NEXT closure exposes antics of self-centred trade unionism

Free Trade Zone and General Services Employees Union leader Anton Marcus

• For all his decades of union activism, Anton Marcus also holds dubious credit of closing down several factories

By Ajith Perera

The closure of the NEXT facility in Katunayake caused quite the din. The announcement came out of the blue; carefully conceived by management to ensure safety of staff and equipment. Naturally, the affiliated union and those outside cried foul. But Industries Minister Sunil Handunneththi alluded to the truth in Parliament.

“They have closed the sewing division because it is not profitable. There is a problem there. There is a collective agreement with a certain union. This particular collective agreement with the union is not found in all factories in the garment industry. 

This is something they have devised,” Handunneththi told the house. 

This is the truth behind the closure of this facility at Katunayake. NEXT made room for the said union to set up office due to fears of rebuttals from related stakeholders in Europe. They needlessly gave them collective bargaining power despite not having real 40% representation. Effectively, the Union and its ‘master’ priced NEXT employees in Katunayake Sri Lanka out of employment. The factory was making close to $ 1 million in losses every month for several years. 

NEXT paid the highest wages in the Katunayake manufacturing zone, Sri Lanka’s most expensive export processing zone, fraught with external influence and stress. Just before closure, the basic salary for a fresh trainee machine operator was Rs. 45,000, which is well above standard. The last increment was Rs. 5,000 whereas the rest of the industry paid Rs. 3,500. The latter was still considered handsome. On top, staff are also paid production and attendance incentives and other benefits including subsidised food and free transport. Some machine operators in Katunayake factories earn over Rs. 95,000 per month. So, staff at NEXT had the best deal there, placing them higher. But earnings were not matched by productivity, and demands by the union had spiralled out of control.

The Free Trade Zone and General Services Employees Union led by Anton Marcus was the appointed union at NEXT Katunayake. For all his decades of union activism, Marcus also holds the dubious credit of closing down several factories with Esquel in Koggala being the most famous, apart from Jaqalanka, Sino Lanka, Mirai and Benji. Now Marcus can add NEXT to his list of accomplishments, as 1,400 more Sri Lankans lose jobs. The union at NEXT paid themselves out of work. Marcus is affiliated to several powerful lobby groups in Europe who impose pressure on brands – like NEXT – forcing them to walk a very thin line. 

On top of the significant losses, with recent news of factory workers holding management hostage over non-payment of bonus (bonus payments are not mandated by law and is discretionary), NEXT management made a calculated and right decision to keep the closure under wraps. Management holds the right to determine the future of any facility which is underperforming. NEXT stated it will pay staff severance packages over and above what is mandated by law. As a listed company in the UK, NEXT will ensure it complies with the law. 

However, the union doesn’t want that. They filed complaints with the Labour Department seeking compensation to be paid according to criterion. But the company has already stated to do over and above that. What Marcus and his union and others will want is to take the matter before court, whereby unions can seek funds from paymasters in Europe.

The NEXT saga is another sad chapter in Sri Lanka’s manufacturing landscape. The Sri Lankan facility was at one time the brand’s primary production plant. But with new countries coming into the fray offering greater efficiencies and cost benefits, the company was losing money in Katunayake fuelled by the added concerns. NEXT had also paid two bonuses to staff annually despite the difficulties. 

“It’s a medium-sized facility with the overheads of a large factory, and the UK office has covered costs for a considerable period of time, and then naturally there came a time where they had to decide,” said one apparel industry leader. “Every time they protested the company caved in and paid whatever they asked for as it impacts their credibility and reputation back home. But there comes a point where anyone would come to a stop. NEXT is a listed company, they will never want to publicly say what really caused this,” he added. 

The Free Trade Zone and General Services Employees Union is making plenty of noise on what the company and Government should do for NEXT employees affected by the closure. But it is the dubious actions of the union that led to the closure. They now state the company must pay compensation as per the law, when it has already said it is paying more. What is their cause then?