ILO/96/33
GENEVA (ILO News) - The geographical distribution of production in the textile, clothing and footwear (TCF) industries has changed dramatically in the past 25 years resulting in sizeable employment losses in Europe and North America and important gains in Asia and other parts of the developing world. This trend, says the International Labour Office in a new report (Endnote 1) has been accompanied by a parallel shift of production from the formal to the informal sector in many countries with generally negative consequences on wage levels and conditions of work.
The available evidence, however, also suggests that globalization has led to a net gain in the level of worldwide employment and that the informal sector promotes "a growing volume of employment in developing countries, especially in clothing and footwear". And, as the report also points out, employment in formal sector establishments has changed very little since 1980, while real earnings have in fact risen in several industrialized countries.
The total number of TCF workers in the formal sector is estimated at 23.6 million worldwide. "No one knows just how many work in the informal sector but the figure may be five to ten times as high", says Mr. Kari Tapiola, Deputy Director-General of the ILO.
Written by staff from the ILO Sectoral activities department, the report will serve as a basis for discussions by participants in a "Tripartite Meeting on the Globalization in the Footwear, Textiles and Clothing Industries" held in Geneva from 28 October to 1 November. Delegates to the meeting represent the governments, employers' organizations and trade unions from 34 leading TCF producing, exporting and importing countries.
The meeting will discuss labour and employment issues relevant to the TCF industries and is expected to provide guidance for national and international action to promote employment, basic workers' rights and sound working conditions throughout the sector.
Much of production capacity and jobs have shifted to the developing world. In the twenty years from 1970 to 1990, the number of TCF workers increased by 597 percent in Malaysia; 416 percent in Bangladesh; 385 percent in Sri Lanka; 334 percent in Indonesia; 271percent in the Philippines; and 137 percent in Korea.
China now employs 5.3 million workers, the most in the world, an increase of some 2million workers since 1980.
During the same 20-year period, employment in the developed world declined sharply. The number of TCF workers has decreased by 58 percent in Germany; United Kingdom - 55percent;
France - 49 percent; and the United States - 31 percent. The US still employs 1.6million workers, down from 2.5 million in 1980.
The decline has been even more severe in Northern Europe. In the 10 years between 1980 and 1990, Finland lost 73 percent of its TCF jobs. Sweden and Norway lost 65 percent.
While the evidence presented in the report "contradicts - for the formal sector - the hypothesis that globalization leads to real earnings compression in the higher-income countries", it also points to a "widening earnings gap between TCF workers in higher- and lower-income countries."
For example, in 1992 the average hourly labour costs (wages and social charges) in the textile, apparel and leather industries were: Germany - $18.40; Italy - $15.70; France - $13.40; Japan - $10.30; Canada - $10.50; US - $10; Spain - $9.70.
This compares with: Mexico - $1.70; Hong Kong - $3.70; Korea - $3.80; Taiwan, China - $4.20.
In response to fast-changing demand patterns, the TCF industries have witnessed a gradual "shift of full-time in-plant jobs to part-time and temporary jobs and, especially in clothing and footwear, increasing recourse to home work and small shops" notes the ILO report. Wages of homeworkers are almost universally based on the piece rate system and tend to be substantially lower than for equivalent factory workers. The first, and to date only, international Convention (No. 177)promoting the rights of homeworkers was adopted by the ILO in June 1996.
"Child labour", says the report, "is still very much a reality in the TCF sectors" and has recently increased as a result of the growth of the informal sector and homework. Of late however, rising pressure from consumer groups, but also from governments, trade unions, employers' organizations and NGOs has begun to reverse this trend. Among other significant measures: the adoption of "Codes of ethics" by several large multinational enterprises such as Levi's, The Gap, Reebok and others.
In the clothing industry, the number of clandestine workshops has grown exponentially in recent years. Few pay any respect to labour legislation and many hire illegal migrants. Many are involved in counterfeiting products from famous trade marks, an activity estimated to account for more the 5 percent of world trade in clothing.
The impact of the globalization of TCF differs according to country and the individual industry.
Clothing
At present, more than 60 percent of world clothing exports are manufactured in developing countries. Asia is the major world supplier today, producing more than 32 percent of the world's clothing exports.
This emergence as the major world supplier has occurred in three successive waves of production.
During the first wave of production, the Republic of Korea, Singapore, the territory of Hong Kong and Taiwan achieved excellent results within their own borders, but then began to cut down production and invest heavily in other least-cost countries. As a result, between 1985 and 1990, the production of the Philippines, Indonesia, Thailand and Malaysia increased greatly and led the world market in exports.
These countries have in turn begun to invest or redistribute part of their production to a third wave of countries such as Bangladesh, Pakistan, Sri Lanka and more recently Laos, Nepal and Viet Nam.
China however, has become the leading world producer and supplier of clothing - currently generating almost 13 percent of the world supply - without the benefit of outsourcing from other countries. Instead, the country has thrived under a government policy geared toward developing a clothing and textiles industry open to the outside world.
