The ReDress Consultancy

New economic zones for South Africa?

2012-01-26T14:39:00.001+02:00

The Treasury has made a complete about-turn in its opposition to tax incentives to promote industrial development.

After a tough battle with the Department of Trade and Industry over this form of funding, the Treasury is now fully supportive of a plan to provide incentives to attract investment to proposed special economic zones.

The Treasury has agreed that a special economic zones fund will be established to finance infrastructure and offer dedicated, sector-specific incentives to enterprises there. All nine provinces are expected to have such zones. Department of Trade and Industry director-general Lionel October said yesterday the size of the multibillion-rand fund still had to be negotiated.

"We still might have to fight a battle (with the Treasury) for significant resources," he told Parliament¶s trade and industry portfolio committee during a briefing on the draft Special Economic Zones Bill. Upfront funding would be essential for the long-term planning of such zones.

Nevertheless, Mr October said, things were now much more in the department¶s favour. After a "long

debate" there was "absolute consensus" between the Treasury and trade and industry on the need

for the zones as a tool for long-term industrial development.

This consensus would provide a strong foundation for the zones which, unlike industrial development

zones, will neither be tied to exports nor located near a port or international airport.

"In a sense the industrial policy debate has been won now," Mr October said. The government was

committed to acting "boldly" now to promote economic growth and industrial development.

This approach was also evident in Finance Minister Pravin Gordhan¶s indication in the medium-term budget policy statement in October that about R10bn would be spent on investment promotion over

the next three years. He recently extended section 12i of the Income Tax Act to include industrial

development zones.

Mr October said the shift in the government¶s view towards incentives was in line with a worldwide
trend after the global recession.

The downturn had revealed that the western approach of not giving special incentives to the private
sector had failed and that the Asian model of targeted financial support had been successful.

During the crisis many countries lost significant chunks of their manufacturing capacity because they
did not give companies any support.

Mr October said he believed the Treasury is confidence in the use of incentives had also been strengthened by the success of schemes in SA"s clothing and automotive industries.

Opposition MPs argued for aggressive tax incentive packages and the relaxation of labour laws in
the economic zones to make them internationally competitive, but Mr October stressed that it was
not sustainable for them to rely on cheap labour. The labour movement need have no fear of these zones.

Ref: Business Day, 26 Jan 2012

Minister probed into clothing workers' missing money resigns

2012-01-18T09:31:00.000+02:00

South Africa
Godongwana denies quitting over R100m pension scandal

Enoch Godongwana insists his resignation as deputy minister of economic development is due to his ANC commitments in the year ahead, and has nothing to do with the probe into the misappropriation of R100-million of clothing workers' pension money.

The R100-million went up in smoke after it was sunk into Canyon Springs, a company -- currently the subject of a liquidation inquiry -- half-owned by a family trust belonging to Godongwana, and his wife Thandiwe.

The money belonged to more than 20 000 members of the South African Clothing and Textile Workers' Union (Sactwu), who earn on average R700 a week and contribute 6.5% of their salary to the provident funds.

"People can have their own opinions about my resignation," Godongwana told The Times newspaper, in a report published on Monday. "In my discussion with the ANC leadership and the presidency, I did not talk about my business interests ... It was out of my own assessment that I decided to resign."

He told the newspaper that he would be tied up with "party work this year", but declined to elaborate on what this would involve.

Salary questions

In October last year, Godongwana told a closed liquidation inquiry in Cape Town that he had expected to earn an annual salary of R1.5-million when he chaired Canyon Springs, but had been paid only when the company had money.

The company's books reveal that he received only R600 000 from Canyon Springs but, according to sources who attended the hearing, he said the company did not keep proper records.

From the records Canyon Springs did keep, it was apparently shown that Godongwana's salary was drawn from the clothing workers' pension money.

When it is finally established what he earned, Godongwana -- who says the loan had been arranged before he and his wife came on board -- could be forced to repay the money.

Godongwana's wife Thandiwe, a director of Canyon Springs, is accused of borrowing as much as R93-million from the company which manages Sactwu's provident funds, Trilinear Capital.

Arrests made

The liquidation inquiry has already led to the arrest in December of union consultant Richard Kawie and Trilinear asset manager director, Sam Buthelezi, who allegedly used money embezzled from the loan deal to finance lavish lifestyles. They could not raise the R500 000 bail imposed and spent Chrstmas in jail, although Kawie last week was released on bail after putting up properties in Goodwood, Cape Town and Noordhoek as guarantees.

Canyon Springs's financial records show that vast sums of money were paid out to Kawie, as well as to the minister of economic development, Ebrahim Patel, who was general secretary of Sactwu at the time the investments were made.

Patel, however, has told the M&G he knows nothing about the movements of the provident funds, which were managed by trustees and were not his responsibility.

Spokesperson Mac Maharaj said Godongwana had tendered his resignation in December, but President Zuma had asked him to stay on until the new year.

"The president has accepted the resignation and thanked the deputy minister for his dedicated service and duty to his portfolio and to the National Executive in general", he said.

Godongwana is a member of the ANC's Economic Transformation Committee. Godongwana is widely regarded in economics, with a Master of Science degree in financial economics from the University of London.

He is also a former deputy minister of public enterprises and continues to be a member of the ruling party's Economic Transformation Committee.

Ref: Source: Mail & Guardian Online, 16 Jan, 2012

Counterfeit clothing found in Durban

2012-01-07T10:50:00.000+02:00

South Africa:
Durban police have seized falsely branded clothing worth R60 million at Durban harbour, bringing the value of counterfeit goods found at the port last year to about R10 billion. The harbour’s operational response services unit swooped last week on a container packed with fake Nike, Adidas, Puma, Daniel Hechter, Levis and Uzzi shoes and T-shirts.

Police spokesman Colonel Vincent Mdunge said the 40-foot container arrived from China on December 16. Its contents were destined for a shop in the Springfield Park area. He said the shipment had been monitored by the national crime intelligence unit for several weeks.

Members of the police anti-smuggling unit and SA Revenue Service officials examined the goods, which were found to be fake. Once the investigation was finalised, the goods would be destroyed, and arrests were imminent, Mdunge said.

Earlier last year, counterfeit goods worth more than R100m were intercepted at the harbour by police during Operation Duty Calls, and goods worth a further R15 million were seized in July. Police attribute the R10 billion total in seized goods last year to regular, even more sizeable, finds of fake goods – two or three a month.

“Our operations ensure that the number of counterfeit goods that infiltrate the market is minimal,” said Mdunge. “Those that do slip through the system are often sold on the black market. But several reputable stores are also being investigated for selling these illegal goods. Unfortunately, the customer only finds out a few weeks or months down the line when the garment shows wear and tear.

“By then it is too late. These garments do not carry any guarantees. Also, in some instances the customer ends up paying the same price for the fake item as the genuine one.” He said counterfeit goods harmed the economy, with criminals evading Sars and other costs associated with importing goods.

Brigadier Anthony Gopaul, the section head of the harbour’s operational response services unit, said last week’s bust was part of Operation Nortje, launched in memory of Warrant Officer Johan Nortje, who was shot dead outside his home. He was an officer in the police’s protection security service, and was responsible for investigating smuggling of goods and drugs through Durban harbour. A hit was allegedly ordered on his life after he made a R100m counterfeit bust at the harbour.

Members linked to the unit said their job was extremely dangerous as the counterfeit market was controlled by a mafia-like empire. Nationally, police had had several successes against counterfeit goods and apparel in the past three months at various ports of entry, said police spokesman, Colonel Vish Naidoo.

“From October to date, the South African Police Service and our counterparts from other government departments have prevented a variety of counterfeit goods valued at over R2.5bn from entering South Africa. At least five suspects (have been arrested) in connection with some of these goods.” He said the grabs were made at various ports of entry – land, sea and air.

Among the goods seized were: perfume valued at R1 052 168 245, cigarettes (R8 052 478), Lion matches (R2 830 000), branded clothing (R1 488 554 804), toys and clothes (R300 000), CDs and DVDs (R156 500), toothbrushes (R7 308 000), wallets and bag (R264 000), shoes (R2 981 600), cellphones (R2 550 000), accessories (R2 243 450), Doom coils (R40 960), light bulbs (R279 650), bags (R200 000), electronics (R129 900) and rugby jerseys (R700 000).

Naidoo said operations at ports of entry formed part of festive season operations focused on the proliferation of counterfeit goods. During this period the demand for counterfeit goods was high, he said.

Ref: IOL News, 2 Jan 2012

SA manufacturing sector can create jobs

2011-12-09T17:12:00.001+02:00

South Africa
Big jobs potential in reviving SA manufacturing, report argues

Reversing the secular decline in the manufacturing sector’s relative contribution to South Africa’s gross domestic product (GDP) would offer material employment, growth and tax revenue benefits, a new report commissioned by an industry lobby group asserts.

But it also argues that any large-scale reindustrialisation of Africa’s largest economy would have to be premised on a “meaningful accord” between business, government and labour and be supported by macroeconomic and foreign exchange policies that improve conditions for industrial competitiveness. A revival will also depend heavily on initiatives and incentives to deal with the country’s current infrastructure and skills backlogs, as well as to moderate the rate at which administered prices are being allowed to increase.

The sector’s relative GDP contribution peaked at nearly 22% in 1981, but it has been in steady retreat since that date and currently only contributes about 14% to GDP. In addition, employment in the sector has fallen sharply to around 1.73-million.

Entitled ‘Assessing the Manufacturing Sector and its Multiplier Effects on the South African Economy’, the report has been prepared for the Manufacturing Circle – a multisector body currently comprising 48 large and small manufacturing enterprises operating in areas as diverse as food and beverages, to pharmaceuticals and capital equipment. Economists from Pan-African Investment & Research Services (PAIRS), which also produce the Manufacturing Circle’s quarterly ‘Manufacturing Bulletin’, authored the document.

The report comes at a time when South Africa’s policymakers are also emphasising the importance of the manufacturing sector as part of plans to improve the resilience of the South Africa economy to economic cycles and to creating and sustaining growth and employment. This policy emphasis has been highlighting in the New Growth Path (NGP), which views manufacturing’s recovery as central to the overall aim of facilitating the creation of five-million new jobs by 2020. Reindustrialisaiton is also the core objective of the second industrial policy action plan, or Ipap2.

The thrust has received further practical support from the recent changes introduced to the regulations associated with the Preferential Procurement Policy Framework Act, of the PPPFA, which empowers the Department of Trade and Industry (DTI) to designate sectors and products that government departments and State-owned companies should procure from local producers.

