Good Management Practices in Apparel Sector

Address by Ms Dagmar Walter, Director, ILO Country Office for India and Decent Work Team for South Asia at the Seminar on Enabling Competitiveness in Apparel Sector and Launch of Compendium of Good Management Practices organized by Apparel Export Promotion Council and ILO

Statement | New Delhi | 30 August 2019
Namaskar and Good Morning!

Respected Officials, Mr. Ravi Capoor, Secretary (T), Ministry of Textiles; Mr. Ajay Shankar, Former Secretary, DIPP; Mr. H K L Magu, Chairman; AEPC and Mr. Balram Kumar, Secretary General, AEPC; valued industry members of Apparel Export Promotion Council, representatives of Brands and ready-made garment manufacturers; business and worker representatives, colleagues and friends,

A very warm welcome to all of you. It is indeed a privilege for the ILO to collaborate with AEPC on the “Compendium on Good Management Practises” and to be part of this seminar, aimed at enhancing competitiveness of the apparel sector!

The primary mandate of the ILO is to support its member States in achieving full and productive employment and decent work for all, including women and young people, a goal embedded in the ILO Declaration 2008 on Social Justice for a Fair Globalization, and which has now been widely adopted by the international community within Agenda 2030 and the Sustainable Development Goals, especially SDG 8, ‘Promoting sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all’, on which ILO leads.

The textiles and garment industries are key to the economic and social development of many countries, including India, and are an entry point to global supply chains and export markets. These highly labour-intensive industries provide employment opportunities to millions of women and men. Nevertheless, the industries’ growing environmental footprint and the prevalence of poor working conditions in the global supply chain has been raising alarms worldwide. The tragedy of the Rana Plaza building collapse in Bangladesh in 2013, costing 1,134 women and men their lives, became a major trigger for the urgent need to improve workplace safety and working conditions in the industry. Let me salute the industry initiatives already underway to improve on the situation.

At the same time, unprecedented transformational change is taking place in the World of Work due to drivers like globalisation, demographic shifts, technology, and climate change. It is fuelling an uncertain and vulnerable future for many industries, including textiles and garments. This calls for preparing now for the future. In fact, ILO’s Global Commission on Future of Work outlines in its report ‘Working for A Brighter Future’ a vision for a human-centred agenda that is based on investing in people’s capabilities, institutions of work, and in decent and sustainable work. The report was launched in January and is available on the ILO website.

So what does preparing now for the future mean in practice?
Let me outline three among the global trends to set the context for the deliberations today, for evolving country specific strategies.

FIRSTLY, in the current unstable geopolitical and trade context, the RMG industries are undergoing a silent technological revolution. Automated technologies and robotic sewing systems are finding their inroads. Digitalization affects a range of occupations and tasks in industries, not only in manufacturing, but also in design, marketing, finance, logistics, and retail. This will increase re-shoring or near-shoring, with the potential to bring major disruption to the sector in terms of employment and production. While new jobs will be created, demanding for higher skilled technicians, local or cottage industry may see gradual decline. The experience of the Li & Fung Group, which has 15,000 suppliers in about 60 countries around the world and over 8,000 customers in more than 100 countries, is that digitalization can improve the speed at which a product reaches the consumer by several months, allow for delayed buying decisions, and reduced inventories.

New materials are also being developed to replace or complement existing resource intensive raw materials, such as fibres made from bamboo or orange trees instead of cotton or synthetic.

ILO’s forthcoming paper on ‘Robotics and Reshoring: The Apparel and Footwear Industry’ attempts to capture some of the implications.

SECONDLY, climate change is expected to have wide-ranging effects throughout the supply chain. Cotton production in the world, including India, is likely to suffer from a combination of rising temperatures, decreased soil moisture, water shortages and increased frequency of extreme weather events and flooding. Flooding has already caused significant disruption and economic losses to manufacturing firms in Bangladesh, and is likely to continue to threaten the industry as water levels rise. Furthermore, it is expected that rising temperatures will have a severe impact on occupational safety and health, as well as on productivity. ILO’s recently released report ‘Working on a Warmer Planet - The Impact of Heat Stress on Labour Productivity and Decent Work' projects loss of 5.8 percent of overall working hours in India alone by 2030 .

