Sri Lanka's apparel industry is pinning its hopes on its 'Garments without Guilt' initiative to give it a competitive edge as an ethical producer in a crowded international market. It's a bold stance, but one the country believes will help enhance buyer loyalty and tap into consumer concerns over the conditions in which their clothes are made. Leonie Barrie reports.

If the Sri Lankan apparel industry has its way, garments sourced in the country and appearing on sale in stores all over the world could soon be displaying hang tags proudly declaring their track record as 'Garments without Guilt.'

This is just one of the initiatives being lined up by the country's Joint Apparel Association Forum (JAAF), the body that represents all of Sri Lanka's textile and apparel businesses, as it rolls out its industry-wide image building campaign into new markets such as Europe this year.

It has also signed up international auditing company SGS to provide independent assurance to retail buyers that clothing sourced from the Indian Ocean island has been made under ethical conditions.

So far, 67 factories have been certified by SGS under the Garments Without Guilt (GWG) programme, and more factories are queuing up for assessment.

Ultimately, the goal is to have all of Sri Lanka's 300-350 factories certified, and the belief is that independent verification adds credibility to the GWG campaign.

Under the monitoring programme, textile and clothing factories are checked and accredited to say they're free of child and forced labour, free from discrimination of any kind, and free from sweatshop conditions.

A list of certified factories will be hosted by SGS on its website, and reviews will be conducted on an annual basis.

"In this second phase of the campaign our objective is to engage with identified audiences world wide and increase visibility," Kumar Mirchandani, chairman of the JAAF image building sub-committee, told just-style.

"We want to make sure the message gets through to all key customers. Ultimately, we want consumers to say, 'I would rather buy a product from Sri Lanka than from anywhere else'."

Elevating 'Made in Sri Lanka'
Launched in August 2006, the Garments without Guilt campaign aims to show overseas customers that Sri Lanka does not use child labour and provides good working conditions for workers.

Buyers are likely to be more comfortable in placing orders with Sri Lankan factories, and brands are expected to benefit by meeting growing international consumer awareness of the conditions under which their clothes are made.

The campaign's initial roll-out focused on the US, which accounts for around 51% of Sri Lanka's apparel exports, after buyer research confirmed that Sri Lanka was seen as a low risk sourcing destination when it came to ethical trading practices.

The EU is Sri Lanka's second largest apparel export destination, buying 44% of production, and the GWG campaign is ultimately aimed at growing and retaining these markets in the face of increasing low-cost competition.

But Mirchandani is at pains to point out that the initiative "is not simply something we've tailored to suit the occasion."

"We've always had a platform of decent working conditions, and to us this was always a given, like quality. We never promoted what we were doing, but because we're now more ethical than anyone else we decided to raise the bar even further."
Sri Lanka claims its stringent labour laws already put it ahead of other developing countries.

It is the only country in Asia which has signed up to 27 of the International Labor Organization (ILO) Core Conventions prohibiting forced labour and child labour.

And domestic legislation demands safe and healthy working conditions, governed hours of work, social and security fund contributions and environmental protection standards.

Mirchandani also notes that according to Sri Lankan law, parents can be punished if their children work. "The culture in Sri Lanka is such that parents want their children to go to school," he adds.

Trade concessions
Strong standards in human and labour rights previously qualified the Indian Ocean island for duty cuts from the EU under its Generalised System of Preferences (GSP) scheme, and more recently contributed to Sri Lanka getting GSP+ status and zero tariffs on exports to the EU.

But JAAF now wants to see other concessions extended to Sri Lankan apparel on the grounds of its ethical manufacturing practices.

Last summer it sent industry representatives to lobby US policy makers for duty-free access for its garments, making a case for 'Trade not Aid' based on its labour compliance and the GWG initiative.

It also wants to see a US programme similar to the EU's GSP+ to support the Sri Lankan apparel industry, and has appointed Sandler Travis and Rosenberg to promote the industry's interests there.

While he concedes this isn't going to happen easily, JAAF chairman Ajith Dias believes the US is keen to help those suppliers who are more ethical producers.

He also sees it as key to helping counter threats such as the lifting of US safeguard quotas on some shipments from China at the end of this year.

Preferences would also aid Sri Lanka in maintaining its US market share in the face of increasing competition from India, Pakistan, Bangladesh, Thailand, Vietnam, Cambodia and the Philippines.

Raising the stakes
The importance of Sri Lanka's apparel industry to the country's economy shows why the industry is so keen to raise the stakes.

A US$3bn industry, Sri Lankan apparel accounts for 46% of the country's total exports and 67% of its industrial production. 

Employing over 300,000 people directly and almost 1m indirectly, it is also the single largest employer in Sri Lanka's manufacturing sector.

Moreover, most of the workers - over 80% - are young women, and employment opportunities in the sector, say apparel manufacturers, have contributed towards empowering women, lowering unemployment, and helping to alleviate rural poverty.

Risky move?
But is it a risky move for Sri Lanka to pin its hopes for market growth on its ethical manufacturing stance?

In recent months, both the US and EU have voiced their concerns about Sri Lanka's civil war human rights abuses, with the EU hinting that trade concessions could be at risk if they continue.

Trade unions - including the International Garment and Leather Workers' Federation (ITGLWF) - have also criticised the industry, saying the $45-a-month wage of an average factory worker in Sri Lanka is not enough.

They add that some factories do not limit overtime, and that many do not allow the formation of trade unions.

But JAAF denies the charges. Dias says that in addition to a basic wage of $60, factories pay attendance bonuses, production incentives, food and transport.

"The cost to the factory of an apparel worker is $155," he says, adding that the average take-home wage is $90-110, rising to $120-130 after 4-5 years for a maximum 60-hour working week including overtime.

"The Sri Lankan trade unions want a basic minimum wage of $110, but what the workers take home and what unions want are running at a level."

Dias and Mirchandani also argue that because the Garments without Guilt label only applies to apparel made in Sri Lanka, subcontracting an order to another factory in another country means the label ceases to apply.

This way they believe they can prevent any problems with its misuse through outsourcing.

"In Sri Lanka every subcontractor has to be approved and monitored by the buying house," explains Mirchandani. Sri Lanka is small enough that you can control it; in India or Bangladesh you can't."

Mirchandani acknowledges that the challenge for Sri Lanka has been to develop a sustainable solution.

"Retailers won't pay more for an ethically produced garment, but we're making the point that it does cost more to produce ethically.

"There is increasing pressure from key customers who either want the lowest cost or a mix of competitive cost with ethical manufacturing.

"It's almost impossible for Sri Lanka to compete with low cost but we can offer competitive cost with environmental and social sustainability."

The industry acknowledges the ethical branding may not lead to direct financial returns, but obviously hopes there will be some tangible benefit.

Apparel exports year-on-year rose by 9.7% in 2007 to $3.20bn, and JAAF hopes to see them reach $5bn by 2010.