The initial DTI designations, which became effective on December 7, cover power pylons, railways rolling stock, buses, canned vegetables, clothing, textiles, footwear and leather products and set-top boxes. Further designations will be made in 2012.

The reindustrialisation ambition implied by the PPPFA changes, together with the NGP and Ipap2, has also been integrated into various social compacts that have been concluded between government, business and labour over the past few months, including a ‘Local Procurement Accord’, which sets an aspirational target for government and large firms to buy 75% of the goods and services they use from local industry.

But PAIRS CEO Dr Iraj Abedian argues that these interventions need to be coupled with a larger macroeconomic package that is explicitly designed to bolster the role of the manufacturing sector in the economy. Such a package should give particular attention to the debilitating effects of surging administered prices, as well as the volatility and overvaluation of the rand.

A peer group assessment of South Africa’s administered-price trends against those in the other ‘Brics’ economies of Brazil, Russia, India and China, shows that local manufacturing competitiveness has been seriously depleted by the country’s relatively high administered price increases. The rapid electricity price increases are of particular concern.

“To put it into perspective, over the ten-yer period between 2000 and 2010, the growth in administered prices (mainly electricity) amongst all of South Africa’s [Brics] peer emerging economies has fallen. In contrast, over the same period South Africa has recorded a massive increase . . . of over 170%,” PAIRS says in its report.

The relative volatility and strength of the rand is also unfavourable to creating conditions supportive of manufacturing competitiveness and PAIRS, thus, calls for a review of South Africa’s foreign exchange policies.

The report emphasises the positive employment, growth, tax and export-earnings multipliers of manufacturing and includes a model of the relative value of yearly manufacturing growth of 10%, relative to the current anticipated level of 3.4%.

Should a growth rate of 10% be sustained over ten years, the cumulative output would be R537-billion, in contrast to R184-billion at 3.4%. The employment gain would be 454 000 jobs, as against 158 000, investment would be R339-billion (R116-billion) and the real wage increase would be R177-billion relative to the R61-billion that could be achieved at a 3.4% rate of expansion.

The report argues that, besides moving to foster a favourable exchange rate policy, South Africa should also consider differential electricity pricing for key sectors, extending government incentives to bolster key industry sectors, accelerating beneficiation plans, encouraging skills development and moves to fast-track efforts to deal with the infrastructural backlogs.

“We need to, as a nation, deal with what it takes to reindustrialize. It is not one policy – it’s a package of policies,” Abedian asserts.

Reference: Creamer Media (Pty) Ltd
9 December 2011

Support made in South Africa this christmas

2011-12-01T08:38:00.000+02:00

The following was sent to ReDress by a friend.

Local is Lekker, let us support our own

Christmas 2011 -- Birth of a New Tradition

As the holidays approach, the giant Asian factories are kicking into high gear to provide us with monstrous piles of cheaply produced goods -- merchandise that has been produced at the expense of South African labour. This year will be different. This year South Africans will give the gift of genuine concern for other South Africans. There is no longer an excuse that, at gift giving time, nothing can be found that is produced by South African hands. Yes, there is plenty.

It's time to think outside the box, people. Who says a gift needs to fit in a shirt box, wrapped in Chinese produced wrapping paper?

Everyone -- yes EVERYONE gets their hair cut. How about gift certificates from your local hair salon or barber? Gym membership? It's appropriate for all ages who are thinking about some health improvement.

Who wouldn't appreciate getting their car valet'd? Small, South African owned car washes would love to sell you a gift certificate or a book of gift certificates.

Are you one of those extravagant givers who think nothing of plonking down the cash on a Chinese made flat-screen? Perhaps that grateful gift receiver would like his driveway fixed, or lawn mowed for the summer, or roof waterproofed and painted.

There are a Gazillion owner-run restaurants -- all offering gift certificates. And, if your intended isn't the fancy eatery sort, what about a half dozen breakfasts at the local breakfast joint. Remember, folks this isn't about big National chains -- this is about supporting your home town South African with their financial lives on the line to keep their doors open.

How many people couldn't use an oil change for their car, truck or motorbike, done at a shop run by a South African working guy?

Thinking about a heartfelt gift for mom? Mom would LOVE the services of a local cleaning lady for a day. My computer could do with an upgrade, and I KNOW I can find some young guy who is struggling to get his repair business up and running.

OK, you were looking for something more personal. Local crafts are great. They make jewellery, pottery, knitted stuff, Teddy Bears, paintings and home preserves etc.

Plan your holiday outings at local, owner operated restaurants and leave your server a nice tip. And, how about going out to see a play or ballet at your hometown theatre. Musicians need love too, so find a venue showcasing local bands.

Honestly, do you REALLY need to buy another ten thousand Chinese lights for the house? When you buy a R50 string of lights, about fifty cents stays in the community. If you have those kinds of bucks to

burn, leave the postman, trash guy or babysitter a nice BIG tip.

And lets add to the “what can you” in regard to clothing and textiles. Look at the “Made in” label, seek out made in

South Africa

clothing using local textiles or go and support a small boutique that stocks local designers’ clothing.

You see, Christmas is no longer about draining South African pockets so that China can build another glittering city. Christmas is now about caring about us, encouraging small businesses to keep plugging

away to follow their dreams. And, when we care about other South Africans, we care about our communities, and the benefits come back to us in ways we couldn't imagine. THIS should be the new South African Christmas tradition.

This is a revolution of caring about each other, and isn't that what Christmas is about?

BUY SOUTH AFRICAN - BE SOUTH AFRICAN - The job you save might be your own

December 2011

South African Clothing and Textile Sector Fine: Minister Davies

2011-11-30T17:43:00.000+02:00

Two articles –same story

Comment
“Social partners such as trade unions have committed to buying local” … WTF … shouldn’t they be leading by example and already doing this? How do you ask the private sector to support local when unions that should be protecting, saving and providing the space for employment growth have only now “committed” to support SA manufacturers? They should be demonstrating their support by providing examples of their local procurement.

Speaking at the Clothing and Textile Industries National Bargaining Council annual general meeting yesterday, Mr Davies said a competitiveness programme had been a significant factor stimulating growth in the sector.

At the end of September, close to 58000 people were employed in the textile industry, a slight improvement from the 56985 employed in December last year, Mr Davies said.

"The third quarter of this year was very problematic and troubling for South African manufacturers as well as the rest of the world. We saw the onset of the European debt crisis and we saw manufacturing industries around the world showing signs of strain," Mr Davies said.

"In SA we found that many of the industrial subsectors started to turn into negative territory as far as growth prospects are concerned, but what stood out is that this industry (clothing) was not one of those. This industry has continued to grow and stabilise."

Mr Davies said the competitiveness incentive measures would in future be applied to other manufacturing sectors. He said 105 companies had taken up the clothing incentives to the value of R112m. Production incentives had been paid to 199 companies and the approvals amounted to R624m. "This has been a lesson to us, and we have indicated in the medium-term budget policy statement that there will be some additional programmes to support manufacturing in general," Mr Davies said.

He cautioned that challenges remained, one of which was the fight against illegal clothing imports, which negatively affected the sector. "We have also stepped up our campaigns on illegal imports... I do not believe we have cracked the problem of illegal imports. The challenge of the illicit economy remains a very serious one in SA," Mr Davies said. Amanda Cronje, chairwoman of the bargaining council, said yesterday there was evidence that the clothing industry might be recovering from the economic difficulties it faced. Although imports from China continued to grow, the Chinese market share in SA had shrunk from 75% to 71%, she said.

Reference: Business Day, 30 November 2011

Textile sector weathers global financial storm

The clothing and textile industry has been little affected by the recent global financial crisis as the competitiveness programme had helped stimulate it, says Trade & Industry Minister Rob Davies.

Speaking at the Clothing & Textile Industries National Bargaining Council annual general meeting on Tuesday, Davies pointed to employment numbers in the sector having increased slightly over the past year. He said that by September 30 there were 57,728 people employed in the textile industry, slightly higher than the 56,985 in October 2010. "This is telling us a huge story," Davies said. "As you all know the third quarter was extremely problematic for the manufacturing industries with the onset of the European debt crisis.

"The strain that was experienced by many of the industrial subsectors was problematic and many slipped into negative territory. This industry (clothing and textiles) was not one of those," he said. Davies said that as afar as he was concerned the Production Incentive Model that had been applied to the clothing and textile industry had helped this and that it would be applied to other manufacturing sectors.

Referring to the onset of the 2008/09 recession when the country lost up to one million jobs, Davies said the biggest casualty then was the manufacturing sector, that had contracted by 200,000 jobs. "We cannot afford for this to happen again," Davies said.

He went on to say that the medium-term budget policy statement had announced additional competitiveness incentive measures that would be followed through in the national budget of 2012 and that the lessons from applying the incentives used in the clothing and textile sector could be generalised and applied to other manufacturing sectors. Davies said that 105 companies had taken up the incentives in the competitive improvement program to the value of R112 million. The production incentives, that came into existence from April 2011 to October 2011, resulted in 199 companies benefitting and the approvals amounted to R624 million. "This is to get manufacturers to invest and raise their competitiveness. No longer can they just sweat the assets, running the factories until no longer possible and then fire the workers," Davies said.

He also pointed that the Preferential Procurement Framework Regulations would come into effect from December 7. These, Davies said, would allow government procurement officers to purchase locally manufactured workwear, bedding and linen. Davies said social partners such the trade unions had also committed themselves to buying promotional material such as T-Shirts locally and that business had agreed to review its own procurement policies.

Reference: 29 November, TimesLive, BusinessLive

SA Minister violates parliamentary code of conduct-again

2011-11-29T09:30:00.000+02:00

South Africa: Why Didn't Deputy Minister Godongwana Declare His Interests in Tyalibongo Trust?

28 November 2011

________________________________________

PRESS RELEASE

Deputy Minister of Economic Development, Enoch Godongwana (a real oxymoron – DM of Economic Development), has violated the Parliamentary Code of Conduct again. I will be writing to Chairperson of the Parliamentary Committee on Ethics and Members' Interests for the second time to report Deputy Minister Godongwana's violation of the rules.

This morning it was reported in the Star that the Deputy Minister received a R1.9 million plot from the Tyalibongo trust, but the latest register of member's interests does not include any information on this trust under Deputy Minister Godongwana's name.

This follows shortly after the Deputy Minister failed to disclose his interests in Canyon Springs Investments - a company that reportedly defrauded textile workers' pension funds.

Deputy Minister Godongwana has consistently attempted to conceal the true value of his assets, preferring to hide the information under layers of trusts and holding companies.

