-By Economic Correspondent
(Lanka-e-News -15.April.2025, 9.45 PM) In a significant move that underscores its commitment to sustainable development and improved workers’ welfare, the NPP Government is set to retain Sri Lanka’s much-valued GSP+ trade concession by instituting sweeping reforms in labour rights within the apparel industry. With billions of rupees in production quotas at stake and nearly 28% of all exports destined for the European Union, the government’s latest initiative is aimed at forcing apparel industrialists to put human dignity and worker welfare ahead of mere profit margins.
The apparel industry has long been the backbone of Sri Lanka’s export economy. However, mounting evidence has suggested that the same industry that brings in substantial foreign exchange has also been guilty of treating its workforce with little regard to basic human rights. Low wages, substandard working conditions, and insufficient benefits have become routine, prompting domestic and international calls for reform.
Recognizing the economic and moral imperatives, the NPP Government has launched a comprehensive plan to improve labour rights by enforcing better working conditions, ensuring regular pay rises, and offering additional support services like health care and financial assistance. One of the most striking elements of this reform is the proposal to allow apparel workers access to loans from their employers when they wish to buy a house or land—a move that underscores the government’s broader vision of integrating workers into the value chain of wealth creation.
Consider, for example, Hydramani Garments—a titan in the apparel manufacturing world boasting extensive facilities and hefty foreign reserves. Despite its financial prowess, the company has been criticized for treating its workforce as little more than cogs in a profit-driven machine. Critics argue that by paying “peanuts” for labour, Hydramani Garments is not only engaging in modern-day exploitation but also squandering the opportunity to offer its employees a more dignified, secure, and productive life.
The government’s stance is clear: when multi-billion rupee quotas are allocated to these industrialists, the profits generated are essentially a national resource. As such, the obligation to ensure that the wealth generated contributes to the long-term wellbeing of Sri Lankan workers becomes paramount. Industry leaders are being urged, nay, compelled to invest in their human capital—moving beyond simply parking money offshore and instead reinvesting in the well-being of their employees, who are, after all, the real drivers of foreign exchange earnings.
Adding further weight to these reforms, an evaluation team from the European Union is scheduled to visit Sri Lanka in late April. Their mission? To assess the country’s compliance with the Generalized Scheme of Preferences Plus (GSP+) trade concession—a vital instrument that extends preferential trade terms to Sri Lanka in return for adherence to a set of international conventions.
The GSP+ scheme requires beneficiary countries to ratify and implement 27 international agreements spanning critical sectors such as human rights, labour rights, environmental protection, and good governance. Any lapses in these areas threaten not only the continuation of trade benefits but also undermine the country’s standing in the global economic arena.
For the apparel industry—which already exports nearly 28% of its products to the EU—the stakes are extraordinarily high. A failure to meet the rigorous conditions stipulated by the GSP+ scheme could result in the imposition of higher tariffs on Sri Lankan products, rendering them uncompetitive in the lucrative European market. In turn, this would likely lead to a significant dip in export earnings and jeopardize the livelihoods of thousands of workers across the nation.
The political discourse surrounding the GSP+ trade concession has been equally heated. Opposition Leader Sajith Premadasa has been one of the most vocal proponents of ensuring that Sri Lanka retains GSP+. During a recent meeting with trade union representatives, Premadasa underscored the critical importance of the GSP+ facility for the apparel industry, and by extension, for the national economy. “Our apparel industry is not just a manufacturing base but a cornerstone of Sri Lanka’s economic identity,” he remarked. “If we lose GSP+, we lose more than a trade benefit—we risk an entire generation of workers and the very fabric of our sustainable development.”
Premadasa’s comments have resonated widely among trade union members and industry experts alike. They argue that the government must treat labour rights as integral to the country’s trade policies, rather than as an afterthought. This sentiment forms the backbone of the current political push to reform the industry—a reform that is not only meant to safeguard worker welfare but also to secure vital export privileges that have long been a lifeline for the economy.
The government’s recent initiatives signal a paradigm shift in how economic growth should be balanced with social justice. The logic is straightforward: while robust economic performance is essential, it should not come at the cost of exploiting those who contribute most to that growth.
To elaborate, consider the following key measures being proposed:
Improved Working Conditions: Stricter regulations will be enforced to ensure safer, more humane working conditions in all apparel factories. Routine inspections, backed by government authority, will target factories that fall short of international norms.