On the American continent, NAFTA has made Mexico a privileged supplier of clothing to Canada and the United States - the leading purchaser of clothing, importing 24percent of the world's supply.
In addition, foreign investors who had anticipated the signing of the free trade agreement, have built up the clothing industry in Mexico which, with its 8,000 clothing enterprises, is in a strong position against its Latin American competitors.
In Central and Eastern Europe, Bulgaria, Hungary, Poland, Romania and the Czech Republic are gradually becoming important suppliers to the European market.
Each country has tended to specialize in a specific range of products and their volume of exports to the OECD countries has been steadily growing since the middle of the 1980s ($2.4 million in 1987; $5.2 million in 1991).
Since 1991, the place left empty by the former Yugoslavia has prompted foreign investors and entrepreneurs to shift their activities to other countries. Croatia, the Russian Federation, Slovenia and Ukraine have thus become host countries for the relocated activities of European clothing industrialists.
In several instances, ultra-modern factories capable of holding their own against their most successful Western counterparts have been constructed to ensure that they can produce articles complying with European quality standards.
Morocco, Mauritius, Tunisia and more recently Madagascar, have become important clothing producers which export most of their production to industrialized countries. African countries as a whole, however, have been little affected by the globalization of the TCF industries.
Textiles
The biggest changes in the textile industry occurred in the 1960s when new production centres began rapidly springing up in Asia.
Many of these centres opened first to service the less capital-intensive clothing industry, then used the export earnings from these products to set up their own textiles production.
Other developing countries entered the market with investments from multinational enterprises.
As a result of new production centres, the share of textiles from developing countries increased dramatically throughout the 1970s. The production of certain fibres by these countries increased by nearly 300 percent, to account for more than 21 percent of the world's supply by 1980.
During the past two decades, textile production in Asia has forged further ahead at an average increase of 3.6 percent per year. By comparison, industrialized countries have only increased production an average of 0.2 percent per year over the same period.
Despite the tendency towards relocation, industrialized countries still lead in the worldwide production of textiles, due to their great strides in modernizing the production process.
In 1990, Germany was still the main world exporter of textiles, producing 12 percent of world exports in value. Italy was second, producing 8.6 percent of world exports. Four other industrialized countries - Belgium (5.7 percent), France (5.5 percent), Japan (5.3percent) and the United States (4.5percent) - were in the list of the 10 major world exporters.
The other major exporters were in Asia. The territory of Hong Kong ranked third with 7.4 percent of the value of world exports, followed by China in fourth place with 6.5 percent, Taiwan in sixth place with 5.7 percent, and the Republic of Korea in seventh place with 5.6 percent.
Footwear
The footwear and clothing industries are similar in structure and share many of the characteristics of production and trade. Most of the countries that have emerged as successful producers and exporters of garments have also become important in footwear.
Among the exceptions, Brazil and Mexico have become key players in footwear, but much less in clothing. A few other countries - such as Singapore - are major producers of garments but not footwear.
Almost all of the higher-cost countries have seen their footwear production fall. In the United States, the industry has declined - since the late 1970s - more than in any other industrialized nation, although footwear production in France, Germany and the United Kingdom has declined significantly in the ensuing years.
Production has also declined, albeit more slowly, in major Southern European producer countries - since 1985 in Italy, 1988 in Spain, and 1991 in Portugal.
As in the clothing and textile industries, footwear production has shifted largely to developing countries capable of producing large shares of the world's supply at far less cost.
In 1992, for example, 63.2 percent of the world's total pairs of shoes were produced in Asia and the Middle East, even though these regions accounted for only 43.5 percent of shoe consumption.
In contrast, North and Central America, which produced only 6.4 percent of the world's shoes, consumed 20.6 percent.
The countries of Western Europe produced 11.7 percent and consumed 18.2 percent of the global shoe production.
Percent changes in employment in the tclf industries (Endnote 2), 1980-1993
| Country | % | Country | % |
| Finland Sweden Norway Austria Poland Syria France Hungary Netherlands United Kingdom Germany Spain Argentina United States | -71.7 -65.4 -64.9 -51.5 -51.0 -50.0 -45.4 -43.1 -41.7 -41.5 -40.9 -40.2 -35.3 -34.7 -32.9 -30.1 | Mauritius Indonesia Morocco Jordan Jamaica Malaysia Mexico China Islamic Rep. of Iran Turkey Philippines Honduras Chile Kenya Israel Venezuela | 344.6 |
Globalization of the footwear, textiles and clothing industries. Report for discussion at the Tripartite Meeting on the Globalization of the Footwear, Textiles and Clothing Industries: Effects on Employment and Working Conditions. ISBN 92-2-110182-7. International Labour Office, Geneva, 1996.
Source: International Labour Office.
Includes Leather, in addition to the Textile, Clothing and Footwear industries discussed above.
