SDPI Research and News Bulletin

Prospects for Women Textile and Clothing Workers in the Post-quota Era

Karin Astrid Siegmann
karin@sdpi.org

Gender Dimension in Global Trade in Textiles and Clothing: Important but Ignored

In January 2005, the Agreement on Textiles and Clothing (ATC) under the World Trade Organization (WTO) will be fully implemented and will give way to more liberalized global trade in textiles and clothing.

Since the 1950s, industrialized countries like the US and various European countries have placed some form of quantitative restrictions on the import of textiles and clothing. They wanted to protect domestic industries facing damage from increasing imports particularly from developing countries. The Multi-Fibre Arrangement (MFA), enforced in 1974, established the most far-reaching limits. It allowed industrialized countries to apply quotas unilaterally on textiles and clothing imports, complemented by high tariffs, and other non-tariff barriers to trade.

Liberalization of trade in textiles and clothing was an important issue for many developing countries, including Pakistan. The ATC was agreed upon at the Marrakesh ministerial meeting of the WTO in 1994. It has taken over from the MFA. The agreement advocates a successive expansion of imports under the existing quotas in a ten-year period until January 2005.

A lot has been said about the economic implications of the ATC for Pakistan. Some observers expect the Pakistani textile industry to do well as a global supplier in cotton yarns and fabrics due to its cheap labor supply, access to local raw cotton guaranteeing a natural backward linkage in the textile chain, and favorable business climate. Others, however, emphasize under-investment in technology and the lack of product diversification as factors detracting from competitiveness. In that, the effects of the ATC on workers in the industry, those who are most vulnerable to the ups and downs of the international market have mostly been neglected.

What is completely ignored is the distinct gender dimension of the textiles and clothing production. The textile and clothing sector absorbs a disproportionate share of female employment, particularly in Asia. Women account for more than two thirds of the global labor force in the sector, and employment in textiles and clothing accounts for almost one fifth of the total world female labor force in manufacturing.

Pakistan is no exception. The textile and clothing sector is the largest employer of female workers in Pakistani manufacturing. An estimated 30 percent of the sector's workforce (approx. 2.3 million workers) is female as compared to a national average of 15 percent. This is lower than in other South and Southeast Asian countries. However, in the context of the social seclusion of women, which negatively affects female labor market participation, the strong representation of women in the textile and clothing industry makes the phase out of the quota regime a gender equality issue - potentially impinging on one of the few sectors that provides paid employment to women in Pakistan.

Although the overall employment of female workers in the Pakistani textile and clothing industry is about 30 percent, relative female employment in stitching units is considerably higher, up to 75 percent of the total workforce in the units where SDPI conducted its research. Whereas, commonly workers are regular employees of the respective companies, the majority of workers in these stitching units are employed via sub-contractors and paid on a piece rate.

Women Workers: Victims of ATC Expiry

The Pakistani textiles and clothing industry mostly prepares for the post-quota era by machinery upgrades, many of them labor-saving. Planned or implemented capacity increases thus do not necessarily add to the workforce. The female dominated stitching units are not the primary targets for machinery upgrades.

This might bear the following implications for the gender composition of the workforce:

In the short-run, the current preparations to more liberalized trade in textiles and clothing may increase relative female employment in the industry in Pakistan. This is because the workforce in the units affected by labor-saving investments is predominantly male.

The long-term effects of the full implementation of the ATC for the gender composition of the workforce are less clear. They depend on the structure of the industry after the abolition of the quota regime, and thus on the competitive position of the Pakistani textile and clothing industry in the post-quota era. It is probable that Pakistan will not be competitive in made-ups, such as bed wear, and garments, but specialize in cotton yarn and cloth. Since the clothing industry has not been the focus of technology upgrading, improvement of workers' skills, and quality improvements.

This scenario would lead to large absolute employment losses, as it is the clothing industry that is considerably more labor-intensive than earlier stages of textile processing. Due to the concentration of women workers in this sub-sector, it would also imply a significant decrease in relative female employment. Indirectly, this might destroy the respective women workers' hopes for economic and overall empowerment, and uplifting of their families.

Apart from the gender composition of the workforce, the regime change will impact working conditions. Increased competition in global trade in textiles and clothing will lead to downward pressure on prices and increased demand for shorter lead times and better quality. Increased cost competition for the Pakistani textile and clothing industry might lead to an increase in precarious forms of employment, in particular, piece rate payments in stitching. Since these provide more flexibility to the employer and reduce overhead costs. For the worker, such contracts imply an increase in health and safety risks as well as a decrease in fringe benefits, e.g. health insurance. Again, due to the concentration of female workers in stitching this can be assumed to affect female rather than male workers.

Special Mitigation Strategies for Women Workers Needed

The inclusion of a gender perspective in the analysis of labor market implications suggests that special mitigation strategies are needed for women workers in the sector. Some examples include the following:

• Female rather than male workers may bear the consequences of a potential deterioration of working conditions due to their concentration in units where piece rates and other types of precarious contracts are possible and common. Thus, more stress on labor standards to protect workers from harmful consequences of trade intensification is necessary. For the industry, it might have welcome side-effects to help ensure quality, and to counter non-trade barriers to trade related to poor labor standards.
• Displaced women workers have more difficulties in finding job alternatives than men due to their higher concentration in few sectors. Thus, to protect women workers from potential long-term job losses, policy reactions should include enhanced training opportunities for female workers. Besides, the industry's quality requirements that are likely to increase after the quota regime has been abolished will require a better educated workforce.
• To enhance female access to jobs, improvement of transport to work is necessary. Its provision may be the employer's responsibility or publicly subsidized. Given the expressed interest of managers in the textile and clothing industry to have greater access to female labor supply, the industry should take the lead here. This does not only hold true for employment in the textile and clothing industry but for all other types of industrial employment as well.

Together with the Friedrich-Ebert-Foundation (FES) Pakistan, SDPI organized a workshop for trade unionists and women workers organizations to develop strategies for mitigating harmful employment effects of the ATC's expiry.