Lesotho’s job cuts entrench poverty, reverse women empowerment gains: analysts
THE year has got off to a bad start for workers amid reports that Hippo Knitting, a Taiwanese-owned garments factory, is retrenching 750 out of its 900 workers.
The looming retrenchments are in addition to the 11 500 job losses sustained in the textiles sector from March 2020 to 31 December 2021. Before then, there were 45 000 employees in the sector. This means that altogether, a staggering 25 percent of the workers have lost their jobs in a sector considered to be the largest employer outside government. A United Nations Development Programme (UNDP) report titled: Assessment of the Socio-Economic Impact of Covid-19 on the Kingdom of Lesotho 2019, states that the manufacturing sector contributed 14,2 percent to gross domestic product (GDP) and made up 16.4 percent of all formal jobs. The report adds that the textiles industry is the second largest formal employer, after the government.
The massive job cuts are likely to worsen the already endemic poverty in the country and spawn a new wave of crime, analysts have warned.
Equally, if not more importantly, the retrenchments will reverse the significant gains that have been made in empowering women. This is because the majority of textile workers are women.
Unfortunately, the job losses will continue unless the government comes up with an effective plan to empower entrepreneurs in new fields outside the traditional fields of employment.
The country will have to meaningfully leverage on the African Growth Opportunities Act (AGOA) trade concession by the United States (US). Instead of exporting just textiles and apparel, Lesotho should explore other products that it can sell to the US market. For instance, the government will have to take a leaf from neighbouring South Africa which exports a wide variety of products under AGOA from agricultural products to automobiles worth billions of maloti annually.
In addition, the government will have to lead the way in finding other markets for locally produced goods instead of relying on the United States and South Africa only.
If these and other measures are not taken without further ado, then the problems being faced by the textiles sector will only continue with even more severe consequences for the economy, society and women in particular, the analysts warn.
Most of the job cuts have been at leading textiles conglomerate, Nien Hsing Textiles Group, which has attributed the retrenchments to the deleterious effects of the Covid-19 induced slump in the demand for its products.
According to the Bureau of Statistics, Lesotho had 45 542 textile workers before the first Covid-19 case was officially detected in the country in May 2020.
About 10 000 of these workers were employed at Nien Hsing Textiles Group’s five subsidiaries . The Group manufactures jeans for top US clothing brands like Levi Strauss and Co among others and it originates from Taiwan.
Its five subsidiaries were Glory International, Nien Hsing International, Global International, C & Y Garments, and Formosa Textiles.
Glory International, in Maseru, was the first to close in 2020 sending home 1500 workers.
Last month, C&Y Garments, also in Maseru, was closed rendering 2700 workers jobless in the process.
Barely three months before that in September 2021, the Taiwanese-owned Group had closed its Nien Hsing International subsidiary, again in Maseru, sending another 2700 workers packing.
In an interview with the Lesotho Times, Group general manager, Ricky Chang, described 2021 as the company’s annus horribilis (horrible year), saying a Covid-19 induced slump in demand for their products had forced them to lay off a combined 5500 workers in the just-ended year alone.
This means that the company has retrenched more than half of its 10 000-strong workforce in 2021 alone. Taken together with the 2020 closure of its Glory International subsidiary, this means that the company has laid off a cumulative 7000 out of its 10 000 workforce or a massive 70 percent of its workforce.
Speaking on the jobs carnage at his company, Mr Chang said, “we have just experienced the worst year since we started operating in Lesotho more than two decades ago”.
“During 2021, we had to shut down two factories. We shut down the Nien Hsing International factory in September 2021 and in December 2021 we shut down C&Y Garments. In 2021 alone, we have lost over 5500 workers to the retrenchments which are a result of the Covid-19 pandemic which has caused a slump in the demand for our products.
“That figure (of jobs lost) accounts for more than half of our entire staff complement which was over 10 000 before the pandemic,” Mr Chang said, adding they would soon be merging their remaining subsidiaries into one company.
He said the business environment remained uncertain due to the emergence of the new, more infectious Omicron variant of the virus.
“There had been signs of recovery in the market but the emergence of the Omicron variant poses a new challenge for the textile industry. It is therefore hard to predict what 2022 holds in store for us.
“We have to be optimistic that a cure for the virus will be found soon,” Mr Chang said.
The Group, like most other textile enterprises operating from Lesotho, has been taking full advantage of the United States’ AGOA which allows them to export their products duty-free to the superpower.
All in all, 11 500 jobs have been lost in the textiles sector. While the bulk of these (7000) have been lost at the Nien Hsing Textiles Group, there have been job cuts at other textile companies in 2020 and 2021.
The Lesotho National Development Corporation (LNDC)- a parastatal in charge of investment promotion, says 4500 jobs were lost in other textile companies from March 2020 to March 2021- hence the 11 500 figure (as at 31 December 2021) when the Nien Hsing Textiles Group retrenchments are factored in.
The job losses were all attributed to the Covid-19-induced slow down in global economic activity.
But analysts this week warned that the job losses were just the beginning of bigger problems to come.
Covid-19 not entirely to blame
The crisis of job losses, worsened by the Covid-19 pandemic — had been long visible and could be foreseen. As pointed out by National University of Lesotho (NUL) senior political science lecturer, Tlohang Letsie, Lesotho has focused on the production of textiles but failed to meaningfully leverage on AGOA by seeking opportunities to develop and export other products. AGOA covers a range of 6000 other products that can be exported duty free into America from qualifying countries including Lesotho.
