· Substantial job losses

· Crisis of competitiveness

· Triggered by a sustained and steep surge of imports, especially from China

· Retailers continue to make super profits

· Lack of coherent industrial strategy

· Part of global restructuring

The South African CTF industry

· Most labour intensive sector in manufacturing

· Lowest paid in manufacturing

· 156402 jobs (13% of manufacturing)

· R37 billion sales

· 67% of all workers are women (82% in Clothing)

· 35% of all women in manufacturing work in clothing and textiles

· Located in

• industrial towns like Botshabelo, Phuthaditjhaba, Isithebe, Newcastle, Ladysmith, Atlantis, Worcester, Mogwase, Babelegi & Dimbaza

• major cities like Cape Town, Durban, Johannesburg, East London, Port Elizabeth, Pietermarilzburg

CTF employment : Official statistics show:

· Lost 97 700 jobs or 38% in last 9 years

· Lost 38 360 jobs or 20% in last 2 years

· The SA Labour Research Institute maintains a database that tracks retrenchments, closures and liquidations in the CTF industry. Its figures shows 55575job losses between January 2003 and September 2005.

• South Africa's trade with china has expanded significantly

• The trade balance with china is negative (R16.5 billion in 2004) and growing

• Exports are concentrated in raw materials and capital-intensive sectors, while several labour-intensive sectors are experiencing rapid surges in imports from China

· Colonial model of trade

· Trade agreement with china

Job losses: impact

· With five people dependent on each breadwinner, it means almost 280 000 people affected by the 55 500 job losses since 2003

· With 66% of workers being women, job losses in the sector affect women and women- headed households disproportionately

· A significant share of job losses in non-metro areas where very little or no other job opportunities exist

[PMG Note : A Graph of Trade balance with China not Included]

Trade: CTF import growth

[PMG Note : A Graph of Trade: CTF import growth not Included]

Trade: CTF trade with China

• Grew by 335% in value between 2002 and 2054 to R2.7 billion
• Now 74% of all clothing imports in 2004, up from 54% in 2002

• Drew by 144% in value between 2002 and 2004 to R1.2 billion
• Now 19% of all textile imports in 2004, up from 12% in 2002

- Grew by 143% in value between 2002 and 2004 to R1.9 billion

- Now 73% of all footwear imports in 2004, up from 63% in 2002

• Women's woven tracksuits

• imports increased by 865% between 2002 and 2004
• average price per kg of R17.42

• imports increased by 717% between 2002 and 2004
• average unit price of R11.05

• Men's woven Suits

• imports increased by 499% between 2002 and 2004
• average unit price of R10.73

• Shoes with uppers of leather

• imports increased by 368% between 2002 and 2004
• average unit price of R17.62

• imports increased by 419% between 2002 and 2004
• average price per kg of R3.18

Labour market

• Wide wage dispersion across sub-sectors and geographic areas: 182 agreements of which 30 are at sector level

- Shift system in textiles and twilight shift in clothing

• Wages in clothing are especially low

• The minimum rate for a starter machinist in non-metro areas is R244 per week

• The benchmark qualified rate for a machinist varies from R304 per week in non-metro areas to R540 in cities

• In spite of this, there is widespread non-compliance

Effect on Africa

• Growth of China as a major producer also affecting other African countries by

- cheap Chinese imports destroying domestic industries

- Chinese exports to the EU and US displacing African exports to those areas

• 250 000 jobs lost in past few years in Lesotho, South Africa, Swaziland, Nigeria, Ghana, Mauritius, Zambia, Madagascar, Tanzania, Malawi, Namibia and Kenya

Job losses: reasons

• Strength of the Rand

• Growth of China as major producer

• High levels of illegal imports

• Inadequate levels of investment

• Poor product focus

• Limited human capital development

• Retailers sourcing from imports

Retailers: profits

· Since 2003, CTF lost 55 500 jobs, while the top 5 retailers made R11.9 billion profit.