When questioned about the failure to disclose his R1.9 million plot, the Deputy Minister said that it was held in the Tyalibongo trust and therefore he didn't directly own it. But this raises two serious questions:

• Why isn't his interest in Tyalibongo trust disclosed; and

• Why, if the Deputy Minister is both listed as the primary donor and beneficiary of the trust, is this R1.9 million plot not disclosed under the "property" section of the Register of Members' Interests?

There are three undeniable facts that cast serious suspicion over the integrity of this Deputy Minister. We know he had an interest in Canyon Springs Investments. We know that Canyon Springs Investments defrauded textile workers' pension funds. And we know that the Deputy Minister has done everything in his power to conceal his financial information from Parliament.

With these three facts in mind I will insist that the Parliamentary Committee on Ethics and Members' Interests conduct a full investigation into the Minister's failure to declare his assets.

Kobus Marais, DA Spokesperson on Economic Development

__________________

Meanwhile the Times Live reports:

Workers' pensions shock

PHILANI NOMBEMBE The inquiry investigating the loss of textile workers' pensions has heard that some of the money placed in a trust of a former clothing union consultant could have been used to buy a multimillion-rand Cape Town property and a luxury car.

Erwin da Gama, a friend of the consultant, Richard Kawie, was testifying in the liquidation inquiry of Canyon Springs, a company linked to Deputy Economic Development Minister Enoch Godongwana.

Canyon Springs is accused of borrowing R93-million from Trilinear Capital, which manages provident funds for the South African Clothing and Textile Workers Union.

Godongwana's wife, Thandiwe, is a director of Canyon Springs, which was supposed to repay the loan in three instalments but has failed to do so, leaving more than 15000 workers in limbo.

Da Gama told the inquiry that his company, Leading Prospect, was used as a "conduit" to move R15-million from Canyon Springs to Pasima, a family trust run by Sam Buthelezi, owner of the Trilinear group of companies.

Da Gama said he paid R13-million of the money into the trust and some of it to Kawie's lawyers. He admitted that his two other companies owed Canyon Springs R4-million.

He said the R15-million loan agreements he signed were not "genuine" and that the liquidators should order Kawie and Buthelezi to repay the money.

The union's counsel, Gavin Woodland SC, said Kawie's family trust, in which Da Gama was a trustee, bought property in upmarket Noordhoek for R4.5-million and a BMW 528i used by Kawie's wife, Vanya, apparently with money from Canyon Springs.

He urged Da Gama to cooperate with the liquidators. Both Kawie and Buthelezi have launched court actions apparently to avoid testifying before the inquiry. Kawie is expected to testify today.

29 November, 2011

Clothing union's office in Newcastle gutted by fire: arson?

2011-11-22T19:13:00.000+02:00

PRESS RELEASE

21 NOVEMBER 2011
SACTWU OFFICES IN NEWCASTLE BURNT DOWN

The offices of the Southern African Clothing and Textile Workers' Union (SACTWU) in Newcastle were gutted by fire last week on Monday 14 November 2011. The destruction of our premises comes in the wake of moves by the union to highlight atrocious labour and human rights' abuses occurring in clothing factories in this KwaZulu-Natal town. It also follows efforts by SACTWU, the clothing bargaining council, the Department of Labour and the Department of Home Affairs to ensure that Newcastle clothing companies comply with South African labour laws and industry agreements.

We have previously indicated our knowledge of threats against the safety of some of our officials in reprisal for raids conducted at some Newcastle clothing companies in late September 2011. We therefore urge the Newcastle authorities to investigate the possibility of arson. We also categorically state that SACTWU shall not be deterred from our fight for decent work for clothing workers in Newcastle.

Issued by Andre Kriel, SACTWU General Secretary.

Benetton “Unhate” campaign: Will it lead to sales?

2011-11-21T12:29:00.000+02:00

Nov. 18 (Bloomberg) --

Benetton Group SpA (BEN) is better at courting controversy than selling clothes.

The company withdrew a doctored image of Pope Benedict XVI kissing an imam from the “Unhate” advertising campaign the same day it was introduced after criticism from the Vatican. Other images from the series appearing online and on billboards feature U.S. President Barack Obama locking lips with Chinese counterpart Hu Jintao and French President Nicolas Sarkozy embracing German Chancellor Angela Merkel.

Translating shock into sales is proving a tougher task as Italy’s largest clothing company falls further behind fast- fashion retailers Hennes & Mauritz AB (HMB) and Inditex SA (ITX), owner of the Zara chain. Annual sales are expected to be 2.06 billion euros ($2.8 billion), according to 12 analysts surveyed by Bloomberg, less than the 2.1 billion euros in 2001. Benetton, which has lost two-thirds of its market value in the same period, fell 17 percent this week to the lowest since its initial public offering in July 1986.

“Gimmicks or ads alone won’t do,” said Luca Solca, global head of European research at CA Chevreux. “Benetton should focus on improving its retail fundamentals instead -- lead time, product ideas, value for money.”

Benetton Unhate Campaign (uncensored)

Alessandro Benetton of the Benetton Group spoke to CNN's Juliet Mann about the company's new ad campaign

Hatred is never appeased by hatred in this world. By non-hatred alone is hatred appeased. This profound and humane concept of tolerance sums up the principles inspiring the UNHATE CAMPAIGN, which Benetton has created with the aim of contrasting the culture of hatred and promoting closeness between peoples, faiths, cultures, and the peaceful understanding of each other's motivations, using a global call to action and the latest communication tools. The worldwide communication campaign UNHATE, which is the first initiative by the newly-formed foundation of the same name, has been presented in a worldwide preview by Alessandro Benetton, Executive Deputy Chairman of Benetton Group, on Wednesday 16 November in Paris, at the flagship store in Boulevard Haussmann.

"While global love is still a utopia, albeit a worthy one, the invitation 'not to hate', to combat the 'culture of hatred', is an ambitious but realistic objective," explains Alessandro Benetton. "At this moment in history, so full of major upheavals and equally large hopes, we have decided, through this campaign, to give widespread visibility to an ideal notion of tolerance and invite the citizens of every country to reflect on how hatred arises particularly from fear of 'the other’ and of what is unfamiliar to us. Ours is a universal campaign, using instruments such as the internet, the world of social media, and artistic imagination, and it is unique, in that it calls the citizens of the world to action. At the same time, it fits perfectly with the values and history of Benetton, which chooses social issues and actively promotes humanitarian causes that could not otherwise have been communicated on a global scale, and in doing so has given a sense and a value to its brand, building a lasting dialogue with the people of the world."

The UNHATE communication project includes a series of coordinated initiatives and events, starting on 16 November in the main newspapers, periodicals and websites around the world. The central theme is the kiss, the most universal symbol of love, between world political and religious leaders, such as: Barack Obama and Chinese leader Hu Jintao; Pope Benedict XVI and Ahmed Mohamed el-Tayeb, Imam of the Al-Azhar mosque in Cairo (the most important and moderate centre for Sunni Islamic studies in the world); the Palestinian president Mahmoud Abbas and the Israeli prime minister Benjamin Netanyahu. These are symbolic images of reconciliation - with a touch of ironic hope and constructive provocation - to stimulate reflection on how politics, faith and ideas, even when they are divergent and mutually opposed, must still lead to dialogue and mediation.

The new campaign, the creation of the Foundation and the other initiatives of the UNHATE project reflect Benetton's wish to drive the desire for participation and change that animates the world's citizens, and especially the young, inviting them to play an active, central role in its initiatives, particularly through the internet, social media and other digital applications. This marks a further step forward in Benetton's communications, which elicit intervention and action from everybody, in the name of an "expanded", open democracy, without physical, political, social or ideological boundaries.

Decrease in jobs lost in clothing industry - union

2011-11-16T18:20:00.000+02:00

The South African clothing union reports good news for the industry.

South Africa

PRESS STATEMENT

14 NOVEMBER 2011

SIGNIFICANT SLOWDOWN IN CLOTHING, TEXTILE AND FOOTWEAR JOB LOSSES

The Southern African Clothing and Textile Workers' Union (SACTWU) held its National Executive Committee (NEC) meeting from 10 to 12 November 2011 in Cape Town. During the NEC discussion on the union's Save Jobs Campaign, a report on the state of the clothing, textile, footwear and leather (CTFL) industry was tabled.

This report showed a significant slowdown in retrenchments in the industry. According to the report and based on information from the union's job loss database, the industry experienced a drop of more than 50% in jobs lost in the first nine months of 2011 compared to the same period in 2010. Compared to 2009, the picture is even rosier with 64% fewer jobs lost.

This slowdown is mainly attributed to the assistance for the CTFL industry by government in the form of support measures to increase factories' competitiveness and a programme to deal with customs fraud. SACTWU's efforts to increase demand for local goods and to ensure the full implementation of the industry development strategy through its Save Jobs Campaign were also highlighted as a significant contributor.

ISSUED BY ANDRE KRIEL, SACTWU GENERAL SECRETARY

We are sure the industry would be very interested to have an opportunity to review the study.
More informaiton on the union's Save Jobs Campaign would be apprecaited.

Can SA apparel sector meet Zara’s expectations?

2011-11-14T17:07:00.002+02:00

Comments by The ReDress Consultancy

Zara the leader in fast fashion quick response apparel production opened in Sandton last week. Their ability to reproduce short runs, fashionable and on-trend products cost effectively has resulted in the Spanish company being found in about 80 cities across the world. The key to their winning formula is their flexible productivity ability, low production cost, quality products and market intellegence. Interlaced with delicate and refined communication and interaction throughout their value-chain Zara has the ability to convert creative catwalk fashion into commercial sellable products quickly, effectively and cost efficiently. The question I ask will they be able to tap into our local apparel/textile industry and receive the same output? How much local production will they procure?

With Adcorp’s latest Employment Index indicating that productivity in South Africa has fallen will our apparel and textile sector be able to meet Zara’s expectations?

SA's labour productivity at 40-year low

Johannesburg - South Africa's labour productivity fell to its lowest level in 40 years in October, according to the Adcorp Employment Index released on Thursday. "While no significant changes in all kinds of jobs - formal, informal, permanent and temporary - were seen during October, South Africa's labour productivity fell to its lowest level in 40 years," Adcorp said. Labour productivity growth - a leading indicator of job creation - has been negative throughout 2011. "This negative trend in labour productivity suggests that adding more workers does not necessarily translate into material increases in business output," said Adcorp labour market analyst Loane Sharp. The index for October shows employment dropped slightly in the mining (-7.8%), construction (-7.0%) and manufacturing (-4.5%) sectors on an annual basis.

