACTWU, maintains a retrenchment and job loss database for the clothing, textile and leather sectors. During 2001 and 2002, at least 17 000 job losses were recorded on the database.

The latest data from this database indicates that for the period 1 January to 30 June 2003, at least 5 749 blue-collar jobs have been lost. This information is compiled by researchers, based on specific reports forwarded to them by branch organisers who are responsible for negotiating retrenchment arrangements, or by bargaining councils which track employment strength on a month-to-month basis in the industry.

In reality, the job losses will be significantly higher since our sources of information are not able to record every instance of retrenchment. Our information also excludes natural attrition. It records employees in the union bargaining unit, and hence excludes most white collar and managerial staff.

The number of jobs lost for the first six months of this year is:

Jobs lost
January	727
February	669
March	410
April	506
May	1629
June	1808
Total	5749

The table below sets out the analysis by sub-sector.

	Clothing	Textile	Leather
January	631	96	0
February	477	42	150
March	327	64	19
April	132	133	241
May	1219	201	209
June	887	737	184
Total	3673	1273	803_

The following table sets out the job losses by region.

Jobs lost
W Cape	1774
KZN	2004
E Cape	897
Gauteng	563
Free State	511
Total	5749

This information shows that not only are retrenchments reaching an exceptional high level, but that the rate of retrenchment appears to be increasing over the period.

This table sets out the number of factory closures and liquidations in the clothing, textile and leather sectors for the first six months of 2003.

	Closures/ liquidations	Number of workers affected
W Cape	4	342
KZN	7	1323
E Cape	2	126
Gauteng	7	348
Free State	3	204
Total	23	2343

The factories that have closed or been liquidated in this period include the following:

1. Outward Bound
2. Taylor CMT
3. Paul Steiger
4. Scala Foundations
5. Sandesh Clothing
6. Jaymat
7. Parris Parris
8. Feier Design
9. JCC/Picasso
10. Belle Mode
11. Adams Hat and Cap
12. Prostart Investments
13. Ardov
14. Elegant Travel Goods
15. Imbali Promotions
16. Rasano Modes
17. Cooler Corporation
18. Abiti
19. Standard Wool
20. Vision Clothing
21. Oriental Embroideries
22. Hoby
23. Santa's Workshop

All this data underlines the need for urgent action to save jobs in the fashion manufacturing industry. The retail industry has shifted more of its sourcing of goods to factories outside South Africa, particularly the Far East.

It is this reality that led the SA Clothing and Textile Workers' Union (SACTWU) to decide to table a Section 77 notice, in terms of the Labour Relations Act, at Nedlac. The notice is directed at clothing and leather retailers, as well as their banks and investors in the form of asset and equity fund managers (their suppliers of working and equity capital).

The notice requires the retailers to sign a Code of Conduct that will commit them to sourcing at least 90% of their fashion goods (clothing, textile and leather articles) from local manufacturers.

The notice will require Nedlac to convene meetings of retailers, banks and asset managers with SACTWU in order to consider the union's socio-economic demands.

Should these discussions fail to arrive at an agreement, SACTWU will be entitled to give further notice to Nedlac, and thereafter embark on protest action against retailers, banks and fund managers.

SACTWU calls on the retail industry to seriously engage in these tasks. The union has prepared a resolution for consideration at the forthcoming COSATU congress in September that entails the 1,7m strong labour federation throwing its weight behind the campaign.

SACTWU is issuing a Section 77 Notice to NEDLAC, stating that we intend initiating socio-economic protest action against the retail sector and their suppliers of capital, (banks and equity fund managers) for the following reasons:

1. The continuing job losses in the clothing, textile and leather manufacturing industry is caused or aggravated, inter alia, by the sourcing decisions of retailers, and/or can be influenced by sourcing decisions of retailers.
2. High levels of imports by retailers of clothing, textile and leather articles that are currently available locally, or are capable of being manufactured locally, results in retrenchments, factory closures or the lack of employment growth in the industry.
3. Pricing policies of retailers towards manufacturers often result in job losses, pressure on wages, and manufacturers paying workers below the minimum wage in order to retain an order from a retailer.
4. The practice of many retailers in shifting their sourcing to low wage areas, and exploiting workers in the informal sector, is against the socio-economic interests of workers.
5. The suppliers of capital (banks and equity fund managers) benefit from the sourcing practices of retailers, and can have leverage or influence over the corporate behaviour of retailers.

SACTWU demands that the retail sector:

1. Promote local employment and decent jobs through actively increasing the total proportion of goods in their stores that are manufactured locally.
2. Sign the Code of Conduct that commits to local procurement, support for the local manufacturing industry, commitment by suppliers to promote fair labour practices in their commercial contractual arrangements with manufacturers, promotes job creation and job security and provide for compliance mechanisms.

