"650 WORKERS RETRENCHED AS TEXTILE COMPANY CLOSES", 27 May 2024

About 650 textile workers have been retrenched as the global market of the industry continues to shrink.

The retrenchments happened against the backdrop of a number of layoffs, which had been implemented by some textile firms in the country due to a decline in orders. Golden Jubilee Textile Factory, which is one of the six sub-factories under Tex Ray Eswatini Group, retrenched all its workers on Monday May 20, 2024, as the company temporarily ceased operations due to the lack of orders, to keep it up and running...

When asked what could be the cause of the decline in orders, the insider attributed it to the fact that the South African Government introduced a rebate system. In February 2021, the South African Government passed a policy, which this publication reported would spell doom for the textile industry in the Kingdom of Eswatini. The policy was 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, was aimed at delivering 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 supported 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 the Far East), were paying A 22 per cent levy, but this was scrapped, on condition that they did not export it to other countries like Eswatini, Lesotho, Botswana and Namibia. 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. The source added that 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 their workers on either short-time or layoffs. This, he said, also contributed to the temporary closure of the factory.

“The global production and supply chain system was also disrupted by consequences of the COVID-19, Russia-Ukraine war and decline of orders from the global market. This means that the reasons for the retrenchments are operational, as the company had been recording a huge loss of orders and decline in sales, which date back to 2020 to date,” the source said. Therefore, he said having explored all options, the company opted for the last resort, to temporarily cease operations...

Through the notice, the factory management notified the labour commissioner that the company would cease operating on May 20, 2024 and 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, the management highlighted to the commissioner of labour that the company would not permanently cease its operations, but their plan was to close temporarily. He said while closed, they would be scouting reliable customers for long-term productivity...