Whenever we think of textile workers nowadays, we tend to think about cheap labor—particularly women sewing in overcrowded factories. In fact, the textile industry nurtures the narrative of how maquiladoras in the south have robbed manufacturing jobs from countries like the U.S., or how China has inundated the global market with cheap goods. But instead of such clichés, there is a lot more complexity and variety of experiences accompanying the geographical movement of textile production.
Apparel is one of the first manufacturing sectors to emerge in poor countries, often providing jobs to low-skilled (mostly female) workers that have few paid employment alternatives. Although salaries are low by international standards, apparel workers tend to make more money than they would in other activities—low-skill agriculture and services—in the domestic market. So for millions of poor, unskilled workers, textile manufacturing is a gateway to start getting out of poverty. The fact that apparel workers are mostly women is another strong link to poverty reduction, as boosting economic opportunities for women is a necessary step to poverty reduction and development.
But this is not the whole story. As it is argued in “The Promise and Peril of Post-MFA Apparel Production,” the latest issue of the World Bank’s Economic Premise notes series, a radical shift in apparel production between countries over the last few years has had mixed results in wages and poverty reduction across the developing world. This is particularly true since the end of the Multi-Fibre Arrangement (MFA) and the Agreement on Textiles and Clothing (ATC) in 2005, which abolished export and import quotas. While most people predicted that China would gain, because of low wages, and all others would lose, many other Asian apparel exporters in fact benefited, such as Bangladesh, India, Vietnam and Pakistan. And not just because of low wages —salaries tended to increase in most exporting countries—but because of domestic policies supporting the textile industry.
On the other hand, countries like Honduras, Mexico, Morocco and Sri Lanka experienced falling apparel employment, something that would appear to be bad news as jobs for women and workers most likely to be closest to poverty, were lost. But Mexico’s experience suggests that shifting out of apparel may not be necessarily negative news when the country is moving up the value chain into more advanced manufacturing. In fact, this would be a sign of economic development as long as the shift into higher-value goods and services is possible.
What matters is for countries to have policies that focus on improving competitiveness in the long-run, but also workforce programs to help workers make the transition. Increasing apparel exports is a good thing for poverty reduction in developing countries but moving up the ladder is an inevitable step in the quest for prosperity. Let’s allow the textile industry to keep moving across borders and to help countries lift themselves out of poverty.
First appeared at World Bank Growth and Crisis blog and Huffington Post