FW
US International Trade Commission (USITC) provides a quantitative assessment on the impact of trade on manufacturing jobs in the US textile and apparel industry in its newly released Economic Impact of Trade Agreement Implemented under Trade Authorities Procedures, 2016 Report. According to the report, manufacturing jobs in the US textile and apparel industry have been declining steadily over the past two decades. Rising import is found as not a major factor leading to the decline in employment in the US textile industry. As estimated, imports only contributed 0.4 per cent of the total 7.6 per cent annual employment decline in the US textile industry. Instead, more job losses in the sector are found caused by improved productivity as a result of capitalisation and automation. Rising imports is the top factor leading to job losses in apparel manufacturing.
However, USITC did not estimate the impact of trade on employment changes in the retail aspect of the industry. According to the US Bureau of Labor Statistics, approximately 80 percent of jobs in the US textile and apparel industry came from retailers in 2015.
Close on the heels of the government announcing radical changes in labour rules and an Rs 6,000-crore package for the garments sector, the textile ministry has pitched for the labour reforms extension to to the textile (yarns, fabrics and made-ups) sector. Textile secretary Rashmi Verma has reportedly said that the special package has talked of certain big reforms in labour laws. This is, of course, specific to the garments sector. They are hoping it will be extended to the textile sector as well, at least things such as fixed-term employment and increase in the overtime limit for workers.
Since both the labour-intensive sectors complement each other, extension of labour reforms to the textiles industry including the spinning sector will enable India to better capture the space being ceded by China due to soaring wages costs there, apart from helping create new jobs.
Late last month, the government decided to introduce fixed-term employment and bring in uniformity between contractual and permanent labourers in terms of wages and other incentives. It also raised the overtime work limits for willing workers to 8 hours per week (which will translate into roughly 100 hours a quarter against the current 50 hours per quarter).Thus a garment factory will now have the flexibility to hire contractual workers for a fixed period and get willing workers to do overtime to be able to meet supply commitments, given the highly seasonal nature of export orders.
Last month, the government had also announced that contribution to the Employees’ Provident Fund (EPF) will be optional for the employees of the garment sector earning less than Rs 15,000 per month. Such a move will leave more money in the hands of workers and help boost rural demand. Moreover, the government decided to bear the entire 12% of the employers’ contribution to the EPF scheme for a certain category of employees, up from 8.33% at present.
Now, the government aims at creating 10 million new jobs, $30 billion additional exports (over and above textile and garment exports of $40 billion in 2015-16) and investments of Rs 74,000 crore over the next three years.
Companies are working on spider silk. Spider silk’s tensile strength is comparable to steel’s. Yet it is lighter, and can be as stretchy as a rubber band. A real spider generates silk in specialized glands in its abdomen, and creates the silk strands using a spinning organ called a spinneret. Some spiders produce up to seven types of silk, each with its own purpose and attributes.
Synthetic spider silk can be used for everything from automobile parts to medical devices to performance outdoor gear, which is the area that’s attracting some of the most attention thus far. A California-based startup called Bolt Threads doesn’t use spiders to make its silk. The main ingredients are genetically modified yeast, water, and sugar. The raw silk is produced through fermentation, much like brewing beer, except instead of the yeast turning the sugar into alcohol, it’s turned into the raw stuff of spider silk.
Bolt Threads spins that into threads using a method similar to the wet-spinning process used to create cellulose-based fibers. It’s molecularly the same as natural spider silk. Unlike silkworm silk, which silkworms produce to make their cocoons, spider silk can’t be farmed in large quantities because spiders are cannibals, and will eat one another in close quarters. The issues holding back manmade spider silk have always been producing it in large quantities and developing the right spinning process.
A technical training institute will be set up in Sialkot, Pakistan. The institute will be affiliated with Japan. With regular functioning it will help exporters engaged in the readymade garment industry to induct trained workforce to improve the overall productivity and quality of the product. Sialkot has become the fourth largest producer of readymade garments and sportswear, particularly in martial arts uniforms.
Meanwhile Pakistan’s readymade garment industry has underscored the need for formulation of sector wise policies which will help in increasing exports and support minimising the problems confronted by the business community. It says special focus should be accorded on short term polices for overcoming the decline in exports and that efforts should be taken to capture the European Union market.
Exporters also say there is a dire need for formulating an aggressive marketing plan at the earliest so as to gain the maximum benefits of GSP status. They want a special R&D support fund for innovation of new products and upgradation of workplaces and a special package of concessions which could enhance exports by seven billion dollars. They say declaring the imports of raw material duty free would help them in efficient functioning. A crippling problem Pakistan’s textile sector faces is that of power and gas outages.
