Syndicate content

Gender

Making South Asian Apparel Exports More Competitive

Ritika D’Souza's picture

Apparel workers in Bangladesh

There is now a huge window of opportunity for South Asia to create more apparel jobs, as rising wages in China compel buyers to look to other sourcing destinations.  Our new report – Stitches to Riches?: Apparel Employment, Trade, and Economic Development in South Asia  –  estimates that the region could create 1.5 million new apparel jobs, of which half a million would be for women. And these jobs would be good for development, because they employ low-skilled workers in large numbers, bring women into the workforce (which benefits their families and society), and facilitate knowledge spillovers that benefit the economy as a whole.

But for these jobs to be created, our report finds that apparel producers will need to become more competitive – chiefly by (i) strengthening links between the apparel and textile sectors; (ii) moving into design, marketing, and branding; and (iii) shifting from a concentration on cotton products to including those made from man-made fibers (MMFs) – now discouraged by high tariffs and import barriers. These suggestions recently drew strong support from panels of academics and representatives from the private sector and government when the report was launched mid-year in Colombo, Delhi, Dhaka, and Islamabad. South Asia is now moving on some of these fronts but a lot more could be done.

Moving up the apparel value chain
Stitches to Riches? finds that South Asia’s abundant low-cost labor supply makes it extremely cost competitive (except for possibly Sri Lanka). But rapidly rising living costs in apparel manufacturing hubs, coupled with international scrutiny, are increasing pressure on producers to raise wages. Plus, countries like Ethiopia and Kenya, who enjoy a similar cost advantage, are entering the fray, and some East Asian countries already pose a big challenge. The good news is that the policy reforms needed to keep the apparel sector competitive would likely benefit other export industries and transform economies (view end of the blog).

A new way to mitigate buyer risk in apparel

Mark Jones's picture
Bangladesh's share of the apparel market is increasing
The Alliance and Accord have been working over the past three years with more than 1,500 factories to help them meet new fire and building safety standards

The China sourcing conundrum
In conversations with U.S. and European retailers and brands, ELEVATE – a company formed in 2013 to support corporate social responsibility – finds that apparel buyers rate diversifying away from China as one of their top three sourcing goals.

This is not to suggest that there is a desire to exit China – which currently holds by far the largest share of global apparel trade, at 41 percent – but rather a need to significantly reduce dependence on product from China, owing to rising costs, factory closures, unenthusiastic second generation family ownership, new attitudes about working in factories, and a perception that China wants to move to higher-value manufacturing. Sourcing and procurement organizations feel uncertain, and uncertainty is not a friend of supply chains.

The problem is that for all its uncertainty, China still has a huge base of factories, a well-developed transport infrastructure, and a comprehensive eco-system that supplies cut-and-sew operations, and management that has matured with years of experience. Even if a buyer would like to give another country an opportunity, many corporate risk managers view certain countries or regions as quite challenging for doing business.

Stitches to Riches? The Potential of Apparel Manufacturing in South Asia


South Asia could seize this opportunity by better meeting requirements – besides competitive costs – that are vital to global buyers. These include: (i) quality, which is influenced by the raw materials used, skill level of the sewing machine operator, and thoroughness of the quality control team; (ii) lead time and reliability, which are greatly affected by the efficiency and availability of transportation networks and customs procedures; and (iii) social compliance and sustainability, which has become central to buyers’ sourcing decisions in response to pressure from corporate social responsibility campaigns by non-governmental organizations, compliance-conscious consumers, and, more recently, the increased number of safety incidents in apparel factories.

Surveys of global buyers show that East Asian apparel manufacturers rank well above South Asian firms along these key dimensions, as noted in a new World Bank report on apparel, jobs, trade, and economic development in South Asia, Stitches to Riches (see table). So, what can South Asia, which now accounts for only 12 percent of global apparel trade, do to become a bigger player? An encouraging recent development is that buyers have started collaborating to facilitate new sourcing possibilities – as the case of Bangladesh illustrates.

Pathways to Prosperity: An e-Symposium

Martin Rama's picture

 

Blog 12: Key lessons on road to sharing prosperity

India is home to the largest number of poor people in the world, as well as the largest number of people who have recently escaped poverty. Over the last few weeks, this blog series has highlighted research from the World Bank and its partners on what has driven poverty reduction, what still stands in the way of progress, and the road to a more prosperous India.

This is the last blog in the
#Pathways2Prosperity series. You can read all the blogs in this series and keep contributing to the discussion around #WhatWillItTake to #EndPoverty in India.


A thorough review of India’s experience in reducing poverty over the last two decades confirmed some of our previous understanding, but it also revealed new, unexpected insights. On the confirmation side, we found that poverty in India, as in other parts of the world, is associated with a lack of assets at the household level, and especially with limited human capital.