Instead of diversifying into other sectors, Lesotho had concentrated on one product to its disadvantage. Now that the market is depressed, there are no options for the country.
The already fragile economy coupled with weak and directionless political leadership would only spell doom for the country, Dr Letsie warned.
“Our leaders are not progressive,” Dr Letsie said.
“If they were progressive, then they would have long ensured that Lesotho takes advantage of more AGOA product lines. They abdicated duty by putting the proverbial eggs in one basket. Surely, we cannot continue relying on textiles only for AGOA exports and expect everything to work out.
“Unemployment has costs to society that are more than just financial. Societal costs of high unemployment include higher crime. That is murder, prostitution and theft among others. We must brace for more societal ills,” Dr Letsie said.
Reversal of women empowerment gains
About 80 percent (79, 3 percent) of the textile workers were women — according to the statistical report by the Bureau of Statistics titled 2021 Second Quarter Performance of Lesotho’s Manufacturing Sector.
Sam Mokhele, the secretary-general of the National Clothing and Textile Workers Union (NACTWU), said the fact that the textiles sector predominantly employs women means the challenges resulting from job losses will reverse the gains achieved so far in empowering women and increase poverty in many women-headed households.
“Without the garment industry, the economy will just break down. The export of textile accounts for more than 20 percent of the country’s GDP.
“The factories employ mostly women whose families will not have anything to eat,” Mr Mokhele said.
Among the ripple effects would be a rise in transactional sex, he said. This will subsequently put a strain on the over-stretched health sector due to a likely increase in sexually transmitted diseases and HIV.
Mohaneng Mokaoane, the secretary general of the Lentsoe La Sechaba Workers Union (LESWU), concurred, saying the retrenchments were likely to fuel gender based violence in many households.
“Gender- based violence is likely to spike in many households as retrenched women will no longer be able to contribute to the household income.
“Once their income dries up, women will no longer be as valuable to their husbands as before and this will fuel conflict in homes,” Mr Mokaoane said.
South Africa feels the pinch
The effects of Lesotho’s jobs carnage will spill into South Africa as many retrenched workers including women have already started trekking into the neighbouring country, Mr Mokaoane said.
Most of these are taking advantage of the porous borders to cross into South Africa without the relevant documents thus compounding the neighbouring country’s own challenges of having to deal with undocumented migrants, he said.
“The retrenched workers are being forced to cross into South Africa to look for work without official work permits. Working as illegal migrants is tough because employers tend to exploit them. They are not protected by South African authorities as they will not even report exploitation for fear of being caught out and deported back to Lesotho,” Mr Mokaoane said.
A retrenched worker’s testimony
‘Manthabiseng Mapesela (40) is one of thousands of female workers who lost her job when C&Y Garments, a subsidiary of the Nien Hsing Group closed down last month.
“As a widow who is raising four school-going children alone, my retrenchment was a devastating blow for me as I am the breadwinner of the family.
Following my retrenchment, I tried selling fruits on the streets of Maseru but the business was not good due to tough competition. I would sometimes take home a paltry M20 per day.
“I have since stopped the vending business and I am considering trying my luck at domestic work in South Africa. I don’t have a work permit and I will have to go there illegally.
For analyst, Mpho Litima, Lesotho will continuously face challenges until women are empowered to create their own jobs and factories. As long as there were no locals owning several factories and producing a variety of goods, then the country was likely to continue facing grave challenges.
“I encourage the retrenched women to come together and start income generating projects. It does not matter starting small but what is important is that they are self-reliant. These retrenchments are not new. We have been here before and we must look for permanent solutions and change our story.”
Economist Majakathata Mokoena-Thakhisi expressed similar sentiments, saying it was important for the government to have a stake in the textile companies and influence their decision making.
“It is unfortunate that the government does not have a say in the textile factories. I am sure if the factories were locally owned, the government would be in a better position to negotiate deals that would ensure that Basotho do not lose their jobs. The government was supposed to buy shares in the factories long back,” he said adding that the effects of the retrenchments would be disastrous.
Trade and Industry Minister, Thabiso Molapo, this week referred all questions to the LNDC.
On his part, LNDC public relations manager, Tiisetso Moremoholo, referred this publication to the corporation’s 12 August 2021 statement wherein it said it was “troubled by the downscaling of operations by key players which has resulted in considerable job losses”.
“In an endeavour to save these jobs, the Corporation has engaged the companies that have downsized their operations through sizable layoffs. These companies have cited disruptions in the supply chain due to Covid-19 as the main driver behind downsizing. A progressively deteriorating investment climate has also been named as a factor which affects business negatively.
“The Corporation has initiated engagements with key stakeholders to jointly address issues that negatively impact on the investment climate. The Corporation has also resuscitated the Inter-Ministerial Task Team (IMTT), which is a high-level problem-solving forum led by the Honourable Minister of Trade and Industry (Thabiso Molapo) to address investors’ grievances. The main objective of the IMTT is to facilitate collaboration with key stakeholders to improve the investment environment to restore investor confidence.
“The corporation therefore wishes to assure workers and the public that it is exploring all avenues to preserve and create new jobs for those who have been retrenched, through operationalising expansion projects in its pipeline,” the LNDC statement says.
But with already spiralling crime rates, a woefully incompetent government and police service and with virtually no inward investment and a policy vacuum to stimulate economic growth, the future remains bleak.