Reference: Fin24.com, 11 November 2011

The Productivity-Wage Relationship In South Africa: An Empirical Investigation

The aim of this paper is to investigate the empirical relationship between productivity, real wages and unemployment in South Africa using appropriate time series econometric techniques. Year of study 2003

Click here to read paper.

South African clothing union says not all is gloomy

2011-11-08T17:59:00.000+02:00

Press Statement from Sactwu

8 NOVEMBER 2011

CLOTHING INDUSTRY STRATEGY STARTING TO WORK

On 5 November 2011, the Mail & Guardian published an article on the changing fortunes of the local clothing and textile industry, written by SACTWU's Research Director, Etienne Vlok. (The piece was in response to an article that appeared in the same edition of the newspaper.) However the published

article was a shorter version of our initial submission to the newspaper and hence we provide a copy of the original article below:

Clothing Industry Strategy Is Starting To Work

All is not gloom in the local clothing and textile industry. Clothing industry employment is stabilising, according to the job loss database of the SA Labour Research Institute (SALRI), which records actual industry retrenchments, liquidations and factory closures. Stats SA too shows that in the last three quarters, 2,500 jobs were lost in the industry - significantly lower than before when considering that Stats SA also recorded clothing employment dropping from 120,000 in 2002 to 52,400 currently.

We also receive increasing reports of factories hiring new workers and even of new factories in the pipeline. This was unimaginable a few years ago.

The industry strategy - forged in 2007 between the SA Clothing and Textile Workers' Union (SACTWU), clothing and textile businesses and government - was finally implemented in 2009. It is starting to pay off. It includes significant new programmes to upskill workers and managers, to replace old machinery, to reorganise work processes and to increase productivity.

Support is also available to companies needing working capital to fulfil orders. SARS is targeting customs fraud more aggressively too. The strategy's aim is to stabilize (and even grow) employment by re-engineering companies to be more competitive in relation to imports. It may even create the basis for exporting in future - as was seen in the industry's last boom in the early 2000s.

The strategy seeks three key outcomes: to make price less significant by exploiting the locational advantage of manufacturers to local retailers: in other words, more quickly delivering orders to customers; to move the bulk of production to higher value added products which do not compete with the mass of cheap imports; and respect workers' rights and their need to earn a decent wage.

A rough analogy for the vision exists in Germany, where a high wage economy still supports a substantial manufacturing sector because of high productivity and high value added products.

State intervention is crucial in the game of international competition and industrial development. However SACTWU also recognises that industry stakeholders themselves must play their part. We do this through our 'Jobs Campaign'. It includes local procurement advocacy with government and retailers, and monitoring relevant tenders advertised by the State, bringing them to the attention of local manufacturers. At factory level we actively participate in mergers and acquisitions, factory rescues and training layoff schemes. On the trade front, we have secured increased duties for certain finished products following an application to government, and we monitor WTO and bilateral trade negotiations to ensure optimal outcomes for the industry.

We also play our part in the fight against customs fraud. We continuously monitor monthly trade data and alert SARS to under-invoicing problems. Through extensive engagement at Nedlac, we've also introduced many amendments to the latest customs legislation - strengthening it in relation to illegal imports.

With government support measures, we analyse their impact and advocate for changes to their rules where this ensures the best benefit to workers and the industry. Bizarrely for a trade union, we market the incentives to companies through e-mails and fax shots, and regularly advise companies on the support measures that would best suit their circumstances.

We've focussed on improving productivity too - though not in the narrow sense which simply squeezes workers. We have helped craft a piece-rate productivity system for the industry, designed for non-metro areas. It works in the same way as Lesotho's system: piece work is allowed but a minimum income must be assured. We have also trained workers on methods-time measurement (MTM) and general sewing data, piloted performance improvement projects with the ILO in the Western Cape and KwaZulu-Natal, and proposed and adopted a wage-linked productivity incentive scheme in 2009 at the clothing bargaining council.

Our efforts have complemented those of the State, helping to shift the fortunes of the industry. Admittedly much still needs to be done. For instance few companies have taken advantage of the productivity incentive schemes, and many companies remain non-compliant. These non-compliant companies employ the minority of workers in the industry - 36% of total workers now. Nevertheless their levels of employment are still significant, as is the problem they pose for the industry's development strategy.

Instead of moving forward, these companies are immobilised by their determination to fight to pay workers less money. Their argument is that local wages are too high, that they cause job losses and must decrease. They cite the deluge of jobs in the industry over the last decade as their evidence.

If these people were right, one would assume that higher wage factories would experience greater job losses than low wage factories. This is not the case. In fact proportionally, there are more job losses in non-metro areas where wages are lower than in metro areas where they are higher. Non-metro areas employ about a third of total workers, yet jobs losses from these areas in the past 9 years constituted almost 45% of total job losses.

The extreme vulnerability of non-metro areas is not primarily wage related. It is due to companies in these areas being overwhelmingly low-margin manufacturers producing low-value products, which are more easily exposed to mass-produced cheap imports. They compete with imports from highly subsidised countries or countries that peg their currencies to weaken them to make their exports cheaper. They previously blossomed in a context of support by the Apartheid State but then became vulnerable when that support

was rolled-back in the 1990s and an expedited tariff phase down was later embarked upon.

Botshabelo illustrates well the point that jobs have been lost primarily due to falling State subsidies, decreased tariffs and higher levels of imports. Many of the companies which closed in Botshabelo were not clothing companies and were therefore not affected by the apparently 'high' wage demands of SACTWU and those stipulated by the clothing bargaining council, yet they closed anyway.

Another challenge for companies has been increasing local municipal and rental costs.

The demand for lower wages in South Africa ignores these critical factors. It also ignores the fact that we cannot win at the low-wage game when countries like Bangladesh pay workers as little as R75 a week. Practically and morally, we believe, we should not even try. A race to the bottom is not sustainable.

The industry's strategy recognises these facts. This is why it seeks to steer the industry towards competitiveness not primarily based on low wages.

The strategy is currently benefiting most of the workers in the industry. It would benefit workers at non-compliant companies too, which is what we want, if those companies become compliant, accessed the incentives and re-organised themselves in line with the industry's plan.

Illegal import link to organised crime

2011-11-07T08:01:00.000+02:00

South Africa

Illegal imports and under-invoicing of clothing and textiles is often linked to organised crime, said a senior official from the SA Revenue Service (SARS). The official, who wished to remain anonymous, said criminal activity in textiles and clothing was not always as "mob-style" as the smuggling of illegal drugs and tobacco.

However, "big profiteers" were carrying out operations in an organised manner with unscrupulous connections throughout the supply chain. "The game of under-invoicing is definitely a king's game, as there is some measure of risk management through supply chains," said the official.

Concerns about organised criminal activity fuelling imports of illegal textiles and garments were also voiced by the National Clothing Retail Federation of SA (NCRFSA), the SA Clothing and Textile Union (Sactu), the Apparel Manufacturers of SA (Amsa) and the largest shoe manufacturer in the country, Eddels Shoes.

NCRFSA director Michael Lawrence highlighted an incident earlier in the year in which a specialist policeman, warrant officer Johan Nortje, was shot dead in his driveway after he had intercepted a consignment of replica branded clothing from China valued at of R100-million.

"This is not a small-change problem and it is affecting different players in many different ways," said Lawrence. Under-invoicing of goods is costing the South African economy billions of rands in tax revenue every year and is stifling local industry. Finance minister Pravin Gordhan has said the country will lose out on an estimated R13-billion of tax revenue in the current fiscal year, bringing the year's deficit to almost R165-billion.

During the past financial year, SARS referred 149 criminal cases to the National Prosecuting Authority, most of them related to smuggling. From these, 56 convictions were obtained. SARS commissioner Oupa Magashula said at a recent National Economic Development and Labour Council session that raids and seizures of illicit goods had been prioritised by SARS. Goods to the value of R180-million were seized in raids during 2010 and 2011.

SARS figures show that about 70% of all clothing and textiles in SA are imported goods, while Sactu research reveals that almost a third of the country's clothing market is made up of illicit goods. A recent study carried out by the department of trade and industry found a 60% difference between what China said it had sold in clothing to SA and what local authorities recorded as coming in.

Amsa director Johann Baard said imports from China recorded by SA customs were R6.7-billion in 2010, which suggests under-invoicing of clothing imports from China alone came to more than R10-billion a year. Baard said this was more than the total value of all declared clothing imports in 2010, which was R9-billion.

Sactu research director Etienne Vlok said that under-invoicing was negating SA's export duties. SARS numbers showed women's woven trousers were being imported at an average cost of R7.33 a unit, while men's knitted trousers were imported at an average price of just over R12 a unit. "This gives some indication of the level of under-invoicing that is taking place and the chances that people are taking.

"This has serious implications for not only the fiscus, but also for government's efforts to create additional jobs through its New Growth Path and the Industrial Policy Action Plan," said Vlok. SA imposes 45% duty on imported finished garments to protect local manufacturers. Yet the clothing and textile sector has been declining over the past three decades. Baard said that while illegal imports were not the only reason for the decline, it had added additional pressures to an already stressed industry.

Every year about R1.5-trillion worth of goods move through SA's borders, with an average of 600 trucks a day passing through the Beit Bridge and Lebombo border posts alone. This makes it difficult for SARS to strike a balance between moving legitimate goods swiftly through checkpoints and ensuring that vehicles carrying illicit goods are detected, said Magashula. SARS has mandated customs officials to focus on textiles and other imported products, targeting undervalued imports. However, the SARS official pointed out that the customs agency on its own could never solve the smuggling problem.

Reference: LONI PRINSLOO, Business Times, 5 November 2011

The ReDress Consultancy has spoken at lengeth and highlighted the urgent need to address the scourge of illegal imports.

Sunday, 11 July 2010

South Africa’s Fashion Industry must tackle illegal imports
South Africa’s fashion sector once again missed an opportunity to highlight specific “fashion-nomics” that are hindering this vital link within the apparel and textile value-chain. Africa Fashion International through the Africa Fashion Awards could have used this platform to create awareness about one issue that is impacting on the industry providing an educational platform for fashion consumers and that is the illegal imports flooding our country.

Thursday, 10 May 2007

Chinese Clothing still being imported in South Africa
Durban - Rumours are rife in the clothing and textile industry that retailers, buyers and importers are breaking the law by continuing to import goods from China but are rerouting them through India, where “Made in India” labels are attached to the garments. The rumors surfaced while Renato Palmi – a researcher and development specialist in the clothing, textile and fashion sector was undertaking research for the Durban Fashion Council.

