Boost in Pakistan apparel sector can create jobs for women

Despite establishing a successful and growing apparel manufacturing industry, Pakistan can do more to realize its potential as a regional hub and to continue to boost opportunities, especially for women and the poor, according to a new World Bank report.

The Stitches to Riches? Apparel Employment, Trade and Economic Development, launched in Pakistan on Thursday, is aimed at demystifying the global and South Asian apparel markets, estimating the potential gains in exports and jobs, and identifying policies that can unleash country’s export and job potential compared with those of their closest competitors in the Southeast Asia region (Vietnam, Cambodia, and Indonesia).

The report finds that it is important for South Asian economies to remove existing impediments and facilitate growth in apparel to capture more production and create more employment as wages rise in China. The successful manufacturers will be those who can supply a wide range of quality products to buyers rapidly and reliably—not just those who offer low costs.

China currently dominates global apparel trade but that may change in coming years due to rising prices in the country. Investors are compelled to seek out apparel firms in other countries. The potential decrease in Chinese exports presents a huge opportunity for South Asian countries. A 10 per cent increase in Chinese apparel prices would increase apparel employment in Pakistan for males by 8.93 per cent—by far the biggest winner—followed by Bangladesh (4.22 per cent) and India (3.32 per cent).

Women are also expected to benefit the most as their share in the total apparel employment is much higher than their share in other industries. This is true for Pakistan as well. The report finds that 1 per cent increase in expected wages in Pakistan would raise the
probability of women entering the labour force by 16.3 per cent.

“Job creation is among the government’s top priorities. Apparel manufacturing presents the poor with job opportunities in Pakistan especially for females”, said Illango Patchamuthu, World Bank Country Director for Pakistan. “These employed women would in return spend more on the health and education of their children, which will contribute towards the larger development goals of the country”.

Pakistan has a fast-growing apparel sector that accounts for 19 per cent of its exports, and firms are competitive with global exporters in terms of prices. Yet, despite low prices in most apparel product categories, Pakistan lags competitors in reliability, and policy continuation. It also remains highly concentrated in cotton products.

“South Asia has taken many steps in recent years to support the textile and apparel sector, but it now needs to step up its game by tackling inefficiencies that are undercutting its competitiveness”, said Gladys C. Lopez-Acevedo, one of the authors of the report and a Lead Economist for the World Bank. “Pakistan should use this opportunity and implement policies to become a regional leader in creating good jobs, bringing more women into the work force and diversifying its products and end markets to increase skills and value.”

The report suggested that Pakistan could benefit from four particular policies. The first is to increase product diversity by reducing barriers on imports to ease access to manmade fibers (such as duty and tax remission for exports, and export processing zones).

It could also attract Foreign Direct Investment by adopting policies to reduce red tape and increase transparency to close the gap with South Asian countries whose textile and apparel industries are located primarily on the coast.

The report also suggested diversifying markets by taking advantage of access to emerging markets. Shortening lead times by improving road infrastructure to facilitate access to ports for exporting firms and by clustering strategies to provide key infrastructure and common facilities would help towards that end.

The fourth policy involves enhancing perceptions of stability as many buyers are reluctant to travel to Pakistan, which makes sourcing complicated.