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Labor dilemma in Egypt's garment sector presages larger problems - Daily News Egypt

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Labor dilemma in Egypt's garment sector presages larger problems

CAIRO: For years Egypt has exported laborers, primarily to its wealthy neighbors in the Gulf. Remittances from Egyptians working abroad are one of the three primary sources of revenue on which the country relies, of commensurate importance as income from the Suez Canal and tourism. Although Egyptians still work abroad, the recent period of economic …


CAIRO: For years Egypt has exported laborers, primarily to its wealthy neighbors in the Gulf. Remittances from Egyptians working abroad are one of the three primary sources of revenue on which the country relies, of commensurate importance as income from the Suez Canal and tourism.

Although Egyptians still work abroad, the recent period of economic reform have allowed multinational companies to consider employing Egyptians in their home country, as labor remained relatively cheap and new industrial zones encouraged foreign factories. The garment industry represented one sector that saw potential in hiring Egyptian laborers to produce ready-made clothing for export.

However, employers, both foreign and local, are facing productivity ceilings. For example, despite implementation of the QIZ program, [Qualifying Industrial Zones, within which companies have duty-free access to US markets], the number of Egyptian garments exported to the US has failed to rise.

To address this, the Trade Related Assistance Center (TRAC) at the American Chamber of Commerce in Egypt (AmCham) hosted a workshop called “Improving Labor Productivity in Egypt’s Ready-Made Garments Sector in April 2009. The subsequent report identified absenteeism, inadequate training and high turnover as the main barriers to productivity, concluding that, “in order to improve productivity. it is necessary to upgrade the skills of workers at all levels of the labor hierarchy.

Daily News Egypt spoke with the owner of a ready-made garment factory in 10th of Ramadan City, whose “just-in-time business model requires that clothing be priced, bagged and ready for sale in Paris, his main importer, within four weeks of an order’s placement. His statements reflected much of that uncovered in the TRAC report, (he will be referred to as “A , as per his request to remain anonymous).

Absenteeism

The report cited Dr Magdi Tolba, CEO of Cairo Cotton Center, who gave figures for industry absenteeism as “10 to 12 percent on normal days and up to 18 percent in pre-seasonal days; which is the equivalent of 600 workers out of 4,000 generally not showing up.

“A corroborated this, saying that although he has capacity for 3,000 laborers and a market to absorb his garments, he can only handle 500 employees. Egypt’s proximity to Europe allows his clothing to appear on shelves within a day of their shipment from Egypt, however, only if workers meet their production quotas. He worries that Egypt will lose its competitive edge as a center for industrial production if foreign companies find it cheaper or less of a headache to hire laborers in countries such as Bangladesh, who typically earn half of an Egyptian garment worker’s salary ($0.22 per hour compared to $0.40-0.80).

The TRAC report investigated the dilemma that wage increases do not lead to increased productivity: “In most countries, productivity challenges are typically reflective of a labor deficit . a common response to which is to increase wages. Given that Egypt is not suffering a typical labor deficit, upward pressure on wages will cost Egypt its competitive advantage in production.

“A related an anecdote, “The Turkish ready-made garment industry in particular has penetrated Egypt, yet many of their factories have suffered or even closed. They think that they can pay a higher wage and they will get more people to work. They think the mentality in Egypt is the same as Turkey. They’ve been really disappointed, because the social condition is completely different.

He went on: “If businesses want to work in Egypt they have to consider the social factor. They have to understand that something like a wedding, for example, will take people a week or 10 days to organize, during which they will not work. This doesn’t exit anywhere else. This is the social factor.

Turnover

“A also identified high turnover as a source of low productivity, which Dr Tolba quoted at 8 to 15 percent per month.

Trying to explain the reason for turnover, “A mused, “There’s no sense of self-satisfaction for the job. Other industries face the same problem, the lack of pride in a job well done. Having had socialism for such a long time, it made people not care. Those who care preferred to leave the country to find better jobs abroad in the Gulf or Libya.

The report named poor working conditions as one reason for high turnover, incorporating recommendations by the International Labor Organization (ILO), referred to as the “wise methodology , or “interactive training sessions . aimed at tackling small practical issues [and] focused on incentives to link good working conditions with management goals.

Factory owners like “A have tried to improve working conditions by providing bi-weekly visits from a doctor to visit employees, as well as health insurance, over-time pay and bonuses for reaching production targets.

Way of Life

Yet asked whether he considers it possible for Egypt to preserve their way of life while remaining internationally competitive, “A hesitated.

Finally, he answered, “There is a paradox. Egyptians want money because life is getting more expensive, but at the same time they want to keep this soft way, the Egyptian way of life. As an Egyptian, I don’t want this to disappear . it’s based on the family. And when you live in Europe the value of the family disappears. I prefer to have this and (laughs) maybe to find some solution for my production. We have to find a balance between Egyptian culture and the productivity of materialism.

“A admitted, “My first two years were catastrophic. I failed. Then I found the balance between the European culture of work and the Egyptian way of life. Since then I’ve been successful. But without this equilibrium you cannot succeed in Egypt.

Magdy Sobhy, economics expert at the Al Ahram Center for Political and Strategic Studies, had a different perspective.

“Some sectors were especially hit by the crisis. There is competition between these affected sectors to attract the most specialized workers, the skilled workers. But I don’t buy this story that people won’t work. If they offered a raise in wages, they [the workers] will come. This is the free market. If you insist on giving people the same wage during these high rates of inflation, they won’t come, he explained.

Asked to comment on the possibility of changing laws to allow more foreign laborers in to Egypt, he remarked, “Even if you import foreign workers in order to pressure Egyptians, it will be expensive. A textile worker in China makes more than in Egypt. No, the problem here is that the businessmen have more say than others in government. With unemployment at 10 percent, I don’t understand this.

Despite the many explanations for the sometimes puzzling behavior of the Egyptian laborer, from social tradition, to lack of training, to lack of sufficient incentive, for the sake of Egypt’s future as both an appealing investment and appealing place to work, the balance described by “A is hoped for.

Topics: FJP

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https://dailyfeed.dailynewsegypt.com/2010/01/03/labor-dilemma-in-egypts-garment-sector-presages-larger-problems/
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