Textile industry which accounts for more than 8 per cent of gross domestic product and the largest employer of Pakistan’s workforce outside agriculture is losing its lure. There are signs that many factory owners in Punjab are taking money out of their textile business and investing in the fast growing retail markets to cash in on the booming sectors like real estate, education, entertainment, ready-to-wear garments, etc. This is in spite of an array of budgetary measures for this financial year to support investment in the textile industry to boost falling exports. Few consider these decisions enough to save Pakistan’s textile sector which is collapsing and encourage investment at least in the short to medium term.
A major factor driving investment out of textile industry is the losses suffered by manufacturers including major textile groups over the last three years on the back of declining exports. According to Amena Cheema, CEO of the Punjab Board of Investment and Trade, a large number of textile factories in Punjab are closed and in some cases the owners just do not have money to pay the salaries to their workers.
Overall, Pakistan’s exports are down 12 per cent or $2.7bn in the first 11 months of the last fiscal from a year ago. The textiles, which form almost three-fifth of export revenues, have declined by 7 per cent or $909m due to the sluggish yarn demand from China and subdued international cotton prices.
Pakistan has raised the issue of cotton subsidies by big cotton growing countries, particularly the United States and India, at the World Trade Organization (WTO). Pakistan’s Ambassador to the WTO Dr Tauqir Shah while addressing the special session on cotton at WTO in Geneva recently said problems of farmers in Pakistan and other developing countries cannot be resolved as long as poor farmers are made to compete with heavily subsidized cotton from major players, we call for a swift and speedy action which allows our cotton growers along with our textile industry to fairly compete into the world market, said.
Shah contended that cotton producing areas are among the poorest in Pakistan; most of cotton growers are small farmers; Pakistan’s average farm size is 2.6 hectors, and 96 per cent of its farms are less than 10 hectors.
The life of cotton farmers has been further complicated by climate change and extreme weather conditions, floods, heavy rains and droughts in some areas, after struggling for many years with adverse terms of trade and declining cotton prices, he said adding that this has resulted in 34 per cent reduction in cotton production. A direct effect is the negative growth in agriculture and the country missed their GDP growth target by 0.5 per cent due to cotton crises.
Shah argued domestic subsidies in cotton production in major cotton producing countries is a critical issue, resulting in an uneven level playing field for cotton producers worldwide, while citing that International Cotton Advisory Committee data. What is more worrying for Pakistan is that proportion of cotton produced through government assistance has increased in recent years.
The Clean Clothes Campaign (CCC) has again reiterated its criticism on the lack of solid guarantees that workers who are into making of clothes under the Fairtrade Textile Standard have received a living wage. Here it may be recalled that on June 28 this year, Fairtrade had announced that three German brands namely 3Freunde, Shirts for Life and Melawear were ready to sign up with the Fairtrade Textile Standard.
The Fairtrade Textile Standard allows an implementation period of six years for a living wage and foresees that the factory management has to sign an implementation plan with worker representatives. But the factory has no guarantee that the brands stay as prices go up. If the burden of implementing a living wage rests entirely on the supplier, Clean Clothes Campaign (CCC) fears that no factory management will commit to such a plan.
Garments will be marked by the Fairtrade Textile Production Mark that is always accompanied by a statement indicating the compliance level that the company or brand has achieved for its supply chain or chains. In other words this means that garments will be marketed as 'Fairtrade' even before living wages have actually been paid to all workers. For CCC, this is unacceptable. It is misleading for consumers and allows for disproportionate marketing benefits for brands.
Garment and footwear factories in Cambodia are becoming compliant. More factories are holding regular evacuation drills, have unlocked emergency exits and can boast of no worker discrimination. The number of confirmed cases of child labor has also dropped from 65 in 2013 to 28 in 2014 and 16 in 2015.
One area of high non-compliance is the use of fixed-term contracts for workers, which weren’t being transferred to undetermined duration employment contracts after two years of employment. This is because it gives factories labor flexibility to get rid of workers or to downsize their staff. The high rates of non-compliance can be attributed to the low investment in the sector because investors aren’t exactly in Cambodia for development of its garment sector.
Certain such as light levels in factories, are judged not in compliance because the technical criteria are too high. While an increase of some compliance levels is a positive signal for the garment industry and its workers, there is also a need for further improvement in common areas of non-compliance.
The top 10 areas of non-compliance – those with upwards of 60 per cent of factories failing to meet the goals set – remain largely unchanged. Those include requirements such as the selection of shop stewards, a functioning HIV/AIDS committee and medical examinations for workers prior to hiring.
