Denim announced the closure of its operations in Malta

The Denim Services Group of Companies announced it was closing its Maltese factories and laying off about 850 employees. The General Workers’ Union showed its concern that there are other manufacturing enterprises which will soon be facing similar problems.

The Denim Services Group of Companies consisting of Denim Services Ltd and Denim Sportswear Ltd forms part of Malta’s manufacturing textile industry, an industry which has been in continuous decline. Together, these two companies employ about 850 employees (0.6% of the Maltese workforce), most of whom are females (60%).

The decision to close down operations in Malta and issue termination notices for all employees was taken by Denim after its contracts of work were awarded to other manufacturing industries in lower wage countries. Unconfirmed sources stated that the company would relocate in Morocco. The company explained that it could not continue to operate in Malta due to the harsh competition it was facing. A warning signal was given in March 2003, when Denim laid off about 250 employees.

On 1 November, the General Workers’ Union (GWU) had a meeting with Government to discuss the specific crisis that the Denim Group was facing as well as the general situation of the manufacturing industry. The union also organised a protest march in Valletta on 18 November to express its solidarity to the workers of Denim Services Ltd and Denim Sportswear Ltd. On their part, the Malta Employers’ Association (MEA) stated that the measures taken by Government to ensure the competitiveness of Maltese enterprises were not adequate.

Meanwhile, the Employment and Training Corporation (ETC), the Public Employment Services (PES) agency in Malta, offered its support to the redundant workers through the provision of training, helping them find alternative employment, and the setting up a of a one-stop-shop for the redundant workforce to start registering and apply for social benefits.

To alleviate the financial burdens of these workers, Government held a meeting with several banks soliciting them either to grant a moratorium for three months on the loans which they had with their bank, or allow these workers to stop paying their loans until they find another job.

The Malta Labour Party (MLP), the party in Opposition, proposed to the Prime Minister to establish a task force made up of representatives from Government, Opposition and social partners to seek remedies for this situation, if possible by offering these unemployed alternative employment. However, no action was taken for this task force to be set up.

Just a month after the announcement of the closure of Denim Services Ltd, the Gama Textile Group from Austria expressed its intention of setting up a factory for quality production jeans wear in Malta, which would employ around 400 of the former Denim employees. The Gama Group was not only willing to buy Denim’s machinery but also to invest in technology, machinery and skills. Its decision to invest in Malta was taken on the basis that the labour force and technology found here would fit best with its present and future plans. Other favourable factors to invest in Malta quoted by the company were the fluency in English of most Maltese workers, the openness to change and new methods shown by management and workforce, and the strategic geographical position of Malta in the Mediterranean which can be logistically useful for future investment and distribution.

Naturally, this news was very welcome by GWU. The fact that this new company intended to give priority to the laid off Denim workers in its recruitment policy was highly appreciated. The union immediately issued a statement expressing its willingness to hold a meeting with representatives from the Group to assure them of the integrity and industriousness of the former Denim workers. However, in spite of this good news, the Union noted that this closure will not be a one off case as others are in the pipeline.

This information is made available through the European Industrial Relations Observatory (EIRO), as a service to users of the EIROnline database. EIRO is a project of the European Foundation for the Improvement of Living and Working Conditions. However, this information has been neither edited nor approved by the Foundation, which means that it is not responsible for its content and accuracy. This is the responsibility of the EIRO national centre that originated/provided the information. For details see the "About this record" information in this record.

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