Mandatory Pay Rises: Apparel industrialists are being urged to gradually increase wages. The goal is to reduce the vast income disparities that have long characterized the industry.
Enhanced Worker Benefits: In addition to pay increases, workers will gain access to improved healthcare services. Furthermore, the initiative proposes employer-facilitated loans to assist workers in purchasing homes or land, thus fostering a sense of long-term security and ownership.
Reinvestment of Profits: With billions of rupees in quotas allocated, industrialists are being made to recognize their social responsibility. Instead of hoarding profits offshore, they are expected to reinvest a significant portion back into the local economy, especially in terms of workforce development and welfare initiatives.
While these reforms might initially be seen as a challenge to the conventional profit-driven ethos of the apparel industry, they are being promoted as a win-win solution. By improving labour rights and worker welfare, the industry stands to benefit from increased productivity, higher worker morale, and a strengthened reputation in the international market—all of which, in the long run, will translate into better economic outcomes.
Undoubtedly, any substantial change comes with its own set of challenges. Critics argue that forcing apparel industrialists to increase wages and improve conditions will lead to higher production costs—at least in the short term. There is a concern that these increased costs might render Sri Lankan apparel less competitive on the global stage, potentially leading to a temporary dip in export earnings.
However, economic experts counter that the long-term benefits far outweigh these short-term setbacks. When workers are treated fairly and provided with a decent standard of living, the resultant boost in morale and productivity can lead to efficiency gains. Additionally, a happier workforce is less likely to experience high turnover rates—a factor that, in turn, contributes to cost savings in recruitment and training.
Moreover, retaining the GSP+ concession is not just about keeping trade benefits. It sends a strong message on the international stage: Sri Lanka is committed to upholding international standards of human rights and labour practices. This commitment is expected to attract further foreign investment and open up new markets, as global companies increasingly favor suppliers who adhere to ethical and sustainable practices.
Consider the potential ripple effects: as the apparel industry improves its labour practices, other sectors may follow suit, leading to a broader transformation in the country’s approach to economic development and social justice. In this context, the NPP Government’s policies are not merely corrective measures; they are strategic investments in the country’s future economic resilience.
As the EU evaluation team’s visit in late April draws near, the pressure on the government and the apparel industry to demonstrate tangible progress has never been greater. The EU’s assessment will cover various dimensions of compliance, ranging from human and labour rights to environmental protection and governance. Each area is critical not only for retaining the GSP+ benefits but also for signaling to the international community that Sri Lanka is serious about modernizing its industrial practices.
Government officials have ramped up efforts to collaborate closely with local trade unions and industry bodies. A series of roundtable discussions have already begun, where stakeholders—from factory owners to union representatives—are hashing out the specifics of the new labour policies. These discussions are being closely monitored by both domestic observers and international watchdogs, who are keen to see whether Sri Lanka can truly transform its apparel industry from one of exploitation to one of ethical manufacturing.
Officials have underscored that maintaining compliance with the 27 international agreements tied to GSP+ is not an option, but a necessity. They are working to ensure that any lacunae in the current practices are addressed promptly and that the industry’s transition towards improved labour rights is both smooth and effective.
The response from the apparel industry has been mixed. While some factory owners have been resistant to change—citing concerns over increased operational costs and reduced profit margins—a growing number of industry leaders are beginning to see the advantages of reform.
Executives from several large manufacturing units have expressed cautious optimism. They argue that a more stable and committed workforce can lead to higher overall productivity and fewer labor disputes. In a recent interview, one senior executive (who requested anonymity) stated, “We understand that it might be painful to increase wages and invest in better working conditions, but in the long run, we believe that these changes will benefit not only our employees but also our bottom line.”
This sentiment is echoed by international business partners as well. Buyers from the EU have made it clear that they are increasingly attentive to ethical sourcing and sustainable production practices. Should Sri Lanka successfully implement these reforms, it would not only secure the GSP+ benefits but also enhance its reputation as a responsible and progressive supplier on the global stage.
The NPP Government’s initiative to improve labour rights in the apparel industry is a landmark policy that could serve as a catalyst for broader socio-economic reforms in Sri Lanka. It is an acknowledgement that sustainable development cannot be achieved by prioritizing short-term gains over the long-term welfare of the nation’s workers. In an era where global supply chains are under intense scrutiny, adopting higher standards of labour rights is not merely a regulatory requirement—it is a moral imperative.
