Tuesday, January 17, 2023
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BusinessAGOA ban forces two more garment factories to lay-off 1100 employees

AGOA ban forces two more garment factories to lay-off 1100 employees

It brings the total number of people losing their jobs to over 4000

Over a thousand employees working inside Hawassa Industrial Park will lose their jobs, as two garment factories announced their layoff plans set to be implemented before the end of this year. 

While this will bring the number of workers losing their jobs inside the park to over 4,000, the two factories, Hela Indochine Apparel PLC and Submarine garment, joined Best Garment in laying-off workers. Best garment is in the process to layoff over 3000 workers.

Industrial parks have been instrumental for job creation in the manufacturing industry for the last four years. Policymakers see parks as a solution to reduce unemployment in towns located nearby the industrial parks.

Constructed in 2017 with a cost of USD 250 million, Hawassa Industrial Park hosted 22 factories up until 2020. Two factories, PVH and Epic Apparel, left the park in 2021 due to the war in Northern Ethiopia, which is cited as a major reason by the management of the factories for leaving the park.

Ethiopia’s suspension from the African Growth Opportunity Act (AGOA) forced Best Garment and now, Hela Indochine and Submarine to exit from the market. It was the trade privileges under the AGOA that encouraged the factories to invest in Ethiopia, along with cheap labor (which officials call cost-effective labor) and low energy cost.

A joint venture of Sri Lankan and Chinese company, Indochine Apparel is involved in the design, sourcing, manufacturing and supply of wide variety of apparel products. In its plant inside the park, the company produces pantsuits, bras and underwear, with PVH was its major client.  

Indochine will cut 900 of its 2600 employees. “They will be required to go on leave with pay and the rest of the staff will remain on the job,” said Angesom Gebre Yohnnes, president of the Industrial Federation of Textile, Leather and Garment Workers Trade Union.

Submarine Garment will cut 264 employees. However, the workers will be reinstated if the companies receive an order, sources said.

Officials at the Industrial Park Development Corporation said they have no information on the layoff plans of the two garment producers.

According to the Labor law, when an employee is dismissed, companies will be required to pay a three month salary of the employee.

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