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MANILA – Philippine apparel exporters expect to cut about 21,000 jobs this year as orders from the United States plummet, prompting workers to turn to international brands, including Adidas and Under Armor, to help prevent further layoffs.
The mass layoffs come as the local labor market is already in crisis due to prolonged lockdowns related to the coronavirus. In addition to pressure on the garment sector, talks on a free trade agreement between the United States and the Philippines aimed at rejuvenating exports have also stalled.
The estimated job cuts are based on an industry survey and are equivalent to one-fifth of the 112,000 workers employed by member companies of the Confederation of Wearable Exporters of the Philippines, or Conwep, which produces clothing, bags and shoes for women. major world brands.
“What you’re seeing is a direct hit from the pandemic,” Conwep CEO Maritess Agoncillo said in an interview. “The orders no longer arrive.”
Major contractors based on the central island of Cebu already laid off about 4,000 workers earlier this month and more job cuts are coming, according to Dennis Derige, coordinator of the Mactan Export Processing Zone Workers Alliance, whose members include fired garment workers.
Derige appeals to international brands supplied by the contractor, including Adidas, Under Armor and Lululemon, to help prevent further job cuts.
“This crisis is temporary, but the layoff is permanent. We hope they advise their subcontractors to suspend the layoff. They are the buyers, they have a lot to say in this,” Derige told the Nikkei Asian Review.
Those companies have not yet responded to a request for comment.
Agoncillo declined to name Conwep’s clients, but said its members have struggled due to weak demand from the United States, which accounts for about 75% of orders.
Clothing exports fell 49% to $ 192 million from January to May this year, he said.
“Right now, we should be getting orders for the spring [next year] but there are no orders, “Agoncillo said, adding that manufacturers are only downsizing, not closing.
The layoffs are expected to hit the local job market. The Philippines’ unemployment rate fell to 10% in July, from a record 17.7% during the height of the lockdown in April, but is still double the 5.4% of a year ago.
The Philippine government has been eager to revive its garment sector, a major industry in the 1990s until an export quota was eliminated, through an FTA with the United States. Talks for the deal, however, have faced delays.
“We may need an aggressive approach to our market access issues, reigniting the US-Philippines FTA agenda, and enhancing the EU’s GSP +. [Generalized System of Preference] program, “said Agoncillo.
In principle, the GSP eliminates tariffs on imports into the European Union from developing countries.
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