Greed and negligence putting T&G export industry at risk, ITGLWF

Greed and negligence putting T&G export industry at risk, ITGLWF
February 23, 2009 (Peru)
Posted by Chea Sophal


“The widespread and often fraudulent use of temporary employment contracts is damaging Peru’s textile and garment export industry”, President Alan García was warned.

In a letter to the Peruvian President, Neil Kearney, General Secretary of the Brussels-based International Textile, Garment and Leather Workers’ Federation (ITGLWF) said that while Peru has the opportunity of being a major player in world export markets, its current labour legislation and the way it is being used is making it impossible for international brands and retailers to ensure that their contractual requirements regarding social compliance are met.

“Short-term contracts are denying workers job security and the right to organise and condemning them to long working hours, low wages, poor conditions, abusive treatment and limited access to health and pension coverage as a result of their non-continuous employment”, says Mr. Kearney.

“At the same time these contracts are condemning the industry to high turnover rates, a poorly-trained workforce, low productivity, and a reputation for posing a threat to the image of the brands and retailers sourcing from Peru. Hardly a recipe for sustainability in difficult markets!”

Of particular concern to the ITGLWF is Decree No. 22342 which establishes a special contractual regime allowing ‘non traditional exporting companies’ to employ workers on short-term contracts.

“When these provisions were introduced thirty years ago as a ‘temporary’ measure, the argument was that special incentives were needed to promote Peru’s textile & garment export industry which at the time was virtually non-existent”, says Mr. Kearney.

“Today, the situation could not be more different. Peru exports some 850 million US dollars in textiles and apparel to the US alone, has a free trade agreement with the United States and enjoys special incentives for exports to the European Union under the GSP+ scheme. Yet employers producing for export markets are still hiring workers on three-month contracts or shorter – even if they have to break the law to do so.

“In order to qualify to hire temporary workers an employer must be accredited as a non-traditional exporting company, must export 70% of its production and must employ workers to work on specific export orders – which means that a worker hired to produce short-sleeved cotton blouses might not be kept on to work on an order for sleeveless cotton tops for the same buyer.

“Companies found to be in breach of these requirements must modify their workers’ contracts to make them permanent.

“However, it is becoming increasingly evident that a potentially large number of companies are hiring temporary workers in breach of the law, and the authorities are standing by and doing nothing.

“Take Universal Textil, a leading Peruvian exporting company which recently failed to renew the contracts of workers who had joined a union. In June 2007, the labour authorities found that the company was employing 1,257 workers on temporary contracts in spite of not meeting the required export levels, and ordered it to make its workers permanent. Twenty months and three unsuccesful appeals later, Universal Textil continues to ignore the order, and the labour authorities have done nothing to force the company to comply.

“Another example is Hilandería Hialpesa, which has failed to renew the contracts of 150 union members. Some of those dismissed had been continuously employed for eighteen years on over 70 three-month contracts. The workers concerned were employed to perform permanent functions in the textile process. Their jobs existed before they were hired and have been filled by other workers since their dismissal. In other words, they are clearly in a ‘de facto’ permanent employment relationship and can in no way be considered as temporary workers hired to fulfill a specific export order.

“Icadie and its parent company Diseño y Color is another example of the fraudulent use of temporary contracts. Last year the ITGLWF intervened to seek the reinstatement of workers who had lost their jobs after joining a union. After finding that Icadie was not registered on the Register of Non Traditional Exporting Companies, the Labour Ministry ordered the company to give the workers permanent contracts. The company failed to do so, and again the government did nothing.

“At the ITGLWF’s request one of the company’s buyers, Gap Inc, intervened to ensure Icadie’s compliance with its code of conduct, but the persistent failure of the company to address its concerns left the buyer which no choice but to sever its relationship”.

President Alan García has been asked to intervene in the cases of Hialpesa and Universal Textil to ensure that the workers fired for joining a union are reinstated with back pay and that the workers illegally hired under temporary contracts are made permanent as of their date of entry.

The ITGLWF has further asked the government to take action to repeal Decree 22342 and to bring Peru’s labour laws into line with international standards. As a first step, the Global Union has called for an immediate investigation into the illegal use of short-term contracts in the industry.

Concludes Mr. Kearney: “The textile and apparel export industry is today an important component of the Peruvian economy but the greed of employers and the negligence of the government is putting the future of the industry at risk. The sector urgently needs a clean-up with immediate government intervention to improve labour protection for workers in the sector”.

International Textile, Garment and Leather Workers' Federation (ITGLWF)