Buy South African made products

2011-11-02T07:32:00.000+02:00

Compiled by the Government Communication and Information System

Date: 31 Oct 2011

Title: Boost for local producers

Pretoria - The term "local is lekker" was given a new meaning today when government, unions and the private sector all signed a deal committing the country to increasing its target of procuring locally manufactured goods to 75 percent.

In a landmark agreement signed in Pretoria organised by labour movements, Cabinet ministers and the business sector, the stakeholders further committed to identify steps that will be taken by social partners to ensure that South Africa increases the speed of job creation and that the country regains the jobs lost during the financial crisis that hit world markets from 2008.

They said the deal was a boost to the local industry and job creation in a country where unemployment stood at more than 25 percent.

"The significance of this accord is that decisions will now be taken on buying local goods and this in the end will go a long way in raising our competitiveness and development of local producers," Economic Development Minister Ebrahim Patel told reporters at the conclusion of the discussions on Monday.

"This Accord is one of a series of agreements in which social partners commit to work together to achieve the goals of the new Growth Path," Patel said. Government wants to the new Growth to help create five million new jobs by 2020.

Under his leadership and that of Trade and Industry Minister Rob Davies, government committed to "significantly" expand the value of goods and services it procures from local producers using new regulations that are set to come into effect in December.

Davies emphasised that only locally produced goods will be targeted, adding that company ownership will not necessarily qualify individuals for procurement. "The fact that ownership of the company is held by South Africans will not count; we are targeting proudly South African products meaning products must have been produced in South Africa."

Several products and services will be identified to allow only local manufacturers to produce these. They include railway equipment, clothing and textile and food products. While it is still not clear how this will impact on foreign investors, Patel said the initiative had a potential of directing billions of Rands to local producers, something which he said will in turn boost the local economy. Government departments will adopt an SABS standard to identify and define local content in various categories.

Business said it will drive the effort in the private sector to improve local buying by the country's 84 largest companies.

"As business we see this as yet another tool to contribute towards economic transformation... we are now beyond talking action," said Business Unity SA CEO Nomaxabiso Njokweni. The deal would not only help improve local competitiveness but will go a long way in developing new enterprises and boosting existing ones, she said.

COSATU's Zwelinzima Vavi described the move as a "milestone in reversing the wrong things that we have seen happening".

"... I must say it has a potential to reverse the job losses and other things that are happening in the manufacturing sector. Our task now is to mobilise ordinary masses of our people to support the initiative of buying local," Vavi said. - BuaNews

Lesotho clothing industry - is there a future?

2011-10-28T19:56:00.002+02:00

Lesotho: Government to Turn Its Back On Textile Industry

Kristin Palitza

28 October 2011

ANALYSIS

Maseru — Lesotho's textile sector - the country's largest employer - is regarded by many as the only way out of the poverty trap in a tiny kingdom where more than half of the population lives on less than 1.25 dollars a day. But what many do not know is that the government and the World Bank have unofficially turned their backs on the sector and will soon cut important subsidies.

Makhoase Lethibelane, 30, works 10 long hours each day as a label printer at the Shinning Century Limited textile factory in Lesotho's capital Maseru. Her work is repetitive, draining and badly paid. At the end of each month, Lethibelane takes home a meagre salary of 122 dollars.

Her income not only has to support herself and her eight-year-old daughter, but also her unemployed parents. Still, Lethibelane says she feels "lucky to have a job, since many others have lost theirs."

Lesotho is one of Africa's largest textile manufacturers, with the majority of its exports destined for the United States. The country boasts some 40 textile and apparel plants. But since the global economic crisis caused textile exports to dwindle, many of this country's 60,000 textile workers lost their jobs.

At Shinning Century, half of the factory's machines stand idle. Managing director Jennifer Chen says she had to lay off two-thirds of her staff over the past couple of years. She only employs 500 to 600 workers at the moment.

"We lost many orders due to the financial crisis," explains Chen. Some of her main customers, well- known U.S. brands GAP and Banana Republic, moved their business to China or Vietnam when the economic meltdown hit in order to save money on lower salaries in Asia, she says.

For the past few years, Lesotho had been a favourite textile-manufacturing destination due to the African Growth and Opportunities Act (AGOA), a tariff-preference programme designed by the U.S. government in 2004 to attract business to Africa.

The impact was immediate: numerous Asian investors took advantage of AGOA benefits and set up their factories in Lesotho. The number of textile jobs tripled in a country where nearly half the population is unemployed and one in four is HIV-positive.

"AGOA secures us business because it offers duty-free supply without quota limitations," says Chen, who hails from Taiwan. In addition, textile manufacturers have been receiving heavy subsidies from Lesotho's government to keep the country attractive compared to Asian countries, where minimum salaries and worker's rights are seldom observed.

Even though who benefits most from AGOA remains questionable - almost all of Lesotho's clothing factories are owned by Asian immigrants who reap the main profits while Basotho workers scrape by on survival wages - both factory owners and the Basotho people have firmly placed their hopes on the revival of the local textile industry, eager to emulate Mauritius' success in creating a competitive, high- end export market for textiles.

Poverty levels in this small Southern African constitutional monarchy have reached dramatic levels after the economic crisis caused a 60 percent decline of Lesotho's share of Southern African Customs Union revenue and a drop in global diamond prices. Alternating floods and droughts have ruined subsistence agriculture, leaving tens of thousands food insecure.

According to the World Bank, Lesotho's Gini coefficient - which measures inequality and ranges from 0, or perfect equality, to 1, or perfect inequality - is at 0.63 among the highest in the world. It has by far surpassed the threshold of 0.4 at which serious inequality could lead to social unrest.

With AGOA poised to expire in 2015, and Lesotho's preferential status with the U.S. thereby under threat, textile manufacturers as well as textile unions have been trying to come up with alternatives to rescue an industry on which the livelihoods of 40,000 workers and their families depend. "We have to find ways to develop a regional supply chain in the Southern African Development Community (SADC)," reckons Chen.

Union representatives demand diversification and expansion of the industry to stay competitive. "We need to start manufacturing production materials locally, like fabric, zips, hangers, buttons," says United Textile Employees general-secretary Bahlakoana Lebakae. "At the moment all our raw materials come from the East."

But unbeknown to unions and manufacturers, Lesotho's government has made different plans.

"The textile sector lacks profitability. It's no longer competitive internationally. Government has given up on it and clearly indicated to us it can't subsidise the textile (industry) any longer," World Bank Lesotho senior operations officer Macmillan Anyanwu told IPS.

After consultation with the World Bank, Lesotho's government decided to ditch the textile sector, to eventually cut the subsidies and instead invest in agriculture, horticulture, water management and tourism. "We need to diversify away from textiles into other areas," hinted Prime Minister Pakalitha Mosisili in February.

Lesotho is one of Africa's largest textile manufacturers.

With the help of the World Bank, the government has been piloting new sector development since 2009.

"We are trying to find markets for (agricultural) products and water supply in and outside the (SADC) region. We also focus on increasing the capacity of small to medium-sized businesses and improving border services to boost economic growth," says Anyanwu, explaining some of the steps government has taken with the support of the World Bank.

By 2013, when the pilot phase comes to an end, government will officially adjust its economic policy to invest in the most promising sectors. What will become of the thousands of textile workers and their families remains unclear.

More pressure for SA clothing sector in Newcastle -murder

2011-10-25T07:07:00.000+02:00

South Africa

The death of a clothing factory owner in Newcastle has shocked the local apparel community. Many of the owners live at their factories in not such luxury environments. In the meantime the factories that were closed in protest against the combined raids by various government officials have attentively opened.

A handful of fashion designers will not revitalise the textile sector

2011-10-24T08:42:00.000+02:00

Comments from The ReDress Consultancy

A fashion show is going to assist in sustaining the jobs of thousands and multi-million rand textile companies in South Africa claims the article below.

First of all, once again, we have the misuse and misunderstanding of the words textile and apparel. They are two distinct sectors within the wider industry. Even the “fashion experts” confuse the industry.

It is great that a designer can supply work to co-operative and help these small businesses. But that is my point. The 30 odd designers who showcased at the AFI fashion event do not require or use hundreds or thousands of meters of fabric which is constructed into hundreds or thousands of apparel units.

The general manager of AFI says that South Africa does not have a “developed based” to contribute to the GDP of the country. How many fashion weeks, fashion councils and workshops have we had over the past years and we still have not even “developed a base?” The general manager then goes on to say something extremely concerning and contradicts the entire theme of the article.

He basically is pleading for local designers to use local suppliers and fabrics. This should be a prerequisite for any designer participating in any South African fashion week. I have heard of stories where prominent designers outsource their production to Asia bring back the finished garments, add a few trims and add their label with a Made in SA label.

One just needs to visit YDE stores and you will note that most of the designers use imported textiles. There is great potential for fashion designers to feed into the local textile and apparel value-chain. However, the onus to ensure this happens is the responsibility of the fashion event holders.

South Africa fashion stitch in time for troubled textile

(Reuters) - South Africa's slowly dying textile industry could receive a shot in the arm from a burgeoning fashion market in Africa's largest economy that is looking for home-grown fabric and stitching for its internationally known designers.

The 8th Africa Fashion week in Johannesburg this week brought together the glamour and chaos of countless fashion shows and the hopes of thousands of jobless textile workers living in poverty.

The textile industry for decades had been a mainstay of Africa's biggest economy until about 20 years ago when cheaper imports from Asia began saturating the market, with factories closing down.

"There have been about 160,000 jobs lost in the industry since 1996, the height of employment in the industry. However, the rate of job losses appears to be slowing down," said South African Textile Workers Union (SACTWU) researcher Simon Eppel.

The number of workers brought back to work from an African fashion success is still small but workers are hoping that as African designers gain in global stature, more jobs will return.

Thula Sindi, an established South African designer showing his line at fashion week, uses co-operatives of skilled seamstresses in the factory areas of Johannesburg to produce many pieces in his line.

"The good thing about co-ops is that you are outsourcing to smaller factories in the city. We work according to demand. It's one way to create and save jobs because the advantage is being able to deliver clothes on time," Sindi said.

To encourage more of these tie-ups, a trade expo was launched concurrently with the fashion week to bring designers, retailers and manufacturers together.

"In the rest of the world, high-end designers with their own businesses contribute hugely to the GDP. In South Africa we don't have a developed base yet for these designers to have such a great share," said Grant Blackbeard, general manager of African Fashion International.

