The ongoing coronavirus pandemic will strengthen the garment sector in Asia well into 2021 and beyond as companies will accelerate adoption of technology to ensure faster and more efficient production amid the economic fallouts, according to a new study by the International Labour Organisation (ILO).
The ILO conducted the study styled, 'What next for Asian garment production after Covid-19', in a bid to explore the nature of changes to production practices in Asia due to the Covid-19 outbreak.
Asia is an international hub for garment products as it houses seven of the world's top 10 garment exporting countries, including Bangladesh, the second largest exporter globally.
In 2018, garment items worth $341 billion were shipped from Asia, accounting for approximately 64.7 per cent of global exports for that year, as per data from the UNCTAD.
China, Korea and Sri Lanka have upgraded their garment sectors in order to meet growing international demand. These countries now have the capacity to produce more advanced items and to undertake further value-added activities across the garment value chain.
Other countries though, such as Bangladesh, Cambodia and Pakistan, continue to primarily focus on producing low-cost garments. This has proven to be a successful export strategy if the total value of exports is any indication.
Between 2012 and 2017 for example, Cambodia and Bangladesh increased their garment exports on an average annual basis of 18 per cent and 13 per cent respectively.
The ILO conducted its qualitative study in July this year with a group of 16 industry experts.
The study also provides an important outlook from a constituency that knows the industry well and will be front and centre of decisions shaping its future in the post-Covid era, the ILO said in its executive summary of the report.
Garment manufacturers in Asia, the industry's largest global hub for production, have been severely impacted by the Covid-19 pandemic.
Many have been forced to shut down their operations either temporarily or permanently, and this has left millions of garment workers, the majority of whom are women, unemployed, furloughed or facing reduced hours and income.
Although longstanding to the sector, the pandemic gave acute exposure to the fragility and structural inequities of the garment supply chain, something that has led those in the industry to once again question its future viability.
Already, debates are emerging about how production dynamics and practices will have to transform for the industry to survive in the post-pandemic era, ILO said in its findings, which were released midway through September.
Asia will continue to dominate global garment production, it said.
Since buyers are looking to mitigate risks and adjust sourcing strategies as a result of the pandemic, some of them will prioritise working with more professionalised manufacturers with more advanced operations while others may double down on cost prerogatives.
Both these types of manufacturers can be found in Asia, where they are highly competitive. The study also indicates that Covid-19 may precipitate a growing divide between Asian garment manufacturers.
On the one hand, larger and more professionalised manufacturers will sustain or scale up factory upgrading and technological investments, allowing them to be more selective when picking customers.
On the other, some factories may be incentivised toward a renewed 'race to the bottom' to attract buyers that are looking to reduce costs to offset financial losses incurred during the pandemic.
The increasing gulf between manufacturers could have implications on the future structure of Asian garment production.
The pandemic will likely accelerate the uptake and adoption of technology in the sector, especially of digital and analytical tools, thus enabling faster and more efficient production among already more professionalised manufacturers.
After an initial deterioration in social and environmental standards due to enterprise level financial constraints, some of the experts predict a new and more forceful phase of industry collaboration to improve long-term industry sustainability.
Participants of the study agreed that garment workers in Asia will likely see increased precariousness and competition for jobs in the short-term with a possible deterioration in working conditions, where social compliance investments are downgraded.
Technological upgrades and increased competition for jobs may also cause women to be crowded out in the long-term, which is particularly concerning given the role the industry has played in generating millions of formal jobs for women across Asia in the last three decades.
Governments and social partners together with other industry stakeholders have an important role to play in mitigating the impact on garment workers.
In the long-term, the pandemic may result in an expansion of social protection measures in a number of Asian countries as governments will invest in new social contracts to boost economic resilience and protect working people from future shocks.
If combined with a renewed focus on social and environmental sustainability in the sector, this could have a transformative impact on the future of work in garment manufacturing, leading to greater resilience both for businesses and workers across the region.
However, with a complex structure and vast array of stakeholders involved at various parts of the supply chain, it is difficult to envisage a single fate or future for the industry as a whole.
Therefore, it is more likely that the sector will evolve in multiple, sometimes competing and contradictory, ways in the coming years, the ILO study said.
Garment workers are being highly affected by the pandemic. 12 million garment workers, the majority of whom are women, have had their work hours reduced or have been furloughed or dismissed.
In Bangladesh for instance, 2.28 million workers have had their jobs affected by the pandemic.