Insurance policies to boost apparel workers’ welfare

January 20, 2020 | Written by Sanjeevi Jayasuriya -

An attractive insurance policy that has been introduced for employees in the apparel industry will make it more appealing to the younger generation to join the sector.

The policy covers the medical and life category.

A milestone in employee welfare has been achieved in Sri Lanka’s apparel industry with Ceylinco Insurance partnering the Joint Apparel Association Forum (JAAF) – the industry’s apex body – to develop a standard life and medical insurance policy that can potentially protect some 350,000 workers and their families.

“Sri Lanka’s apparel industry has a well-evolved culture of protecting, nurturing and up-scaling its work force, helped by strong pro-labour laws and ‘rest of the world’ best practices mandated by the buyers’ community,” JAAF Secretary General Tuli Cooray said.

The industry already has employee insurance in the form of contributory or company-funded schemes, but this new scheme takes the industry to an era of a standard insurance package if workers and companies decide to take it, he said.

“We consider this move to boost the confidence of the workforce and the apparel sector be more appealing to the younger generation to join the sector in terms of employment and contribute aggressively towards the national economy in reaching the envisage targets in volumes and revenues,” he said.

With an export turnover of over $ 5 billion, apparel is among the largest single industries contributing to the growth of Sri Lanka. Sri Lanka’s apparel sector surpassed $5 billion in export earnings in 2018 and targets $8 billion by 2025. The earnings from export of apparel amounted to $5,050 million in 2018, registering an increase of 4.79 per cent compared to $ 4,819 million in 2017. The United States and the European Union (EU) continued to be the two largest buyers of Sri Lankan garments, in both volume and value terms.

The export turnover target of $8 billion by 2025 requires an annual growth of 6 per cent, a very ambitious target and therefore, market access programs through regional, multilateral, or bilateral trade arrangements are extremely important, particularly with emerging markets such as India, China and Brazil, he said.

Costing less than Rs. 6 per employee per day, the Ceylinco ‘Ransalu Raksha’ policy provides life cover of Rs. 1 million, and will pay Rs. 1.5 million in the event of accidental death, Rs. 500,000 for partial and permanent disability, up to Rs. 500,000 as cover for 39 critical illnesses, reimburse up to Rs. 30,000 a year in medical expenses and contribute Rs. 30,000 as funeral expenses.

In preparedness to gain maximum advantage of the GSP + facility by meeting the rule of origin requirement, the apparel industry plans to set up a fabric manufacturing plant in Eastern Eravur, to commence construction in six months’ time with the likelihood of attracting an investment of US$40 million towards the project. The plant would be ready within about six months for construction. Since this has been part of the new President’s election manifesto the industry is convinced that the project would receive the backing of the government in this regard, he said. Environmental agency officials are expected to visit the identified 200-acre land in Eravur within the next two weeks but the process in allocating the land is still underway.

The fabric manufacturing facility will ensure speed to market and shorter lead times when the foreign textile manufacturing facilities are set up.

The apparel industry has been obtaining assurances from investors in China and India to engage in the manufacturing facility when it is established and has been assured of the possibility of Indian and Chinese investors investing $40 million in the project.

The facility is expected to attract a minimum of five investors to set up their production plants initially as weaving is not available in Sri Lanka and it is a requirement in the manufacture of garments. The textile plant in the East is expected to produce about 35 tonnes of fabric per day and is said to meet the local requirements. Sri Lanka imports fabric worth about $2.5 million per annum for manufacturing for export and domestic purposes. Sri Lanka only has a few large manufacturers involved in knitting but at least 70-80 per cent of the fabric continues to remain an imported product.