February 28, 2024
MANILA – A local group of garment exporters warned on Tuesday that a new wage hike would devastate their industry, with data pointing to over 120,000 jobs getting wiped out in a sector already on a downward spiral due to softening global demand.
Confederation of Wearable Exporters of the Philippines (Conwep) executive director Maritess Jocson-Agoncillo said that as much as two-thirds of the 182,600 currently employed by the industry could end up losing their jobs should a legislated salary increase push through.
“Maybe [around] 20 to 30 percent of 160,000 would stay,” Jocson-Agoncillo told reporters.
“We are already suffering a bad 2024 projection of losing another 22,000 workers without the legislated minimum wage,” she added.
The group employs around 65 percent of the local garments industry’s over 180,000 employees who work in factories that make clothes for international brands.
Aside from the job losses this year, Jocson-Agoncillo also presented data showing that their export revenues for apparel, leather goods and footwear were also expected to decline by 11 percent.
The export revenues for these goods were pegged at $1.35 billion in 2023, with the business group projecting it to settle at $1.20 billion for 2024.
These commodity groups have seen a 34-percent decline in export revenues after the COVID-19 pandemic hit in 2020. The figure hit $1.79 billion in 2019.
Multiple factors
Conwep has already asked President Marcos to reconsider a wage hike through a letter, where it also explained the reasons behind the decline in export revenues.
“Falling consumer purchasing power and rising price cuts leave retail stores with higher inventory, and buyers migrate their orders to more affordable options such as Vietnam, Cambodia and Indonesia due to preferential trade agreements or competitive sourcing costs and faster deliveries,” it said.
In the same letter, the group told Mr. Marcos that a major client in the United States had already warned Conwep on Feb. 22 that its orders would be diverted to Indonesia and Cambodia should a new wage increase be implemented.
According to Conwep, garment factories in Regions 3, 4A, 4B and 7 would be impacted by this loss.
Citing these problems, the group said it suggested, in its letter to Mr. Marcos, to enforce a two-year monthly government inflation subsidy of P1,000 for minimum salary earners instead of another pay increase.
“We understand the predicament of the approximately 4.2 million registered minimum wage earners adversely affected by inflation and rotational job loss. The [Department of Labor and Employment’s] Adjustment Measure Program can be mobilized and funded rather than legislating a P100 minimum wage increase or any amount,” Conwep said.
Inflation subsidy proposed
It added that a two-year inflation subsidy would allow the industry to recover, saying that it expected global demand for apparel exports to remain soft until March 2026.
“Other countries such as Vietnam, China and Cambodia have implemented support programs similar to those of their apparel export sectors in previous years,” it noted. A second suggestion from the group was for the President to mobilize government agencies to improve the country’s business climate and promote the Philippines as a preferred investment choice.