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The sugar industry which was employing 52,600 peoplelo in 1976 had to
move to more mechanisation during the 1980s as young people preferred to work in
the manufacturing sector rather than in the sugar cane fields as labourers. The level
of employment in sugar activity dropped consistently and reached 40,000 in 1990.
That had no adverse impact on unemployment, which was at its lowest figure of 3%
in 1991. From then onwards discussions about agriculture coming under the
purview of GATT started sending signals to the industry about the need to
modernize and reduce costs. Ad hoc measures were initially adopted but it
ultimately culminated with a comprehensive centralization plan to benefit from
economies of scale and lower production cost for ensuring the survival of the sugar
industry which has to face both a phasing out of support pricing policy in Europe
and also the entry of sugar from Least Developed Countries (LDCS) duty free and
quota free into the European market. The centralization plan has been accompanied
by a voluntary retirement scheme causing employment to drop to 17,770 in
December 2003.
On the manufacturing front, employment reached its peak level of 89,000 in
the EPZ in1992. Upward wage pressure due to labour shortage in early 1990s,
increased competition from new Asian and African producers of basic garments,
relocation of some production activities to Madagascar and modernization of some
firms that were moving up market all combined into a job destruction process.
Discussions about the phasing out of the Multifibre Agreement (MFA) also led to a
wait and see attitude hindering initiatives in the textile and garment industry.
10 This figure dropped to 48700 in 1979 following two isolated cases of centralisation of sugar mills.
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