THIRDLY, globally shifting demographics will have an impact on labour supply in the industries, which have traditionally employed young women and migrants, like India. In recent years, new countries have entered this space, such as Myanmar, Ethiopia, and Indonesia, sharing similar labour cost advantages.

At present, Asia, in particular India and China, is emerging as the major immediate market for this sector, estimated to account for about 40 per cent of global sales by 2025.

However, in the longer term, it is estimated that Africa’s share of the global population will increase to 25 per cent by 2050, already attracting industry investments.

Against this backdrop, undoubtedly, the SMEs in the global supply chain are the most vulnerable to some of the future of work drivers I just mentioned. Considering they also account for the majority of employment in most sourcing countries, after agriculture, including in India, a well-designed and inclusive SME policy is imperative to sustain the competitiveness of the sector in the future.

The ILO Sustaining Competitive and Responsible Enterprises training, SCORE, is technically assisting SMEs in more than 22 countries to better cope with the introduction of new digital technologies, production processes, and external shocks due to globalisation. For example, the ready-made garment enterprise Marina Atelier SAC, based in Peru, has improved productivity by 18% with the introduction of 3D scanners, new design software, along with measures to reduce waste, sustainable packaging, use of rainwater and new policies to promote gender equality, non-discrimination and non-violence.

Considering that export incentive schemes may no longer be viable as India needs to harmonise with the World Trade Organization (WTO) guidelines, more action is now needed by government, in collaboration with employers and workers, to foster an enabling environment for SME to grow. This includes but is not limited to: simplifying complex regulations for SMEs; improving access to finance;clustering, networking and linking into technology platforms; incentivising SMEs to scale-up instead of remaining small; and addressing decent work challenges in the industries.

It is on the latter, where investment is needed the most since total factor productivity is strongly linked to decent working conditions for the workforce.

Partnerships like the ILO-IFC Better Work programme have proven that safe, dignified work means more productive factories, and a more profitable business model that benefits workers, managers, countries, and consumers alike. Similarly, the programme has shown, for instance, that mobile phone applications have the potential to facilitate the organisation of young women workers and inform them about their rights, considering women represent more than 80 per cent of the workforce in this sector.

The compendium of good management practises that the ILO has designed in collaboration with AEPC, and that we are launching today, builds on tested and validated experiences by ILO SCORE and Better Work. Put in context of India, it primarily intends to build capacity of RMG units to effectively respond to some of the current and emerging market changes that I mentioned earlier, though very concrete and actionable measures.

It is laid on the foundation that employees are at the heart of competitive enterprises. It re-affirms that resource or cost efficiency is dependent on the soft skills, motivation and innovativeness of the workforce, especially shop-floor workers who comprise more than 80 % in any manufacturing enterprise, and not only managers or supervisors. While I will leave it upon my colleagues from ILO to unpack the content in the compendium in the latter half of the day, I would only like to emphasise that while market-responsive policies and institutions are critical enablers for boosting growth of SMEs, their survival is dependent upon their own internal management practises.

This year marks the 100th anniversary of the ILO and the Centenary Declaration that was adopted at the International Labour Conference this June underscores the need to invest in people through a human-centred approach in order to move forward and create the perspectives for a just and sustainable future of work. And its enthusiastic adoption by 187 ILO member States including India, shows that the political will is also there.

The time is ripe for the government, employers and workers to jointly define how the industries can in the future become competitive, greener, more inclusive, and sustainable while realizing decent work. Together you can formulate and implement sustainable industrial strategies that work for all in this sector.

I wish you all success with the deliberations in the seminar and hope concrete and innovative recommendations will emerge from the consultations today, as well as commitment from the brands and their suppliers to promote and adopt the practises presented in the ILO/AEPC compendium!

Thank you for your kind attention!