. . . as jobs carnage continues after Nien Hsing closes C&Y factory,
Bereng Mpaki
LEADING textiles conglomerate, Nien Hsing Textiles Group, has closed down its C&Y Garments subsidiary in Maseru, rendering about 2700 workers jobless in the process.
Barely three months ago, the Group also closed its Nien Hsing International subsidiary, also in the Thetsane, Maseru industrial hub area, sending more than 2700 workers packing.
Group general manager, Ricky Chang, described 2021 as the company’s annus horribilis (horrible year), saying a Covid-19 induced slump in demand for their products had forced them to lay off a combined 5500 workers this year alone.
This means that the company has retrenched more than half of its 10 000-strong workforce in just one year.
Both C&Y Garments and Nien Hsing International are part of the larger Nien Hsing Textiles Group, which originates from Taiwan. The group had textile manufacturing factories in Lesotho, which collectively employed over 10 000 workers. Apart from the two, others in the group are Global International and Formosa Textiles. There used to be five factories in all before Glory International closed last year and sent home 1500 workers in the process.
Now that C&Y Garments has followed Nien Hsing International’s example and retrenched its 2700 workers, this means that the group would have retrenched more than 7000 workers in 2020 and 2021.
This is a massive jobs carnage considering that the Lesotho National Development Corporation (LNDC) reported that at least 6000 workers lost their jobs within the manufacturing sector from March 2020 to March 2021 mainly due to the Covid-19 induced slowdown in global economic activity. This was before the 5 500 workers who lost their jobs at Nien Hsing’s companies since September 2021.
The haemorrhaging of jobs in the entire textiles and garment factories may continue as Mr Chang conceded that they were unsure about what 2022 holds in store for them. He said they were considering merging their remaining three subsidiaries into one operation to manage their ballooning production costs.
Prior to last year’s retrenchments, the government had put the number of factory workers in the country at 45 000. Given the LNDC reports of 6000 job losses up to March this year and the subsequent job cuts at the Nien Hsing Group in September and December 2021, the total number of those who have been retrenched to date is about 11500. In other words, a staggering 25 percent of the entire workforce have lost their jobs since last year.
Speaking on the jobs carnage at his company in an exclusive interview with the Lesotho Times this week, Mr Chang said, “we have just experienced the worst year since we started operating in Lesotho more than two decades ago”.
“During 2021, we had to shut down two factories. We shut down Nien Hsing International Lesotho factory in September 2021 and this month we have shut down C&Y Garments. In 2021 alone, we have lost over 5500 workers to retrenchments as a result of the Covid-19 pandemic which has caused a slump in the demand for our products.
“That figure (of jobs lost) accounts for more than half of our entire staff complement which was over 10 000 before the pandemic,” Mr Chang said, adding they would soon be merging their remaining subsidiaries into one company.
He said the business environment remained uncertain due to the emergence of the new, more infectious Omicron variant of the virus.
“There had been signs of recovery in the market but the emergence of the Omicron variant poses a new challenge for the textile industry. It is therefore hard to predict what 2022 holds in store for us.
“We have to be optimistic that a cure for the virus will be found soon. It is also important for the government and all stakeholders to continue raising awareness on the need for everyone to adhere to the safety protocols to stop the virus from spreading within the country,” Mr Chang said.
The Group, like most other textile enterprises operating from Lesotho, has been taking full advantage of the United States (US)’s African Growth and Opportunity Act (AGOA) which allows them to export their products duty-free to the superpower.
Meanwhile, the Lesotho Wholesale, Catering and Allied Workers Union has bemoaned the jobs carnage saying this will further entrench poverty in the country.
The union’s secretary general, Lebonejoang James Molefi, is not buying the Nien Hsing Group’s argument that it has been forced into the drastic job cuts by the Covid-19 induced slump in demand for its products.
He believes the textile companies are only using Covid-19 as an excuse to reduce their workforce in order to arm twist the government into giving in to their demands not to increase workers’ wages.
In June this year, the government awarded a 14 percent salary increase to textile workers. Other sectors were awarded a nine percent wage increase for the 2021/22 financial year.
The salary hikes came on the back of violent worker protests for better pay from 10 May to 7 June 2021.
The workers had complained that the cost of living had gone up since their last wage adjustment in 2019. They wanted a 20 percent salary increase for the current 2021/22 financial year, while their employers were offering six percent.
They were also demanding the retrospective publishing of the minimum wage gazette for the 2020/21 financial year which was never issued after employers pleaded that they were financially constrained due to the negative effects of Covid-19.
Nien Hsing Group’s Mr Chang alluded to the impact of the salary hikes and the consequent escalation of production costs as the reasons behind their move to lay off workers at Nien Hsing International and C&Y Garments.
However, Mr Molefi is unconvinced by the Group’s explanation.
“The Group and other textile employers are making these job cuts as part of a plan to arm-twist the government not to make any concessions to workers ahead of next year’s elections. They know that political parties, including those in government, will be needing the workers’ votes and could give them concessions like salary increments to win their support. To forestall the authorities from awarding any increments like this year’s 14 percent award, the employers are retrenching, citing a depressed market and ballooning costs.
“The government should not just accept these excuses. It must conduct its own investigations to ascertain if it is really the case that these companies cannot afford to retain workers. We believe the employers are only using the Covid-19 pandemic as an excuse to retrench workers ahead of next year’s elections,” Mr Molefi said.
An “Industry Status Report for January to March 2021” prepared by the LNDC suggests that the Corporation was aware of the looming job cuts at the Nien Hsing Group earlier this year.
“Nien Hsing has combined its five companies into three and planning to combine the three companies into one company,” the LNDC states in a section of the report titled “Closures”.
Contacted for comment, LNDC public relations manager, Tiisetso Moremoholo, referred this publication to the corporation’s 12 August 2021 statement wherein it said it was “troubled by the downscaling of operations by key players which has resulted in considerable job losses”.
“In an endeavour to save these jobs, the Corporation has engaged the companies that have downsized their operations through sizable layoffs. These companies have cited disruptions in the supply chain due to Covid-19 as the main driver behind downsizing. A progressively deteriorating investment climate has also been named as a factor which affects business negatively.
“The Corporation has initiated engagements with key stakeholders to jointly address issues that negatively impact on the investment climate. The Corporation has also resuscitated the Inter-Ministerial Task Team (IMTT), which is a high-level problem-solving forum led by the Honourable Minister of Trade and Industry (Thabiso Molapo) to address investors’ grievances. The main objective of the IMTT is to facilitate collaboration with key stakeholders to improve the investment environment to restore investor confidence.
“The corporation therefore wishes to assure workers and the public that it is exploring all avenues to preserve and create new jobs for those who have been retrenched, through operationalising expansion projects in its pipeline.
“Saving existing jobs is as equally important, if not more important to LNDC than creating new ones, particularly under these strained economic conditions. Looking after the welfare of existing investors to ensure that they thrive and create additional jobs for Basotho as reflected in the Corporation’s mandate remains a key priority for LNDC,” the LNDC statement said.
Trade and Industry Minister, Thabiso Molapo’s mobile phone rang unanswered when this publication called him for comment yesterday.
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