The Confederation of Wearable Exporters of the Philippines (CONWEP) said 8 to 10 percent of its 270,000 workers could be affected if “current trend” extends longer, or global demand conditions worsen.
“Currently we are experiencing around 3.5 to 4 percent workers affected with a base of 270,000 workers covering wearables [apparel, travel goods, footwear.] It might reach to a maximum range of 8 to 10 percent if the current trend extends longer or global demand conditions worsen,” CONWEP Executive Director Marites Jocson-Agoncillo told reporters at a virtual news conference on Wednesday.
As global demand for consumer goods continues to slow down, the wearables export sector is expected to also bear the brunt of the worsening global conditions.
“What happened to our Mactan, Cebu based member should not be singled out at this moment. This will be a trend to some factories whose customers are starting to cut down on their projections, so we expect temporary closures or partial retrenchment of work force in the next few months,” CONWEP said in a news statement on Wednesday.
4,000 workers of CONWEP were laid off in Cebu recently.
In fact, the wearables export sector stressed that the United States, being its top export market, reported that their monthly consumer confidence index in August 2022 stood at 96.18.
This, CONWEP stressed, is an indicator that the average US consumer is not confident to spend, as they are worried about another possible recession. Hence, the wearables export group said, American consumers would rather hold back spending in the next 12 months.
The US is the major market of the wearables export sector.
In fact, the group stressed that this is already happening as global giants in Silicon Valley already started cutting down costs.
“The continuing downturn of the global consumer confidence index [CCI] clearly reveals the softening of the global apparel market. This is brought about by current global trend wherein consumers tend to spend less, hold back on discretionary spending such as apparel and other consumer goods,” CONWEP said in a news statement issued on Wednesday.
The wearables export sector emphasized that the uncertainty of the war in East Central Europe, rising fuel cost, the disrupted supply chain, and fear of another pandemic “directly” impacts on consumer behavior across the globe.
As the wearables sector moves forward, it said that it is banking on the collaboration between the Philippine government and the industry sector, as it is “very critical” at this juncture.
“We are grateful to the DSWD [Department of Social Welfare and Development] for extending out support to our 4,000 workers laid off in Cebu recently,” CONWEP said.
The wearables export sector also highlighted that the Department of Trade and Industry (DTI) headed by Trade Secretary Alfredo E. Pascual organized the CEO Roundtable Meeting (RTM) on Global Brands (Apparel, Shoes and Leather Goods) during the recent working visit of President Ferdinand “Bongbong” R. Marcos Jr. to the United States.
CONWEP said it supports such initiatives to push for better trade opportunities to mitigate migration of orders to more competitive countries with access to raw materials.
During the RTM, CONWEP said “strategic” trade and investment policy recommendations were discussed in length on how to increase US imports from the Philippines.
Moreover, CONWEP noted that the “key factors discussed were the US reauthorization of the Generalized System of Preferences [GSP], enhancement of the GSP to cover other Philippine-made products, and other possible framework such as a bilateral trade agreement which it said will spur growth of the Philippine manufacturing sector and increase US inputs on products exported from the Philippines.”
Jocson-Agoncillo stressed that as CONWEP is in the output export manufacturing, their operating cost is “very small.” With this, the CONWEP executive director added that the wearables export sector needs “trade preferences programs,” such as the Regional Comprehensive Economic Partnership (RCEP) to be able to “survive competitiveness.”
She also stressed that “because with these trade preferences programs, we will be able to entice investors.” Jocson-Agoncillo added that being part of trade agreements can make the sector “vertically integrated” and will enable it to put more value in its exports to its major market.