Further layoffs predicted in textiles industry

The process of relocation has recently been causing a dramatic decline in employment in the textiles industry in Malta. In June 2007, two clothing companies laid off a total of around 683 employees. Employee representatives and employer organisations, together with the government, are making a joint effort to offer various forms of support to these redundant workers.

Redundancies at VF Corporation

The VF Corporation (VF), the last remaining denim manufacturer in Malta producing jeans, announced that it intended to close down its plant in San Ġwann in central Malta by the end of August 2007, making its 570 employees redundant. The company took the decision to relocate abroad where labour costs are much lower. Despite the fact that the company’s management was satisfied with the effectiveness, skills and dedication of the Maltese workers, it ‘had difficulty maintaining a competitive advantage’, according to the company’s Vice-President, Noel Kyndt.

The social partners have expressed their concern regarding the situation in the textiles sector, especially due to recent redundancy announcements. The Secretary of the manufacturing and small and medium-sized enterprises (SME) section of the General Workers’ Union (GWU), Roberto Cristiano, expressed his concern about the precarious situation, pointing out that VF was the largest textiles company on the island. According to GWU, more worrying is the fact that similar companies were in the same insecure situation. Only 19 months ago, Denim Services Ltd closed down its operations, making its 850 workforce redundant (MT0601103N).

GWU, which represents VF’s employees, held a meeting with Mr Kyndt to discuss financial remuneration for the company’s workers. The union feels that it secured a decent termination package, after all efforts to convince the company to reverse the relocation decision failed.

Job losses at Bortex

In the same week of the VF closure announcement, GWU, which also represents employees at Bortex Ltd, a company that manufactures men’s suits, was informed by the company’s management that it planned to close part of its production operations in Marsa in south Malta, thus laying off 113 employees. The union was not surprised by the company’s decision as the management had during previous consultation meetings updated the union about its unviable position. GWU was satisfied with the remuneration package it managed to negotiate for the redundant workers. The union also held a meeting with two of the main Maltese banks to discuss any possible means to ease the burden of loan repayments for those workers who would be laid off.

Support measures for redundant workers

VF stated that it was willing to work with the government training agencies to facilitate a career transition for workers who would be made redundant. The Ministry for Investment, Industry and Information Technology (Ministeru Ghall-Investiment, Industrija u Teknologijja ta’ l-Informazzjoni, MITI) announced that it would be taking decisive action to support the redundant employees and, if necessary, provide re-training. Following this, MITI contacted the Employment and Training Corporation (ETC) requesting it to find alternative jobs for these workers. ETC mobilised a comprehensive package of services for both VF and Bortex employees. A profiling exercise was also immediately conducted to identify the skills and career preferences of the redundant workers. ETC stated that a number of employers had already shown interest in recruiting some of these workers.

The government submitted a formal application to the EU asking for assistance from the new European Globalisation Adjustment Fund (EGF). The EGF, set up in 2005, aims to assist Member States facing substantial and sudden layoffs due to changing global industrial patterns, as is the case in Malta.

Employers are calling for restructuring of the economy in light of these redundancies. The Malta Employers’ Association (MEA) noted that these events highlight the importance of intensifying efforts to restructure the economy and generate jobs in areas in which the country has a competitive advantage. According to MEA, the way forward in this regard includes the creation of jobs in higher value-added sectors and the retraining of workers to improve their occupational mobility. MEA promised that it will offer its assistance together with the other social partners so that alternative employment is found within the shortest possible timeframe.

Commentary

These redundancies, which have been caused by the process of outward relocation, mark the lowest point of the textiles industry in Malta, which was once the mainstay of the manufacturing sector. The decline of the industry, with its traditional highly unionised workforce, has deprived GWU of one of its strong power bases. It may indeed entail some changes in the structure of the Maltese trade union movement. This number of layoffs, which by Maltese standards is considerable, is a manifestation of the broad shift in employment which has been and is still occurring in Malta. The Maltese trade unions, like their European counterparts, are now paying more attention to this shift.

Christine Farrugia and Manwel Debono, Centre for Labour Studies

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