Increase in profit before tax:

Industrial weaknesses

· Weak investment

· Low skills development

· Limited design focus

· Inadequate supply-chain management

· Poor product innovation

SACTWU's response

A combination of interventions required guided by an active industrial policy:

· defend domestic market

· modernise industry

· refocus export strategy

· build new sources of competitiveness

· develop industrial clusters and fashion districts

Alliance discussions

Support for proposals to

· Restructure and grow the industry

· Improve logistics

• Invest in training

· Use trade measures to address surges in imports

· Promote innovation

· Combat sweatshop practices

Processes

· Alliance discussion document

· Ministerial Task Team

· Customised Sector Process

· Safeguard application

· Customised Sector Programme

· Retailer agreement and protest action

· Cape Town Fashion Festival

• Other initiatives include

• Label of origin
• Intensifying training of workers and managers with the CTFL SETA
• HlV/Aids project
• Computer training

• China's accession protocol allows for temporary safeguards when imports have caused injury or disruption

· Number of countries have invoked or gave notice to invoke

· SACTWU submitted an application to ITAC for safeguards

- 38 products

- Pegged at 2002 import levels

- 7.5% increase per year

• Necessary but not sufficient response

SACTWU's response: call for Industry Plan

Key programmes of an Industry Plan should include the following

· Increase capital investment and upgrade the technological base

· Promote training of workers and managers at an intensified level

· Use advanced ICT to improve efficiencies and integrate the supply chain

· Promote product and design innovation

· Improve quality of local clothing and textile products

· Improve sustainability of employment and combat sweatshop practices

· Develop provincial and local clusters

· Launch major ‘buy local’ campaign

· Combat illegal imports

· Secure government commitment to purchase local foods

· Market the industry through Fashion Festivals

· Develop fashion precincts

SACTWU's response: Support CSP

• C5P is a strategy for restructuring the industry. It outlines plans for increasing competitiveness, exports and investments as well as employment and equity.

By 2014, the South African textile and clothing sector will have internationally competitive value chains that embrace global best practice in the manufacture of high value-added product's that sustain large numbers of skilled and quality jobs and contribute to realising the national economic aspirations.

· In process of being crafted.

· If successfully implemented, the CSP could create 50-60 000 direct jobs and 125-150 000 indirect jobs. It would also save the approximate 50-75 000 jobs that are likely to be lost if present trends continue.

SACTWU's response: retailer agreement and protest action

- Respondents: retailers and finance sector companies

- 6-month agreement in Dec 2003

- Retailers commit to source more locally and from compliant Companies

- In mid-2004, negotiations on a longer-term agreement collapse

· Cosatu s77 notice submitted to Nedlac in Oct 2004

- Respondents: retailers and finance sector Companies

- Negotiations with retailers and finance sector

- No agreement reached

- Competition Commission validates code

- Ongoing protest action (retail picketing 18 June; general strike 27 June; regionaL stayaways 3,10, 17 & 24 October)

SACTWU response: Cape Town Fashion Festival

Events include the Fashion a Lifestyle Expo, the Fashion Imbizo, Spring Queen, City Catwalk, fashion shows, the Cape Town Fashion Map, a worker exhibition and more 40 000 people attended in 2004 and with extensive media Coverage the event reached 1.4 to 2.8 million people

Cape Town Fashion Festival :Fashion Promotion

· Fashion precincts

· Fashion tourism

· Young designers programme

· SACTWU initiative, in partnership with the dti, the Western Cape Provincial Government, the City of Cape Town and two SETAs

• Key objectives

• display the fashion industry ‘s strengths and competitive adavantages,

• promote sustainable high value –added exports,
• raise consumer awareness of opportunities to buy quality local products,
• develop design innovation and capacity and encourage a uniquely South African look and
• create a platform for industry leaders to discuss the industry.

Fashion Promotion

• Fashion precincts
• Fashion tourism
• Young designers programme

[PMG Note Photographs For Ctff: worker exhibition: not included]

Worth saving?

A growing CTF industry can

• Easily create jobs

• Has major multiplier effect

· Result in increased gender equity

· Develop rural areas

· Act as an avenue for broad-based BEE

· Positive foreign exchange impact

African response

· Southern African unions met on 21-22 September and African unions On 10-11 October 2005 and released declarations asking their governments

• to institute temporary safeguard measures against Chinese textiles and clothing imports;

• for a summit in Africa on the future of the CTF industry to develop a common action plan to grow the industry and the welfare of its workers;

• to develop strong beneficiation programmes and to integrate regional value chains in textiles and clothing;

• to promote decent work through an expansion in the quantity and quality of clothing and textile employment;

• involve trade unions and employer organisations in government discussions on trade and industrial policy

1. Support a strong, coherent & effective CSP, with substantial funding

2. Address surge of Chinese imports through trade-related support measures

3. Support a Code with retailers linked to sourcing from local suppliers

4. Investigate retail profiteering

5. Support the Proudly South African campaign

6. Sponsor projects such as the Cape Town Fashion Festival, the fashion precincts and districts

7. Strengthen partnerships between the dti and Labour