Fashion companies deepen the crisis due to the fall of the euro/ So far, 3,000 jobs have been cut

2024-02-06 08:27:00, Ekonomi CNA

Fashion companies deepen the crisis due to the fall of the euro/ So far, 3,000

In the fashion sector, the crisis of employee cuts continues.

According to the Chairman of the Association, 3,000 jobs have been cut from the shoe and clothing factories in cities such as: Shkodër, Vau i Dejës, Has, Laç, Fushkrujë, Krujë, Elbasan, Gramsh and Bilisht since the beginning of January and until today of Pro-Export Albania, Edvin Prençe.

"The situation is critical, not to say apocalyptic due to the daily closure of businesses and job cuts. We have an economic war report with about 500 jobs per week throughout Albania (from January 4, 2024 until today about 3,000 jobs cut)", he asserts.

According to him, the reason for job cuts is the drop in the exchange rate and, as a result, the loss of competitiveness, the marked lack of liquidity for businesses to renew production plants and purchase raw materials and diversify the current European clientele.

Prençe adds that the most affected areas are the rural ones, in which the social impact is higher.

"Job reductions have started in the factories producing shoes and intimate clothing, and then the crisis has continued in all fashion clothing factories."

In the space of one year, the European currency has depreciated by 9%. The devaluation of the euro has affected the activity of fashion exporters who work with low profit rates and are financially unable to invest in the technological improvement of factories. Factory managers have often raised the concern that in the absence of labor, they should invest in innovation, in order to reduce the dependence on human resources and to be able to produce products that are sold expensively in foreign markets.

For these concerns, the representatives of the fashion sector have continued the dialogue with representatives of leading institutions to resolve the situation and prevent similar situations in the future, with the implementation of the Manufacturing package proposed by PEA, which would enable the orientation and transition of the sector to concrete producer Made in Albania, so towards a closed cycle.

Referring to the meeting held in mid-January with Prime Minister Edi Rama, it has been agreed between them to start interventions with some measures that would enable the solution of the sector's problems, such as:

Encouraging the transformation of production processes by supporting the purchase of industry 4.0 machines as well as all investments through the increase of the depreciation index from 20% to 40%. In this way, we ease the tax burden and companies will have more liquidity in a shorter time to reinvest.

The creation of a credit fund similar to the Sovereign Guarantee 1 as well as the facilitating mechanism (overdraft) for the quick availability of liquidity, according to contracts with customers.

VAT refund, through a dedicated channel for companies in this industry in less than 10 days. In this way, companies are provided with immediate liquidity without much bureaucracy.

Improving the business climate.

Applying the law to stop the sale of counterfeit brands.

Free trade agreement between Albania and raw material producing countries such as Pakistan, Bangladesh and India etc. (which currently have preferential lanes with European countries for customs taxes) and our products are subject to customs taxes.

Textile and footwear exports fell by 15% in December

The textile and footwear industry, which works with custom material (fason) and is one of the largest employers in the country (mainly low-income strata), went through a difficult situation in 2023, affected by rising costs (mainly of work) and especially the fall of the euro.

In 2023, this sector realized sales of 126 billion ALL, with a decrease of 6.6% on an annual basis. The downward trend continued in December, with -15.4%.

The sector has lost its competitiveness, as a result of the increase in costs and the fall of the euro. The Exporters Association announces company closures and layoffs daily, as many partners shift orders to countries with cheaper production costs, such as Tunisia, Morocco and Egypt.

Exporters have continuously complained to the Bank of Albania and the Ministry of Finance about the consequences that the strong devaluation of the euro is having on their activity, which is currently exchanged at around 104-105 ALL, from 118 ALL, which was the average of 2022.

Textiles and shoes are the largest exporting group in the country, with about 29% of the total./ Monitor Magazine