At the national level, 45 percent of India’s poor are illiterate, whereas another 25 percent have a primary education at most. Further down several Indian states, including a few high-income ones, show stunting and underweight rates that are worse than the averages for sub-Saharan Africa. While multiple factors lie at the root of the nutrition challenge, the prevalence of diarrheal disease is thought to be one of the main culprits, and diarrhea is triggered by poor hygiene. Only 6 percent of India’s poor have tap water at home, and a little more than a fifth have a latrine or some form of improved sanitation.

From this perspective, investing in education, health and the delivery of basic services for India’s most disadvantaged people remains a key priority. Investments of this sort would enhance the human capital of the poor, hence increase their chances to prosper.

What India’s successful rural development programs can teach the world?

Ethel Sennhauser's picture

In India’s southern state of Tamil Nadu, I met young ex-farmers who had moved out of farm jobs and were now working in factories and government offices.  Their day to day circumstances weren’t all that different from millions of others around the world.

But yet, the people I met were remarkable.  There was the disabled young man who, with skills training, found an IT job and a life outside his home, and is now supporting his mother.  There were also women Self Help Group (SHG) members who, with support from their female Panchayat Leader, Pushpa, were helping to better the lives of their communities. They worked to improve water supply, build toilets and boost sanitation, and also found jobs in agro-processing.

My time in India made it clear to me that opportunity can change lives - especially in rural areas, where 78% of the country’s poor people live. 

Opportunity can come in various forms. It can come in the form of social empowerment - by giving voice to groups that are often marginalized, such as women, youth and disabled people.

It can also come in the form of jobs - through skills training, job placement programs and other services that help people secure formal employment. 

Jobs and social empowerment are two different opportunities. But they can be related: They both share transformative effects that are positive, and can multiply in unexpected directions.

For example, as women gain more confidence, their voices are listened to on a variety of matters within the home - such as on family planning and how to spend family incomes - improving the lives of their children and their families. Collectively, the power of their voices expressed through SHGs and other groups can bring about change on a larger scale, impacting the wider community as a whole.
 
Photo credit: Irina Klytchnikova



Jobs, too, are known to have transformative effects. They give people the economic resources to improve their quality of life, open up new opportunities and enable them to engage with the outside world.

Pathways to Prosperity: An e-Symposium

Urmila Chatterjee's picture

Blog #11: Since 2005, fewer jobs for women in India

India is home to the largest number of poor people in the world, as well as the largest number of people who have recently escaped poverty. Over the next few weeks, this blog series will highlight recent research from the World Bank and its partners on what has driven poverty reduction, what still stands in the way of progress, and the road to a more prosperous India.

We hope this will spark a conversation around #WhatWillItTake to #EndPoverty in India. Read all the blogs in this series, we look forward to your comments. 

Female labor force participation in India is among the lowest in the world. What’s worse, the share of working women in India is declining.  This is a cause for concern since higher labor earnings are the primary driver of poverty reduction. It is often argued that declining female participation is due to rising incomes that allow more women to stay at home. The evidence, however, shows that after farming jobs collapsed post 2005, alternative jobs considered suitable for women failed to replace them.

Pathways to Prosperity: An e-Symposium

Martin Rama's picture

Blog #10: Three job deficits in unfolding India story

India is home to the largest number of poor people in the world, as well as the largest number of people who have recently escaped poverty. Over the next few weeks, this blog series will highlight recent research from the World Bank and its partners on what has driven poverty reduction, what still stands in the way of progress, and the road to a more prosperous India.

We hope this will spark a conversation around 
#WhatWillItTake to #EndPoverty in India. Read all the blogs in this series, we look forward to your comments. 


Rising labor earnings have driven India’s recent decline in poverty.  But the quantity and quality of jobs created raise concerns about the sustainability of poverty reduction, and the prospects for enlarging the middle class. The period after 2005 can be best described as one of a growing jobs deficit. Three deficits actually: i) a deficit in the overall number of jobs, ii) a deficit in the number of good jobs, and iii) a deficit in the number of suitable jobs for women. 

How much of China’s apparel production can South Asia capture?

Raymond Robertson's picture
Clothing Manufacturing
Apparel manufactuaring has the potential to provide much needed jobs to women in South Asia
Photo by: Arne Hoel/World Bank

China now dominates the global apparel market – accounting for 41% of the market, compared with 12% for South Asia. But as wages in China continue to rise, its apparel production is expected to shift toward other developing countries, especially in Asia. How much of China’s apparel production can South Asia capture and therefore how much employment could be created? This is important because apparel is a labor intensive industry that historically employs relatively large numbers of female workers. 
 
In our new report, Stiches to Riches?, we estimate that South Asia could create at least 1.5 million jobs, of which half a million would be for women. Moreover, that is a conservative estimate, given that we are assuming no changes in policies to foster growth in apparel and address existing impediments.

Pages