Moreover, the new policies serve as a reminder that billions of rupees in national resources should yield benefits that extend well beyond the balance sheets of multinational corporations. The quotas granted to apparel industrialists are, in effect, a national trust—a trust that obligates them to contribute to the welfare of the Sri Lankan people. Rather than viewing labour as a mere cost center, these companies are now being encouraged to consider it as an investment in the country’s future.
There is also an important cultural shift at play. For too long, the narrative in Sri Lanka’s apparel sector has been one of exploitation and neglect. By instituting reforms that ensure fair wages, improved working conditions, and additional benefits, the government is challenging that narrative and setting a new standard for industrial relations.
Implementing these reforms will not be without its challenges. The government acknowledges that the policy rollout must be carefully managed to avoid any sudden disruptions in the industry. A phased approach is being proposed, which will allow companies to gradually adjust to the new regulations. This approach is expected to minimize the short-term negative impact while ensuring that long-term objectives are met.
At the operational level, this means establishing robust mechanisms for monitoring compliance, providing technical and financial support to businesses undergoing the transition, and ensuring that any disputes between workers and employers are promptly and fairly resolved. The government is also considering incentives for companies that exceed the minimum standards of worker welfare, thereby promoting a culture of excellence and responsibility within the industry.
One of the more innovative proposals on the table is the idea of a “Worker Welfare Fund,” which would be financed in part by the profits earned from the quotas granted to apparel companies. This fund could be used to provide loans, healthcare services, and even training programs for workers, empowering them to upgrade their skills and improve their living standards.
Economists are largely optimistic about the potential of these reforms to drive long-term economic growth. By retaining the GSP+ concession, Sri Lanka safeguards a major revenue stream and sends a strong signal to international investors that it is committed to ethical and sustainable growth. The improvements in labour rights are expected to enhance the competitiveness of Sri Lankan apparel on the global stage, not only through cost efficiencies generated by a more loyal and skilled workforce but also through the enhanced image of being a responsible supplier.
The broader economic impact is far-reaching. As the apparel sector is modernized, there is potential for positive spillover effects in related industries such as textiles, logistics, and even retail. Additionally, by aligning with international standards in labour and human rights, Sri Lanka could unlock new avenues for trade and investment beyond the apparel sector.
Furthermore, in the current global economic climate—where sustainability and ethical production are more than just buzzwords—the NPP Government’s initiative is poised to serve as a blueprint for other sectors in Sri Lanka and even other developing economies. It represents a clear assertion that economic growth can, and must, go hand-in-hand with social justice.
In conclusion, the NPP Government’s concerted effort to improve labour rights in the apparel industry comes at a critical juncture in Sri Lanka’s economic narrative. With an EU evaluation team scheduled to visit in late April and the GSP+ concession hanging in the balance, the stakes could not be higher. The government’s reform agenda—mandating better working conditions, wage increases, and enhanced worker benefits—is designed not only to meet stringent international standards but also to usher in a new era of sustainable and inclusive growth.
The promise of GSP+ is deeply intertwined with Sri Lanka’s ability to show the world that it can modernize its industrial practices without sacrificing the welfare of its people. For too long, billions of rupees generated by the apparel industry have flowed out as offshore profits while the workers, the very backbone of this success, have been left struggling with paltry wages and poor living conditions. The NPP Government’s roadmap is clear: to realign the distribution of wealth so that the benefits of global trade reach those who need it the most.
As the policy implementation rolls out, all eyes will be on the apparel factories—from the sprawling facilities of companies like Hydramani Garments to smaller, locally owned units—to see whether they can transition from models of exploitation to paragons of ethical industrial practice. Should this transformation be successful, it will not only secure the much-needed GSP+ benefits but also lay the groundwork for a more equitable and prosperous Sri Lanka.
Only time will tell if this bold move will bear the fruit of lasting economic progress. But for now, in boardrooms, factories, and political offices alike, there is a palpable sense of anticipation. The world is watching, and Sri Lanka is determined to show that it can transform challenges into opportunities—one reformed labour policy at a time.
-By Economic Correspondent
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by (2025-04-15 16:24:10)
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