The swimwear and lingerie line from Durban-based Dax Martin had an ocean theme produced by local craftsmen. His works have been used in global beauty contests and sold internationally.

Blackbeard said designers branching out globally should think about producing locally.

"We have to look at the starting point which is fabric. With a lot of our mills being put out of business from the cheaper Chinese fabrics coming in, we need to strengthen our mills so we don't have to purchase our raw materials from abroad."

Reference: By Mmathabo Tladi, IOL, Fri Oct 21, 2011 1

Labour Costs -Clothing Industry

2011-10-22T15:56:00.000+02:00

Will the temporary new entry-level wage structure for the clothing sector have any real effect on the efficiencies of this sector? Is this not just a short-term strategy to appease certain political constituencies? There is no evidence that increasing labour, albeit initially cheaper will provide the space for a clothing operation to become more productive and sharpen its productivity output. In fact my not the cost of manufacturing actually increase thereby pricing a company out of the market?

How competitive is South Africa’s apparel labour wage compared with overseas? On the other hand increase in labour costs and delivery delays and rising cost in Asia provides an opportunity of South Africa to maybe recapture some of its own market.

The increase of cost of labour in China is have impacting on the apparel and even textile sector and China is having to face new threats from its neighbours and find mechanisms to realign these sectors. Some statistic reflect 5-15% increase in 2010 alone. The prosperous Southern coastal province of Guangdone has had a 20% monthly increase in labour. The input cost of labour in apparel production is 15-22%. Big retailers like Guess Inc, AnnTaylor Stores Corp and JC Peeny are contemplating relocating some of purchasing dollars to India, Bangladesh, Indonesia and Cambodia and Vietnam. It now costs about four times more to employ an apparel worker in China than it does in Vietnam.

Labor costs are high in Lesotho compared to other Sub-Saharan African countries. Hourly wages range from approximately $0.14 to $1.80 in apparel-producing African countries as well as in several non-African coun- tries with significant apparel sectors such as Bangladesh, China, and Sri Lanka. Wages in Lesotho average $0.46 an hour, lower than those in Mauritius and South Africa but significantly higher than those in Ethiopia, Kenya, Mada- gascar, Mozambique, and Swaziland. Even when productiv- ity is taken into account (labor costs per shirt), Lesotho still is an expensive manufacturer compared with Ethiopia, Kenya, Madagascar, and Mozambique (reference: Apparel Exports Lesotho, Chapter 13, 2009)

Labour costs (hourly compensation) in the clothing industry in selected countries (US$/hour, 2002)

Bangladesh 0.39, China 0.68-0.88, Egypt 0.77, India 0.38, Kenya 0.38, Madagascar 0.33, Mauritius 1.25, Mexico 2.45, South Africa 1.38, Sri Lanka 0.48 Source: Economist Intelligence Unit (2004)

Country Hourly Wage

United States $8.25-14.00 , United Kingdom $7.58-9.11, Venezeula $2.73 , Costa Rica $2.19 , Guatemala $1.21 , Colombia $1.20 , Honduras $1.02 , Philippines $0.94-1.00 , China $0.93 , Peru $0.92 , El Salvador $0.92 , Jordan $0.74 , Malaysia $0.73 , Nicaragua $0.65 , Bahrain $0.57 , Thailand $0.56 , India $0.55-0.68 , Mauritius $0.55-0.65 , Vietnam $0.52 , Egypt $0.50-0.87 , Mexico $0.50-0.53 ,
Sri Lanka $0.46 , Pakistan $0.37 , Indonesia $0.35 , Cambodia $0.24 , Bangladesh $0.21

Reference: Institute for Global Labour and Human Rights, 19 August 2010

South Africa: New wage -reflecting the entry-level wages 1 Sept 2011.

Sactwu speaks about new entry-level wages

2011-10-17T19:31:00.000+02:00

South Africa
Clothing union speaks about the new entry-level wages.

Responsible media coverage of clothing & textile sectors.
It is absolutely imperative that media report on the clothing and textile sector in a responsible manner. Instead their misunderstanding and or integration of the words clothing and textiles in their reports sews further confusion and leads to misrepresentation.
The new entry-level wage agreement is NOT for the textile sector. The Apparel Manufacturers Association (AMSA) does not represent the textile industry. This agreement is only for the apparel industry.

Sactwu’s General Secretary answers questions posed by South Africa’s textile federation regarding the new entry level wages for the clothing sector.

Date: 13 October 2011

Question:

Why is there this change from SACTWU? A wage proposal albeit linked to productivity was tabled over a year ago but was rejected by SACTWU?

Answer:

THERE IS NO CHANGE FROM SACTWU. WE HAVE FOR A LONG TIME BEEN EXPERIMENTING WITH THE CONCEPT OF A LOWER ENTRY RATE, BEFORE INTRODUCING IT INTO THE CLOTHING INDUSTRY. FOR EXAMPLE, IF YOU SPEAK TO SOME OF THE EMPLOYER NEGOTIATORS IN THE TEXTILE SECTOR, THEY WILL TELL YOU THAT FOR QUITE A FEW YEARS, IN SOME OF THE SECTORS, THAT CONCEPT EXISTED. WHAT IS NOW NEW IS THAT IN THE CLOTHING AGREEMENT IT IS FIRMLY LINKED TO EXPLICIT JOB CREATION COMMITMENTS.

WE HAVE NOT REJECTED PRODUCTIVITY LINKED WAGES IN CLOTHING. IN FACT, SACTWU HAS CHAMPIONED IT. THE CURRENT CLOTHING MAIN AGREEMENT'S WAGE STRUCTURE PROVIDES FOR WAGE LEVELS WITH AND WAGE LEVELS WITHOUT PRODUCTIVITY INCENTIVES. WHAT IS SAD IS THAT EMPLOYERS HAVE FAILED TO IMPLEMENT IT, AND IT ONLY GETS IMPLEMENTED WHERE THE TRADE UNION PUSHES IT.

Question:

Does this new wage proposal only pertain to compliant clothing companies? Or does it also apply to non-compliant clothing companies?

Answer:

IT APPLIES ONLY TO COMPLIANT COMPANIES

Question:

Will companies have to increase new personnel to 100% of bargaining council wages within a certain period or will there be an incremental > increase in wages?

Answer:

INCREMENTAL, BUT THE END POINT IS 70% OF THE CURRENT QUALIFIED (METRO AREAS) AND 80% OF CURRENT QUALIFIED IN NON-METRO AREAS.

Question:

Are there other conditions that employers have to comply with?

Answer:

YES. THEY CANNOT RETRENCH CURRENT WORKERS AND REPLACE THEM WITH NEW EMPLOYEES ON A LOWER RATE. THEY MUST GROW EMPLOYMENT IN COMPLIANT COMPANIES BY 15% BY MARCH 2014, AT A BENCHMARK RATE OF 3% EVERY 6 MONTHS WITH EFFECT FROM 1ST SEPTEMBER 2011.

Question:

Cosatu is, according to Patrick Craven, still "looking into the agreement to find out what it is about." Is there a possibility that Cosatu will not endorse it?

Answer:

I AM LIAISING WITH COSATU REGARDING THE MATTER AND AM CERTAIN THAT AT THE APPROPRIATE TIME SOME SORT OF PRONOUNCEMENT OR COMMENT WILL BE MADE BY THE FEDERATION. SACTWU IS PROCEEDING WITH THE IMPLEMENTATION OF THE AGREEMENT THOUGH, AS WE SPEAK, AS IT IS AN AGREEMENT THAT HAS BEEN LEGITIMATELY REACHED IN TERMS OF OUR COLLECTIVE BARGAINING PROCEDURES. I UNDERSTAND COSATU'S CONCERN AND WILL WORK WITH THE FEDERATION TO HELP ADDRESSING IT.

Question:

This agreement provides a legal framework for employers in the already stressed textile sector to seek a similar agreement. Can this agreement be extended to the textile industry?

Answer:

NO, IT DOES NOT PROVIDE A LEGAL FRAMEWORK FOR EMPLOYERS IN THE TEXTILE SECTOR TO SEEK A SIMILAR AGREEMENT. THE AGREEMENT IS ONLY LEGALLY BINDING ON THE CLOTHING INDUSTRY. CONDITIONS ALSO DIFFER: FOR EXAMPLE, IN THE CLOTHING INDUSTRY THERE IS ONE NATIONAL BARGAINING COUNCIL COVERING THE WHOLE SECTOR.

THIS IS NOT THE CASE IN TEXTILES, WHERE FOR EXAMPLE FABRIC KNITTING EMPLOYERS HAVE FOR YEARS REFUSED TO BE COVERED BY THE SCOPE OF THE TEXTILE BARGAINING COUNCIL. FURTHER, IN SOME TEXTILE SECTORS, THERE IS ALREADY A SIMILAR DISPENSATION IN PLACE (IE ALOWER ENTRY RATE) BUT WITHOUT SPECIFIC JOB CREATION TARGETS. ALSO, AS AN EXAMPLE, THEIR IS QUITE A SOPHISTICATED MULTI-TIERED WAGE REGIME IN PLACE IN THE CLOTHING SECTOR (FOR EXAMPLE, AT LEAST 60 DIFFERENT WAGE CATEGORIES FOR A MACHINIST, DEPENDING ON GEOGRAPHIC AREA, LENGTH OF SERVICE, ETC, WHICH IS NOT THE CASE IN THE TEXTILE SECTOR)

ALSO, IT IS MUCH CHEAPER TO CREATE A JOB IN THE CLOTHING SECTOR THAN WHAT IT IS TO CREATE A JOB IN THE TEXTILE SECTOR. HOWEVER, NOTHING OF COURSE PREVENTS TEXTILE EMPLOYERS FROM TABLING ANY PROPOSAL DURING THE ANNUAL ROUND OF WAGE NEGOTIATIONS. IT IS THEN UP TO THE NEGOTIATING FORUMS TO DEAL WITH IT.

Question:

When will this new entrant wage proposal be implemented?

Answer:

THE AGREEMENT IS EFFECTIVE RETROSPECTIVELY TO 1ST SEPTEMBER 2011.

ENDS

On 13 October Sactwu’s General Sectary was interviewed by the Financial Mail.

Q & A - Sactwu general secretary, Andre Kriel

Of mutual gain

Claire Bisseker speaks to SA Clothing & Textile Workers’ Union general secretary Andre Kriel about the wage deal with employers allowing them to pay new entrants 30% less than existing workers.

Q: What made Sactwu agree to the new model, given that labour has long opposed a two-tier labour market?