SACTWU demands that suppliers of capital to the retail sector:

1. Bring to the attention of retailers that their sourcing decisions are not consistent with long-term economic and social development goals.
2. Require retailers to promote local employment and decent jobs through actively increasing the total proportion of goods in their stores that are manufactured locally.
3. Require retailers to sign the attached Code of Conduct.
4. Advise retailers that failure to sign the Code of Conduct will result in the termination of the commercial relationship with and/or equity holding in the retailer, its subsidiaries and/or holding company.

Plastic bags

The Chemical, Energy, Paper, Printing, Wood and Allied Workers Union is also issuing a Section 77 Notice in face of a threat of massive job losses in the plastic bag industry.

The background to this is that labour, the Department of Environmental Affairs and Tourism (DEAT) and organised business entered into a Memorandum of Agreement in September 2003 and regulations prescribing the thickness of plastic bags and printing on plastic bags were promulgated on 9 May 2003.

Parties to the agreement agreed that there was a need to address environmental issues in a sustainable manner and the agreement specifically addressed plastic bag litter. The agreement also attempted to ensure that DEAT's regulatory efforts would be optimised 'whilst minimising any negative social or economic impacts, especially those relating to workers, the poor, women and rural areas'.

The agreement provides for, among other things:

• A minimum thickness of plastic bags
• A limitation on the coverage and type of ink to be used when printing on the bags
• Setting up a section 21 company that would, inter alia, promote efficiency in the use, re-use, collection, recycling and disposal of plastic bags
• Disclosure and transparency regarding the costs of plastic bags
• The need for a market for recycled materials
• Job retention and the promotion of job creation
• Retailers to recover the cost the bags from consumers and reduce the price of other goods accordingly.

An unintended consequence of the agreement is that demand for plastic bags has plummeted by between 80% and 90%.

The reasons for the dramatic drop are misleading advertising by certain retailers who indicated that it was the law to charge for plastic bags, the high price set for the bags by the retailers and the plastic bag manufacturers, and the fact that consumers have to pay for bags after purchasing their goods. These factors have led to massive consumer resistance to the new measures.

DEAT initially promulgated the regulations to enforce the agreement. The regulations do not enforce charging, but merely specify thickness and printing. However, DEAT has pursued companies not signatory to the agreement, trying to enforce charging across the board.

This action by the retailers and DEAT has created a perception in the minds of people that they are required to charge for (in the case of retailers) or to pay for plastic bags (in the case of consumers).

The result of the dramatic drop in demand has been that many workers have been placed on short time or unpaid leave. Other workers in the plastic bag manufacturing industry have been retrenched and many more may be retrenched if demand does not increase rapidly and dramatically.

The unions believe that consumers are also being 'penalised' by the new system in that there is no evidence that retailers are reducing the price of goods in accordance with the agreement Consumers are thus paying for bags twice - once through the cost in the overhead of the company and then again when they pay at the till. This is particularly burdensome for poor consumers with limited disposable income.

Unless charging for bags ends immediately, more jobs will be lost in the production industry. At this point, maintaining any charge for bags is therefore not acceptable. We are prepared to consider charging for bags, as a measure to reduce litter, after suitable time for adjustment and a joint communication and advertising to consumers, in order to avoid the precipitous drop in demand experienced in recent months.

Numerous meetings have been held with DEAT, the plastic bag manufacturers and the retailers in an attempt to address the problem of job loss resulting from exceptionally low demand. While all parties acknowledge the problem and say they are committed to addressing it, labour does not believe that the substantive positions on the table from retail and government will ensure that jobs are saved.

Labour's Demands

• There should be no charging for plastic bags for 6 months in order to increase demand and secure jobs
• After 6 months, market forces should set the price for plastic bags. That means retailers could charge whatever amount they see fit, including nothing. After that retailers should be free to choose whether they wish to charge separately or to build the cost of the packaging into their overall cost.
• In the interim, the government, retailers and labour should work together to communicate the reasons for the change to consumers and the fact that the new, thicker bags may be worth more on the market and to the users than the earlier, thinner ones.
• The Section 21 company should be set up urgently and opportunities for recycling plastic bags made available in or near all major retail outlets. The retailers have held up the process by refusing to sign the legal documents setting up the company. We want them to sign forthwith.

Unemployment crisis

All this information has to be seen in the context of yesterday's report of the survey of employment and earnings by Statistics South Africa, which showed a negligible increase in overall employment (0.02%) between September and December 2002.

The evidence from this survey and the evidence presented by us today from the plastic bag and clothing and textile industries contradicts claims that we have turned the corner on the unemployment crisis. Statistics South Africa's narrow, official definition of unemployment, that does not include workers too discouraged to seek employment, shows that unemployment rose from 16% of the labour force in 1995 to over 30% today. The larger figure of the total number unemployed stands at over 40%, close to eight million people.

COSATU and its affiliates will not tolerate such levels of unemployment and will campaign vigorously to defend every job and sup[port any action taken by our affiliates to save and create jobs. We will do everything to ensure that the job creation programmes agreed to at the Growth and Development Summit are implemented with the greatest possible urgency by government, business labour and the community.

Patrick Craven
Acting COSATU Spokesperson
patrick@cosatu.org.za
082-821-7456
339-4911