1 762 TEXTILE WORKERS TO BE RETRENCHED

MANZINI - The new year is off to a bad start for 1 762 textile workers as Kasumi Apparels Swaziland (Pty) Ltd is set to cease operation and retrench them all.

This is according to a notice which was written by the textile company’s management to the office of the Labour Commissioner in the Ministry of Labour and Social Security and it was confirmed by the company’s Deputy Managing Director (MD) – Administration, Brian Lu.
Kasumi Apparels Swaziland is a textile factory which has four subfactories, that operate at Matsapha Industrial Site and it is one of the companies under Tex Ray Group Eswatini.

Closure

According to a well-placed source within the company, the main reason for the closure was that the business was recording a decrease in terms of orders. However, the source said they hoped this would not be permanent. “We do not have enough orders to keep the workers, but we are working on securing some for long-term productivity, thus our plan to reopen the company afterwards,” the source said. When asked what could be the cause of the decline in terms of orders, the insider attributed it to the fact that the South African government introduced a rebate system. In February 2021, the South African government had passed a policy, which this publication reported that it could spell doom for the textile industry in the Kingdom of Eswatini.

The policy was as a result of the South African retail - clothing, textile, footwear and leather (R-CTFL) value chain master plan, which is part of the neighbouring country’s COVID-19 economic recovery strategy. The South African policy, as per the master plan, is bold in ambition as it aims to deliver significant new jobs along the value chain behind a clear set of commitments from retailers to buy locally. In a bid to ensure that retailers support local manufacturers, the South African government introduced some incentives. For example, South African companies which were importing materials like fabric from overseas countries (Republic of China, Taiwan and Far East), were paying 22 per cent as levy, but this was scraped out on condition that they did not export it in other countries like Eswatini, Lesotho, Botswana and Namibia.

Maturing

In that regard, the source said as this master plan was maturing; South Africa was increasing the share of local CTFL retail sales of locally manufactured clothing and footwear, thus the number of companies which placed orders in other countries, including Eswatini were decreasing.
He added that some of their clients also did not place orders with them because they still had a lot in stock and that the competition was tight as textile factories continuously lowered their prices at the market. Furthermore, he said the first quarter of every year was referred to as a low season in the textile industry as orders were usually limited and most often companies placed its workers on either short-time or layoffs. He said after the low season, which last until around April, they would surely get enough orders to get the company up and running.

The source also highlighted that the company had already served the labour commissioner’s office with a notice regarding the matter and this happened on Thursday. The notice, which this publication is in possession of, is titled; ‘Notice to terminate contract of employment on reasons of redundancies in terms of Section 40 of the Employment Act of 1980 as amended - Kasumi Apparels Swaziland (Pty) Ltd’. In the notice, which was signed by company’s deputy MD – administration, the textile company said it was a garment manufacturing firm, which was duly registered in terms of Companies Act of the Kingdom of Eswatini and it was having its principal place of business at the Matsapha Industrial Site.

Brian Lu then brought it to the attention of the labour commissioner that companies and departments forming Kasumi Apparels Swaziland were; Kasumi Factory Shell I, Kasumi Factory Shell III, Printing, Embroidery, Carton and General. Thereafter, on behalf of the company, he notified the labour commissioner that the company would cease operations on March 3, 2023. He said when doing so, all positions would be declared redundant; hence they would retrench all their employees in terms of Section 40 of the Employment Act as amended. However, he highlighted to the commissioner of labour that the company would not permanently cease its operations, but their plan was to shut it down temporarily. He said while closed, at the backstage they would be scouting for reliable customers for a long-term productivity.

Retrench

Thereafter, the deputy MD advised the labour commissioner that they would retrench all 1 782 employees as all the positions in the company would be affected. He also highlighted in the notice that the main and core reason for the retrenchment was operational as there was a huge loss of orders and decline in sales dating back from 2020 to date. He said this had been caused by global production and supply chain system disrupted by consequences of COVID-19 and Russia-Ukraine war, among other things.

“Management has tried all possible means to avert the unfortunate situation, but it all proved futile as we many times within this period legally instituted lay-offs and short-time with a hope that the situation will normalise, but failed and now the company can no longer afford to take the risk of continuing under the circumstances. Having explored all options, we opted for the last resort; to temporarily shut down operations and terminate employment of all employees under the company,” the deputy MD said in the notice.

He said the retrenchment will be effected from March 31, 2023 and mentioned that the company would pay all the terminal benefits to all the employees prior to the cease of operations. He said the terminal benefits would include severance allowance, additional notice and leave payment.
He emphasised that payment of the terminal benefits would be made on or about March 31, 2023, which would be preceded by the submission of the same to the labour commissioner’s office for its approval.

Moreover, he said the company endeavours on keeping employment. As such, he said the retrenched former employees might all re-apply and be gradually hired. It is worth noting that in 2018, Union Industrial Washing, which was a textile factory under Tex Ray Group Eswatini, was closed and all its workers – 1 115 were retrenched. The main reason was that the company did not have enough orders from the South African market to continue with operations. The workers were paid their terminal benefits. Later on, the company managed to secure orders and it reopened, but under a new name and some of its former workers reapplied and were hired again.

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