Among other things, it was the realisation that we need to embark on an extraordinary effort to ensure the repatriation of foreign orders linked to domestic job creation, further attack non compliance and grow trade union membership.

Q: Did you consult with Cosatu before signing it?

No, there was no need to. This agreement does not transgress Cosatu policy.

Q: Is Sactwu happy with the agreement or do you still harbour suspicion about a two-tier labour market?

We will, of course, remain vigilant against any possible abuses and will regularly monitor implementation progress. We are committed to make it work. This is an example of a settlement where both parties have their concerns but, on balance, each feels it is of mutual gain. Like any virgin agreement, there will be controversy and debate. This is healthy to help strengthen the developmental mandate of our labour market policy.

Q: Could the economic downturn derail the agreement?

Employment levels in compliant companies must grow by 15% over 30 months, failing which the agreement is automatically cancelled. This provision is not subject to any factors such as economic downturns. Employers will have to find innovative ways of meeting their job creation commitment if any challenges arise.

Q: Can Sactwu account for R100m in provident fund money which it allegedly invested in Canyon Springs Investments?

The provident funds are stand-alone funds, independently controlled by a board of trustees. Sactwu has never been part of the investment decisions of the board of trustees. Nevertheless, we’ve taken steps to initiate and lead a section 417/418 Companies Act inquiry into the missing money. We are determined to find out what has happened to the money and to bring any guilty party to book.

ENDS

The ReDress comments that the lowing of wages may have an impact on unions and bargaining councils in other industry sectors. This was endorsed by Sacci.

On the 10 October it was reported that the SA Chamber of Commerce and Industry said that the new clothing wage model could be followed by other industries.

The lowering of the minimum wage in the clothing and textile industry can serve as a model to other industries, the SA Chamber of Commerce and Industry said on Monday. The agreement to lower the minimum wage by 30 percent within the clothing and textile industry is a model that can be implemented to increase South Africa's competitiveness and employment creation," Sacci president Chose Choeu said in a statement.

Walmart: The cheap, the imported and the truth

2011-10-15T09:38:00.000+02:00

South Africa

More shots were fired this week in the war over the supermarket trolley, with the government, unions, economists and analysts all weighing in, but there was little agreement about who should own the trolley and how its contents should be sourced.

Union federation Cosatu said that Walmart's unmatched global buying power and ability to source cheap goods posed "an unprecedented risk to local industries". It said all retailers should be required to source 75% of its stocks locally.

Massmart-Walmart said it anticipates spending an additional R60-billion on food and fast moving consumer goods (FMCG) procurement over the next 5 years, most of which will be produced locally and therefore of benefit to local food and FMCG manufacturers.

Stephen Gelb, professor of economics at the University of Johannesburg, said the same retailers that were complaining about Walmart had been importing goods from China for years. "It's entirely the same scenario as far as I can see. The problem is simply that locals don't want more competition, especially not from a bigger, badder foreign company."

A comprehensive strategic partnership agreement between South Africa and China was formed last year and agreements were made pertaining to a variety of sectors.

Political analyst Moeletsi Mbeki said, after South Africa joined the World Trade Organisation in 1995, industries were subjected to competition before they were ready to fend for themselves against cheap imported goods. He said one consequence was the footwear industry collapsing almost completely.

Data from the South African Footwear and Leather Industries Association indicated that, in 1985, 78% of footwear sold in the local market was made in South Africa. By 2005 only 17% was made locally and 83% was imported.

The scapegoat

The idea was to make consumer goods cheaper for South Africans, said Mbeki. "But what is the point of having affordable shoes if you are unemployed? I don't think one can turn around and say it is Walmart's fault -- those industries were dead already. Unions and the government are looking for a scapegoat," he said.

Neil Rankin, co-ordinator at the African Microeconomic Research Umbrella, said that despite years of trade with China and other countries resulting in job losses, the outcry over Walmart was because the people affected belonged to important political constituencies.

He said all three ministers who opposed the merger (Agriculture Minister Tina Joemat-Pettersson, Economic Development Minister Ebrahim Patel and Trade and Industry Minister Rob Davies) had strong labour constituencies.

But Davies told the Mail & Guardian that the competition authorities acknowledged there would be an increase in imports with the Massmart-Walmart merger.

The main concern was that retailers who sourced some products locally would be forced to go outside South Africa to compete with Walmart prices, he said.

"Consumption sectors have been growing twice as fast as production sectors. We have got to stack the deck in favour of local producers."

South African tyre-makers recently lost an anti-dumping case against the flood of cheap Chinese imports, the M&G reported last week. The cost of passenger tyre imports from China to South Africa had increased to an average of R214 each, compared with R588 a tyre from Europe. South African-made tyres are usually priced at about the same level as European tyres.

Manufacturers complained that the government did not appear to be interested in protecting South African industries against Chinese imports because of the cosy relationship between President Jacob Zuma's administration and the Chinese.

Davies said exports had also grown faster than imports, although exports were largely primary goods such as metals and minerals, whereas imports were value-added products such as clothing and appliances.

He said the department now hoped to correct the imbalance: 10 value-added products had been identified and China was asked to send its buyers to an exhibition of these goods.

Value-added goods

Christopher Gilmour, an analyst at Absa Investments, said 97% to 98% of produce sold at retailers like Shoprite and Pick n Pay were sourced locally. But when it came to value-added goods such as clothing, appliances and computers, South African industry could not compete.

"The government has this idea that value-added [goods] is a good idea, which is fine as long as you can compete," he said. "It is about comparative advantage; you have to produce what you're good at."

Gelb said the emergence of Walmart in South Africa would intensify competitive conditions. "The basic problem is that our cost of production is higher than those [countries] we are importing from and it's up to us to keep our costs down." The costs involved are not just wages, but also high overheads and profit margins.

Gelb said the big question was: "How do you weigh up the competing but not easily comparable costs and benefits -- jobs lost in the past and those that may be lost in future -- versus consumer benefits, but with less of a benefit per individual."

Davies said struggling industries were partly caused by trade liberalisation, but also by insufficient industrial development.

"The thinking was that the competitive environment would encourage a more competitive nature, but a lot of these guys just put their hands up and went under."

Peter Draper, adjunct professor at Wits Business School, said the debate about trade with China was occurring in resource-dependent countries such as Brazil and Russia as well because none of them could compete with the manufacturing powerhouse.

"The resistance against Walmart is from those who are developing trade policy and are protectionist in their views," Draper said, adding that this did not make sense for a country with a poor population that had little buying power, such as South Africa.

He said the government should not aim to drive the development of an entire sector but should rather look at niches in which South Africa could compete.

Source: Mail & Guardian Online
LISA STEYN

JOHANNESBURG, SOUTH AFRICA - Oct 14 2011 15:03

Details of new wage proposal must be explained

2011-10-10T17:54:00.002+02:00

Comments from The ReDress Consultancy

The announcement of a new wage structure for South Africa’s beleaguered clothing sector is welcomed. However, there are a number of questions and uncertainties meandering through the industry. It would be prudent for the union and the clothing industry representative body, AMSA to unpack the new wag structure. Furthermore, it is imperative that the media covering the industry also ask pertinent questions and excavate this “landmark agreement.”

But before the media do this they need to define the industry they are writing about. The media intertwines textile and clothing. They may fall under the broader definition of the industry but they are very distinct industry sectors. The new wage structure is not for the textile sector it is for the clothing sector. Maybe we are being pedantic.

Let’s move onto some questions pertaining to this “most important development in collective bargaining since the introduction of the labour laws in 1995.”

1. Why the sudden change from the union? A wage proposal albeit linked to productivity was tabled over a year ago but rejected by the union?

2. What was secretly agreed for the union to endorse this concept? The removal of duties on all textiles – imported or made locally- which will invariably lead to more unemployment and diminish the competiveness of the clothing sector?

3. Does this wage structure only pertain to compliant clothing companies? Or can the irksome non-compliant companies employ at 30% less?

4. Will companies have to increase new personnel to 100% bargaining council wages within a certain period or will there be an incremental increase in wages?

5. What other benefits do employers have to contribute which could or will erode the 30% lower wages?

6. Will new entrants have to become union members? A very convenient way to grow membership.

7. Employing more people will not increase efficiency –again a singular focus on labour when there are other critical factors that contribute to the clothing sector.

8. Sactwu’s parent, Cosatu is, according to Patrick Craven, still “looking into the agreement to find out what it is about.” And if they do not endorse it?

9. This agreement provides a legal framework for employers in the already stressed textile sector to seek a similar agreement. This “landmark” agreement can and will percolate through South Africa’s entire labour market and we believe no union or bargaining council will have a legitimate reason to deny or refuse similar agreements.

We hope the parties who constructed this agreement will explain the minutiae of this agreement to avoid any ambiguity.

The onus is on the industry to ensure this occurs

New Wages for SA Clothing Industry

2011-10-05T18:03:00.000+02:00

5 October 2011

Breaking News from The ReDress Consultancy

New Wages for SA Clothing Industry announced.

It is understood that South Africa’s clothing union, Sactwu has agreed on a new wage structure for the clothing industry. The new wage structure is effective as of 1 September 2011.

According to resources the wage breakdown is as follows:

Metro Areas: An increase of 6.5% to company for all categories in sector.

Non-Metro Areas: The new wage equates to roughly R45.00 per week increase for a General Worker & Qualified Machine Operator. Other categories equates to a 9.2% increase – this is cost to company.

New Entry Wage Structure:

A new wage structure agreed for new employees (industry entrants) with no prior industry experience. This new structure will also cover potential employees who have experience but have been out of the industry for (3), three or more years.

Metro Area: 70% of the New Gazetted Wages for relevant category.

Non Metro Area: 80% of the New Gazetted Wages for relevant category.

Comment:

Wage increases onto an already burdened and stretched industry is of concern. More so when the bargaining council has admitted that companies who undertook in principal to meet the Phase-in regulations are failing to do so. One wonders how many companies will be in a position absorb these increases and what effect it will have on existing labour in the industry.

The notice that the union has accepted a new entry wage structure to encourage up-take of employment is welcomed. However, a similar proposal with the same objective was proposed over a year ago and the union rejected this initiative. The consequences of this rejection have reverberated throughout the industry and are well documented.

Why the change at this time in regard to entry level wages?

The new Entry Wage model needs more excavation and evaluation to be fully understood.

How long will the new Entry Wages be in effect?
After one year of employment will a new employee move to 100% or is there a structured wage increase over a specific period?
What other benefits do employers have to pay that is not included in the new wage structures.

