Monday, March 26, 2012

Case study: Closure of Surya Nepal Textile

Background

Established in 2004 with an investment of approximately Rs. 700 million, Surya Nepal Private Limited’s garment manufacturing unit - Surya Textile Industry - had been providing jobs to 608 workers directly, while the number of workers indirectly related to textile industry was more than 1,000. Located in Tankisinuwari, a VDC near Biratnagar in Morang district, around 500 workers in the industry were female and it used to produce 50 to 60 per cent of Nepal’s total garment export. Popular international brands like John Players and Springwood having markets in India, France, Canada, Italy and the US were being produced form Surya Textile. Most importantly, the industry paid Rs. 300 million as tax to the government of Nepal in last fiscal year (HNS, August 25).

Dispute over wage of 8 days: apparent cause of the shutdown

Remunerations demanded by workers for the eight days strike[1] that took place in mid-April and the management’s refusal to provide any, under the “no work no pay[2]” provision, in long run turned out to be the main reason for the permanent closure of Surya Textile. Workers didn’t agree with the “no work no pay” pact arguing that they were present inside the industry’s premises during the strike but could not work, because the industry itself was closed. This way, arguments and counter arguments continued and it deepened the conflict between management and labours. On June 14, the situation worsened when factory workers, under backing of major trade unions, locked up 42 officials of the management (Ghimire, August 18) without food and water supply for more than 24 hours (Lee, August 25). Finally, police had to rescue the captivated officials forcefully, because the major[3] trade unions wanted their demand to be fulfilled immediately, or else they were not ready to release the officials. During the rescue clash, 8 labours and 12 policemen were injured (ibid.). After the officials were rescued, the management announced an indefinite closure of the industry to be effective from June 15 itself.

Since June 15 to August 17 the industry remained closed during which labourers and even the trade unions demonstrated to re-open the industry but the management continuously refused to re-open citing unfriendly industrial climate and security problems rather they wanted to close the industry forever. Finally, an agreement was reached among representatives of Morang Industry Organisation, Trade Unions and Surya Nepal to shut down the industry permanently paying Rs 29,800 as lay-off benefits to each worker and also according to agreement, the laid-off workers will be given priority as per the workers’ efficiency and capacity if the company comes up with new venture or resume its factory again (HNS, August 20). The security problems, militant trade unionism and their irrational demands, according to the management, forced the company to permanently close the textile industry (HNS, August 18).

Salary was not the problem

Irrespective of many other cases where monthly wage is the main cause of rift between management and labourers, Surya Textile looks like an exception. Sanjiv Keshava, Surya Nepal’s managing director, claims themselves as a good paymaster and explained that they paid almost double the amount stated in the minimum wage (Lee, August 25). Similarly, news published about Chattra and Damber Kumari Shrestha shows that the couple earned more than 10 thousands in total (Ghimire, et al., 2011) which is at least equal to the minimum salary for workers fixed by government i.e. Rs 6,200. The news, about Sarala Khadka also proves that she earned 6-7 thousands a month, an amount more than the minimum salary fixed by the government (Nagarik, March 6). These cases show that Surya Garment was not closed because of labourers’ dissatisfaction in the amount of salary paid to them.

Latent causes of the shutdown

On the one side where management claims the over-politicization of trade unions and their often violent assertions to be major cause behind the closure of Surya Textile Industry, the trade unions and their political leaders argues that labour unrest is not the only reason for the closure of Surya Garment. Hari Roka, a Constitutional Assembly member representing the United Communist Party of Nepal (Maoist), blames that Surya Garment has cheated national coffer by creating false Value Added Tax (VAT) bill (HNS, August 25) and to escape the penalty it has been shut down. Another possible reason for the permanent shutdown of Surya Garment is identified as its inability to compete in the global market (Lamsal, G.). Besides all above reasons, government inability in creating conducive environment for industrial activities is prime factor in closure of Surya Textile. Prolonged power cuts, minimal infrastructure, liquidity crisis, etc. are some of the areas where the government should have helped.

Finally, whatever the management and the trade unions claim the workers clearly were not in favour of closing the industry. Saraswati Ghimire, who worked for Surya Textile blames the union leaders for the closure of industry. She explains, “this is all because of our over dependence and faith on so called labour leaders” (Nagarik, March 6). It is true that both the Surya Textile and Government have lost their income but important of all, labourers are the one who has been hampered the most.

Conclusion

Apart from sending a frightening message to potential investors, the Surya Textile case will also have a disastrous impact on the already stagnating economic activities. So the government now should work for creating conducive industrial environment so that all the three parties – government, industry and the labourers will be benefited.


[1] Organizations related to different political parties had called on strike in mid-April (Ghimire, et al., 2011)

[2] The three major trade unions All Nepal Trade Union Federation (ANTUF), Nepal Trade Union Congress and General Federation of Trade Unions of Nepal (Gefont) – and the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) had signed an agreement on March 24, 2011 accepting “no work no pay” for illegal strike in the industrial sector (HNS, August 19).

[3] The three major trade unions are: All Nepal Trade Union Federation (ANTUF), Nepal Trade Union Congress and General Federation of Trade Unions of Nepal (Gefont).

References

Ghimire, M (2011, August 18). Surya Nepal shuts down garment factory. The Kathmandu Post (Money), p. A.

Ghimre, L & Ghimire, M. (2011, September 24). Khyalkhyalmai gumyo rojgaari. Retrieved March 21, 2012, from http://www.ekantipur.com/nep/2068/6/7/full-story/336158.html

Lamsal, G. (n.d.). Majdurko mukha bandha garera kina sutyo surya nepal? Retrieved March 21, 2012, from http://janaaasthanews.com/temp.php?article_id=283&cat_id=7

Lee, T. (2011, August 25). “Due to frequent labor unrest, we’ve consistently been unable to make our deliveries”. The Himalayan Times (Perspectives), p. 5.

HNS. (2011, August 18). Surya Nepal shuts garment unit. The Himalayan Times, p.10.

HNS. (2011, August 19). Pvt sector shows concern about surya garments. The Himalayan Times, p.10.

HNS. (2011, August 20). Surya sets lay off package for apparel workers. Retrieved March 24, 2012, from http://www.thehimalayantimes.com/fullNews.php?headline=Surya+sets+lay+off+package+for+apparel+workers&NewsID=303457

HNS. (2011, August 25). Call to resume surya garment unit. The Himalayan Times, p.10.

Nagarik. (2012, March 6). Garment bandhako ashar kashyama. Retrieved March 21, 2012, from http://nagariknews.com/society/nation/37618-2012-03-06-03-25-24.html