Over 3000 workers of Best Garment, an Indian company operating inside Hawassa Industry, are facing layoff as the textile manufacturer battles a drastic fall in revenues. The move comes in light of the US government’s decision to cutoff Ethiopia from enjoying privileges granted under the African Growth and Opportunity act (AGOA).
The managers of the company were not able compete in the US market for the last two months. The situation forced multinational companies to suspend shipments to the international market.
“There was no order following the restriction, with our income barely covering our salary expenses. So, our plan is to exit from the park after compensating the employees,” said a senior manager of a Factory whose name is withheld upon request.
Best is not the only company to take such moves.
PVH Corporation is the first to exit from the park. The producer of brands like Calvin Klein, Speedo and Tommy Hilfiger cited the unpredictability of the situation in Ethiopia for its exit.
Epic Apparel is also struggling to remain afloat, forcing it to layoff over 1200 workers. Both EPIC and PVH have settled compensation payments for their employees.
“We expect Best Garment to do the same,” said Angesom Gebre Yohnnes, president of the Industrial Federation of Textile, Leather and Garment Workers Trade Union.
Best is expected to pay a three month gross salary to employees facing a layoff.
“We have proposed the factory to first cut 2400 workers and then another 600 during the end of August to give sometime to workers,” said Angesom, adding, “An agreement is yet to be reached on the process.”
Best Garment has already notified the Trade Union, Industrial Parks Development Corporation (IPDC) and authorities in Sidama Regional Government about the layoffs.
A flagship project of the Ethiopian government, the Hawassa Industrial Park became operational in 2017, with a target to contribute USD one billion to the export of Ethiopia annually.
It houses 19 factories, creating job opportunities for over 35,000 people. The figure is two times lower than the number of people working before Ethiopia’s suspension from the AGOA.