The new two level wages formal and Entry Level have been negotiated between the industry body that represents compliant clothing companies and the union. Will the non-compliant companies agree with the new wages or will they reject both levels due to them being excluded from negotiations?

Newcastle Chinese Chamber of Commerce and Industry responds to raids

2011-09-30T18:03:00.000+02:00

Press Statement

From: Newcastle Chinese Chamber of Commerce and Industry

Reference to the raids on Newcastle Clothing Companies

Date: 30 September 2011

South Africa

The Newcastle Chinese Chamber regrets the raid yesterday. Such intimidating actions do not help to address the issues raised by SACTWU nor will it help the national job creation campaign. The Newcastle Chinese Chamber met with SACTWU last week to set up a meeting with the Disciplinary Committee of the chamber together with SACTWU to discuss the matters contained in their memorandum . Yet despite this agreement SACTWU decided to ask the department of labour and home affairs to raid our factories.

We are concerned about the way the inspections were conducted because the joint teams were either lead by SACTWU officials or NBC inspectors. All inspections took more than 5 hours and longer and the actions were more like police raids on criminals. The raids resulted in loss of production to those factories and some factories cannot open today as their workers were frightened by the actions of yesterday.

Factories haven’t received the report from DoL about the findings, we will comment on the reports only when we receive them. Some so called illegal immigrants were arrested and detained on allegations of violation of the act. We have submitted proof and documents to the DoH and hopefully they can be released as soon as possible.

In one incident, 2 Chinese were arrested with valid permits with company A but found allegedly working in company B. In fact, they were assigned by their company A to supervise and check the orders placed to company B. The 2 companies are situated within 2km from each other. Both owners approached the chamber for assistance. The others had expired work permits but already applied for extension before expired date.

We are also curious as to why such raids only take place in Newcastle and in Chinese factories. The Minister seemed to hear the voice only from the trade unions but not from the workers and employers. The question can be rightfully asked if this is not bullying tactics because of the impending court case against the bargaining council and other stakeholders

All the 12 factories provided the officials in the task teams with full co-operation yesterday as we respect the laws of this land. We are however under the impression that government departments are supposed to assist the manufacturing sector as was recently announced by our President Zuma in Port Elizabeth and we would have imagined that the government departments would have engaged us as stakeholders in the SA economy and not like criminals.

Alex Liu

To read article:
Foreign textile workers arrested in Newcastle factory raids

At least 46 foreign workers without legal work permits were arrested in a surprise swoop by the Department of Labour at what it called “12 of the worst clothing factories” in Newcastle, officials said yesterday. Click here

Newcastle clothing factories raided

2011-09-30T10:07:00.000+02:00

Foreign textile workers arrested in Newcastle factory raids

At least 46 foreign workers without legal work permits were arrested in a surprise swoop by the Department of Labour at what it called “12 of the worst clothing factories” in Newcastle, officials said yesterday.

The raid is one of the initiatives the department has encouraged provinces to undertake in a bid to stamp out non-compliance in the textile industry. This is in addition to the nationwide blitz campaign that focuses on high-risk and problematic sectors.

The inspection, to ensure compliance with labour laws, was conducted in collaboration with the Department of Home Affairs, the SAPS and the bargaining council for the clothing and textile sector.

“This is a way in which a holistic and consolidated approach is used to root out employers who flout the law. Follow-up inspections will be conducted and if it is found that the employers concerned are still disregarding the law, then inspectors will not hesitate to recommend prosecution in such instances,” said Abey Rasepae, the provincial control inspector of the Department of Labour in KwaZulu-Natal.

Although the nationalities of those arrested could not be confirmed yesterday, Rasepae said there was concern over textile companies hiring foreign labourers who did not have the correct documentation and permits. Nine workers were arrested two weeks ago in a similar operation.

The antagonism between government agencies and textile factory owners has been exacerbated by the latter’s reluctance to pay agreed minimum wages, despite a process through which government has tried to enforce compliance.

Rasepae said yesterday’s raid had uncovered various anomalies. Production at one factory was ordered to stop as the sewing machines had no safety guards and this posed a danger to workers.

“Some of the contraventions included emergency exits not being demarcated, no electrical certificates available for electrical installations and no soap or toilet paper being placed in toilets.

“In one instance, it was found that only one toilet was shared by almost 60 male and female employees,” he said.

He said some factories had no fire-fighting equipment or qualified first aid personnel, and some first aid boxes were not adequately supplied

“Employers were also found to be on the wrong side of the law when it came to making declarations and paying contributions to the Unemployment Insurance Fund (UIF). The lack of registering with the Compensation Fund was also prevalent,” Rasepae said.

The Southern African Clothing & Textile Workers Union (Sactwu) had laid complaints against the employers, accusing them of exploiting workers and not providing decent working conditions.

Rasepae said such initiatives would be continued to ensure that the enforcement of labour laws gained momentum at all levels, particularly where there was gross violation.

Inspectors have issued contravention notices giving employers 60 days to comply.

Reference: Ayanda Mdluli, Business Report, 30 September 2011

Sactwu to participate in legal case-missing funds

2011-09-28T18:39:00.000+02:00

SACTWU secures legal standing in Canyon Springs 417/418 enquiries

The Southern African Clothing and Textile Workers’ union (SACTWU) has secured the legal right to participate in a section 417/418 Companies’ Act enquiry, in the Canyon Springs liquidation proceedings. It will be the first ever such enquiry in South Africa in which a trade union participates, by way of interrogating witnesses who have been subpoenaed to attend the enquiry, and will usher in a new era in industrial relations in our country, where bosses and related persons of suspect insolvent companies are called to account for their actions in a legally sanctioned investigation enquiry. In this instance, SACTWU is pursuing the Section 417/418 enquiry in order to establish what has happened to about R100m of its members’ retirement funds, loaned to Canyon Springs by the Trilinear Empowerment Trust (TET), to recover as much as possible of the missing monies and to ensure that if any guilt is proven by anyone, steps are taken to bring the guilty to book.

The new Companies’ Act, which provides for this type of enquiry, came into effect in May this year. SACTWU has purchased the debtors’ rights of Dart Stationers CC to secure the legal standing to pursue the enquiry (this debtors’ purchase was done for a minimal amount of just over R900, being the amount that Canyon Springs owes Dart Stationers for stationary purchases). The agreement with the union states that Darts Stationers CC cedes its Canyon Springs debtor’s rights to SACTWU. A second similar agreement was entered into with Mel Solving IT CC, for just over R400. Prior to these two agreements, SACTWU had no legal standing in the matter, as the union itself was never party to the investment decisions of the retirement funds or in any of the decisions by the Trilinear Empowerment Trust Fund to lend retirement fund monies to Canyon Springs. These agreements now provide the union with the legal right to pursue a section 417/418 enquiry against anyone involved in the alleged misappropriation of about R100 million of SACTWU members’ retirement funds originally loaned to Canyon Springs.

The union has arranged for the Section 417/418 enquiry to commence at the end of September this year and it is expected to run for about 10 non-consecutive days, with completion expected by mid-October 2011. There-after, the Enquiry Commissioner is required by law to prepare and issue a report, including to pronounce on alleged criminal and/or negligent conduct by persons who have been subpoenaed to appear. The Cape High Court has now already appointed senior attorney Jan Reitz as the Enquiry Commissioner.

In terms of the new Companies Act, a subpoenaed person is required to answer all questions at the 417/418 enquiry and to produce such documents as may be required, failing which the person could be jailed.

We are determined to execute my take steps to of recover every single cent which may be missing and to ensure that if any wrongdoing is proven, the guilty must go to jail for a long time.

SACTWU has instructed that a number of high profile people involved in the matter to be subpoenaed and the Enquiry Commissioner has now formally issued such subpoenas. Persons who have been summoned to date are as follows (more persons WILL be summonsed later):

• Mohan Patel. He is one of the key directors of Canyon Springs and is effectively one of the senior shareholders of Canyon Springs. He has acted as the equivalent of Canyon Springs CEO for many years.

• Enoch Godongwana. He was a director of Canyon Springs. When he became a Deputy Minister, he resigned as a director and his wife, Thandiwe Godongwana, then became a director of Canyon Springs. Furthermore, him and his wife are, through their company, effectively senior shareholders in Canyon Springs.

• Thandiwe Godongwana. As stated above, she is a director of Canyon Springs and through the relevant company effectively a senior shareholder of Canyon Springs.

• Erwin Da Gama. Is a director of Leading Prospects (Pty) Limited (“Leading Prospects”), which company was allegedly granted an unsecured loan of at least R15 million by Canyon Springs.

• Sam Buthelezi. He is effectively the Chairman of and the person in control of all of the Trilinear companies, which were effectively the financial services provider and investment advisers for the Trilinear Empowerment Trust (“TET”).

• Graig Philander. He was one of the initial trustees of TET. He was apparently paid a substantial consultancy fee, as a consultant for TET.

• Richard Kawie. He claims that he was the National Benefits Co-ordinator of SACTWU and it is alleged that he has received substantial service fee payments from Canyon Springs, up to approximately R8m. In meetings with the trade union, he has consistently denied any wrongdoing.

• Hyman Bruk of Bruk Munkes & Co, the auditors of Canyon Springs.

• Bonita Davids. She was the bookkeeper for Canyon Springs.
• PKF, the auditors of TET. PKF recently withdrew the audited financial statements of TET for several years, because they alleged there have been misrepresentations made to them, after the union had queried certain aspects of their reports

• Shahid Sulaiman. He is a partner at Bowman Gilfillan, one of the top legal firms in South Africa, the attorneys that acted for the Trilinear companies and TET. It is alleged that he made material written misrepresentations relating to the financial position of TET/Trilinear, allegedly also having given written assurances that the monies are secure in safety deposits.

• Silumko Nondwangu, a former General Secretary of the National Union of Metal Workers of South Africa (NUMSA), who is alleged to have received payments from Canyons Springs for services which he claims to have legitimately rendered to the company

• Spencer Witten: Richard Kawie’s PA

• Siphamandla Jama. He was originally employed with the Trilinear companies, as well as TET, and signed the founding affidavit in support of TET’s application for the liquidation of Canyon Springs.

• Darawees Gasant: he acted as a Transaction Adviser to Canyon Springs

The following persons will appear first during the commencing session this week, and in this order, when the Enquiry starts on 29 September 2011:
• Enoch Godongwana.
• Thandiwe Godongwana.
• Siphamandla Jama
• Mohan Patel.

Issued by
Andre Kriel
SACTWU
General Secretary