Wearables industry warns more jobs at risk if wage hike bill becomes law
THE Confederation of Wearable Exporters of the Philippines (CONWEP) said more jobs in the wearables industry could be lost if the P100 wage hike bill is signed into law, noting that previous wage increases are estimated to have resulted in the loss of 21,912 jobs.
In a briefing on Tuesday, CONWEP Executive Director Ma. Teresita Jocson-Agoncillo said the industry is projecting job losses just from the wage hikes implemented last year and in 2022.
Citing feedback from foreign clients, Ms. Jocson-Agoncillo said that “a legislated minimum wage hike with the recent increase on the Regional Tripartite Wages and Productivity Board (RTWB) last September and October is like the final nail in our coffin.”
CONWEP estimated a decline of at least 12% in industry employment this year to 160,888 direct and indirect jobs, without even considering the proposed P100 wage hike.
“Our projection of a dip of another 12-15% in industry employment was projected without incorporating the additional legislated wage increase,” she said.
In 2022 and 2023, the industry recorded a 2% and 13% decline in employment, respectively, following the pullout from the Philippines of a major European client, which she said was “just one brand in the sportswear sector. One (company) had to retrench 7,000 workers between 2022 and 2023,” she said.
“For this particular brand in Region VII (Central Visayas), close to 10,000 workers were retrenched. There was another factory manufacturing the same brand which also had to retrench 2,800 workers,” she added.
She said that the European brand shifted production to Vietnam following the signing of a free trade agreement between Vietnam and the European Union, while a US brand in sportswear and sport equipment also has plans to pull out ahead of the looming P100 wage hike.
“Mere news (about) the Senate pushing for a P100 minimum wage increase alarmed investors and buyers,” she said.
She said that the US brand, which currently employs 6,000 workers, is planning to pull out and move to Indonesia and Cambodia “if the Philippines started to really get more expensive while not having been able to recover from the past two years’ increases in minimum wages.”
According to Ms. Jocson-Agoncillo, the two consecutive wage board-ordered increases in 2022 and 2023 increased wages by P73, P80, P106, and P64 in the National Capital Region, Region III or Central Luzon, Region IV-A or Calabarzon, and Region VII, respectively.
“The two consecutive mandated RTWB minimum wage increases (weakened) the industry’s competitive position … We were unable to protect jobs, unable to keep jobs in the country. So another regulated or even mandated wage increase will really be devastating,” she said.
CONWEP put the daily minimum wage in the Philippines at $6.7-11, more expensive than Vietnam ($5.45-7.84), Indonesia ($4.8-12.15), Laos ($2.5-3.15), and Myanmar ($2.28-2.76).
Meanwhile, the P100 wage hike is expected to lead to a 21% increase in labor costs, which constitutes 35% of total cost in the industry.
Asked how many jobs are at risk, Ms. Jocson-Agoncillo said passing the bill could result in the retention of only about 20-30% of the current workforce.
CONWEP has written President Ferdinand R. Marcos, Jr., the Senate, the Department of Trade and Industry, and the Department of Labor and Employment (DoLE), seeking a two-year subsidy and a freeze to the wage increase plans.
The group proposed a monthly P1,000 government inflation subsidy for two years for minimum wage earners, instead of a legislated increase in the minimum wage.
“We are currently exploring the possibility of tapping into the Adjustment Measure Program, which is in some form a Job Protection Program of DoLE,” Ms. Jocson-Agoncillo said.
Ms. Jocson-Agoncillo said this is similar to the government support measures for employers during the pandemic in order to preserve employment levels.
“We are hoping to tap this again — anything between a P600 and P1,000 inflation subsidy,” she added.
In the group’s letter, the two-year inflation subsidy was pitched as a means to allow the industry to recover, with global demand for apparel exports expected to remain soft until March 2026.
It added that Vietnam, China, and Cambodia have implemented support programs for their apparel exporters.
“That is the reason why we sent the letter, to look into a job protection program for the industry. We are already a distressed industry, so we request the government put this up first. Then by 2026, who knows, we can start to recover,” Ms. Jocson-Agoncillo said.
She said the subsidy will allow the industry to maintain a staffing level of 160,000.
CONWEP projects exports in 2024 to decline 11% to $1.2 billion in 2024.
“Our projections for 2024 don’t look good. We ran a survey because CONWEP represents 60-70% of the industry, and our projection shows that we may run another 11% at minimum to 15% maximum negative growth,” Ms. Jocson-Agoncillo said.
She said that the study does not cover data for textiles and only covers apparel, leather goods, and footwear.
“We are not interesting anymore to brands because we are not enjoying any preferential status for garments,” she added.
Ms. Jocson-Agoncillo said that January to February are usually the peak seasons for orders for the spring and summer collections.
“But we are not getting the orders. The orders are still soft, unlike in previous years,” she added.
She said that orders for spring and summer normally come in by December-February, with production runs set between March and May, just in time for the spring and summer schedules. — Justine Irish D. Tabile