"The horrific slaughter of diners at a Dhaka cafe has triggered fears that surging Islamist violence may imperil the garment industry in Bangladesh, which built its economy on cheaply supplying fashion to the world’s big-name brands. Said Faruque Hassan, Senior Vice President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), that this attack will turn away foreigners. BGMEA represents 4,500 factories in the country"
The horrific slaughter of diners at a Dhaka cafe has triggered fears that surging Islamist violence may imperil the garment industry in Bangladesh, which built its economy on cheaply supplying fashion to the world’s big-name brands. Said Faruque Hassan, Senior Vice President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), that this attack will turn away foreigners. BGMEA represents 4,500 factories in the country. The impact of this attack will be very damaging for the industry and we are now extremely worried, added Hassan, whose Giant Group supplies clothes to retailers including Britain’s Marks & Spencer and Next.
From the frying pan into the fire
Bangladesh, the world’s second-biggest exporter of apparel after China, even before the cafe siege was reeling from a wave of Islamist-linked killings of religious minorities, liberal activists and foreigners, including an Italian aid worker last September. Now concern is mounting that the South Asian nation, wracked by political instability since independence in 1971, is sliding into deeper chaos, with under-pressure police arresting 11,000 people last month in a desperate crackdown.
Said Sarah Labowitz, Co-director at the NYU Stern Center for Business and Human Rights in New York, the hostage crisis in Dhaka is a terrible tragedy reflecting how security has deteriorated in the country. The violence presents a serious threat to the economy, Labowitz said. This kind of attack will surely keep (fashion) buyers away in the months leading up to the holiday shopping season.
Bangladesh has clocked growth of around six per cent nearly every year since the turn of the millennium, although a quarter of its 160 million people still live below the poverty line. This is largely due to the garment exports, the lifeblood of its economy, and accounting for more than 80 per cent of total outbound goods last year. Between them the nation’s clothing factories employ more than four million people; most of them impoverished rural women. Ulrica Bogh Lind, a spokeswoman for H&M, which sources many of its clothes from Bangladesh, told AFP the Swedish chain was deeply sad about the tragic incident. They are of course monitoring the situation in Dhaka closely.
Sign of financial malaise
Ahsan Mansur, a former representative for the IMF in Islamabad fears that the trade-dependent Bangladesh may suffer the same fate as its restive rival Pakistan. When extremist violence began to spread in Pakistan, he said, the first sign of financial malaise was expat families packing their bags, then trade and investment crumbled. The perception that Bangladesh is a potential terrorist hotspot can seriously hit our export potential and growth prospects. Yet plucky Bangladesh has ridden out numerous storms, seeing off threats from labour unrest, mass transport blockades and large-scale political paralysis - as well as workplace disasters.
According to industry figures, clothing exports swelled nearly 10 per cent in the year to June, to $27.3 billion. The Rana Plaza factory collapse that killed at least 1,138 workers in 2013 shocked the world, heaping opprobrium on Western retailers seen as exploiting impoverished workers. But the tragedy prompted retailers to act on appalling safety conditions in their factories, where fires and other accidents are frequent. The incident forced the brands to set up two global alliances to make workshops safer and cleaner - although it remains a work in progress.
Chief negotiators of 16 countries including those from India and China are expected to meet on July 18-19 in Jakarta to participate in the Regional Comprehensive Economic Partnership (RCEP) talks to discuss tariff-related issues in the goods sector. India will pitch for continuation of the three-tier system of tariff or tax elimination for member countries as a few countries favour only one tier, an official has reportedly said. The RCEP is a mega trade deal which aims to cover goods, services, investments, economic and technical cooperation, competition and intellectual property rights.
Some countries, including China, are pushing to increase the number of products that will attract zero duty. The meeting is crucial as members have to finalise the contours before the trade ministers meet in August. India may increase the number of products, but would not go for zero duty on those. It will propose to reduce taxes on those incremental goods.
India has decided to offer maximum access to its market for ASEAN countries with which it has a free trade agreement in place and has proposed to eliminate duties or tariffs on 80 per cent of items for the 10-nation bloc under this proposed pact. Similarly, for Japan and South Korea, the country has offered to open up 65 per cent of its product space. For Australia, New Zealand and China, Delhi has proposed to eliminate duties on only 42.5 per cent of products as India does not have any kind of FTA with them.
In the recently-concluded negotiations for the mega trade deal RCEP in Auckland, a few members raised concerns about the three-tier system. The next round of talks is scheduled to be held in Vietnam.
