Apparel exporters insist on flexible labour laws, revisions to energy tariffs

Amendments to Sri Lanka’s electricity tariff structure and labour laws are being sought by Sri Lankan apparel exporters in order to facilitate apparel manufacture by lowering cost of production.

“Energy costs continue to be a large and increasing part of our industry. We would look to the removal of the fuel adjustment charge applicable under the tariffs which most of our members operate. With the commissioning of the coal power plants there is now a valid argument for the removal of this surcharge.

Our association has made a number of observations to the Public Utilities Commission (PUC) and we would seek an opportunity to discuss these in detail as we believe there are some fundamental issues in the way the current tariff system is structured,” Sri Lanka Apparel Exporters Association Chairman Yohan Lawrence stated at the association’s recently held AGM.

Electricity currently represents approximately 8 percent of the cost of running a factory. However, with the recent tariff increases, apparel manufacturers saw electricity costs increasing between 17-18 percent with manufacturers running large wet processing units seeing much higher increases.

Lawrence also called for the implementation of incentive schemes for alternative energy generation, particularly in the conversion from furnace oil to biomass boilers.

“Applications may be limited in our industry but there is potentially a large benefit across other industries, including fabric mills. Low-cost funding in this area would be for mutual benefit,” he stated.

Meanwhile, touching on Sri Lanka’s labour laws, Lawrence called on amendments with a view to allowing factory workers to work longer hours while also allowing factories to run continuous shifts.

“Flexibility of the labour market is an issue we struggle to make any headway on. The Sri Lankan apparel industry is recognized internationally for the treatment of our employees and we have some truly world-class factories that offer exceptional working conditions. However, we work less hours than our competitor countries and we have a much more rigid set of rules.

Increased labour market flexibility will be a significant advantage to the industry as this allows us to have 24-hour/seven-day shift operations,” Lawrence noted.

Sri Lankan factory workers are allowed a maximum of 57.5 hours in comparison to Bangladesh with 60 hours and Vietnam with 64 hours and a fixed weekly holiday.

Allowing factories to work continuous shifts may also have positive implications for Sri Lanka’s power grid, which would otherwise see a significant drop in consumption after peak hours.