About the Informal Economy

Occupational Groups

GARMENT WORKERS

WIEGO seeks to better understand how the working poor, especially women, in the informal economy are inserted into the global economy, and with what consequences; and to identify strategies to promote fair trade for informal producers who want to export their goods and ethical trade for informal wage workers or homeworkers who work in global value chains. Our activities to meet these goals include research studies and seminars; case study documentation of good practice; policy dialogues on key issues; as well as collaboration with the fair and ethical trade movements.

Garment workers were the first category of the global informal workforce that WIEGO focused on for obvious reasons: the garment sector is one of the most globalized sectors and employs large numbers of women under poor working conditions. WIEGO’s activities in support of garment workers, detailed below, illustrate how our Global Trade Programme functions.

The garment or apparel industry is one of the oldest and largest export industries in the world. Most nations produce for the international textile and apparel market (Dickerson 1995: 6), making this one of the most global of all industries. The garment industry is often the "starter" industry for countries engaged in export-oriented industrialization: for example, it played the leading role in East Asia’s early export growth. In many countries around the world, the garment sector employs the most workers in manufacturing.

The garment sector is also seen to represent prototypically:

Why does the garment sector, in particular, exemplify these aspects of production and employment today? What do these features mean for garment workers?

1. Global Manufacturing
Globalization today means that economic activity is not only international in scope but also global in organization. The garment sector is seen as emblematic of the global manufacturing system whereby production is dispersed geographically to an unprecedented number of locations across and within countries (Gereffi 1994, 1999). From a developed country perspective, this system of production is associated with outsourcing: as much of production is shifted offshore from developed to developing countries. From a developed country perspective, this system of production is associated with re-sourcing: as production also shifts within and between developing countries. One notable shift has been to China which has become the “world’s factory” in many sectors, including garments. Another major shift, to meet “just-in-time” delivery orders especially for the high-end fashion industry, has been to the periphery of Europe (Albania, Morocco, Turkey) and the USA (Mexico and Central America).

In addition to the marked spread across and within national boundaries, what distinguishes the global manufacturing system today is the fact that global production and trade are controlled by relatively few core corporations: both transnational manufacturing companies and, especially in the garment sector, foreign buyers (large retailers and branded merchandisers) (Ibid.).Global manufacturing today has been promoted by industrial and commercial firms alike, which have established two distinct types of international economic networks that have been called "producer-driven" and "buyer-driven" global commodity chains, respectively (Gereffi 1994; 1999).

Producer-driven commodity chains are those in which large, usually transnational, manufacturers play the central roles in coordinating production networks (including their backward and forward linkages). This is characteristic of capital and technology-intensive industries such as automobiles, aircraft, computers, semiconductors, and heavy machinery.

Buyer-driven commodity chains, on the other hand, refer to those industries in which large retailers, marketers, and branded manufacturers play the pivotal roles in setting up decentralized production networks in a variety of exporting countries, typically located in the third world. This pattern of trade-led industrialization has become common in labor-intensive, consumer goods industries such as garments, footwear, toys, handicrafts, and consumer electronics. Tiered networks of third world contractors that make finished goods for foreign buyers carry out production. Large retailers or marketers that order the goods supply the specifications (Ibid).

The buyer-driven system of production in the garment sector is fuelled in large part by new information technologies. New technologies make it possible for transnational manufacturing companies to send product design and other production specifications around the world to their suppliers with the click of a computer mouse. New technologies make it possible for retailers and branded merchandisers to track their inventories (using bar codes) and place orders (using computer graphics and email) for the precise type and volume of goods that they require. This has led to what are called “just-in-time” delivery requirements. There have also been fundamental changes in the structure of the retail industry: notably, the rise of giant retail chains including the giant discounters (low price, high volume) such as Wal-Mart. With their increased size and power, and having streamlined their operations so as to minimize their inventory, the big retailers today are able to place even greater demands on manufacturers to lower their costs and to produce and ship goods quickly (Bonacich 2000).

In sum, the garments sector is not just prototypical of global manufacturing but of a particular variety thereof: buyer-driven global production chains. The relative ease of setting up apparel firms, coupled with the prevalence of developed country protectionism in this sector, has led to the unparalleled worldwide dispersal of production and exporting in this sector.

The international quota system known as the Multi-Fibre Arrangement (MFA) regulated trade in textiles and garments from 1974 through 2004, imposing quotas on the amount of garments developing countries could export to development countries. During the Uruguay Round of the General Agreement on Tariffs and Trade (GATT), which commenced in September 1986 and ended in April 1994, it was decided to bring the textile trade under the jurisdiction of the World Trade Organization. The Agreement on Textiles and Clothing (ATC) coming out of the Uruguay Round provided for the gradual dismantling of the quotas that existed under the MFA. The phasing-out process was completed by January 2005.

The phasing out of the MFA and the ATC means that trade in textile and clothing products is no longer subject to quotas under a special regime outside normal WTO/GATT rules but is now governed by the general rules and disciplines embodied in the multilateral trading system. Under the WTO/GATT regime, large tariffs remain in place on many textile and garment products.

2. Flexible Production
Contracting in the garment sector is a prototypical case of so-called “flexible” production. Manufacturers have to underbid each other for orders from the large retailers who are in a position to demand low-cost production and just-in-time delivery. The manufacturers reduce risk by giving work orders to their suppliers or contractors only when they need them and “shift work around to look for the best deal” (Bonacich 2000). Suppliers and contractors underbid each other to get work orders from the manufacturers; then contract out work to their sub-contractors when they need them; and so on down the global production chain.

As a result, the location of work, the volume and duration of work orders, and length and terms of employment contracts are all “flexible”. The workers who produce garments on this “global assembly line” tend to be recruited under “flexible” contracts: hired during seasons of peak demand and production, laid off when demand and production slackens.

3. Sweatshop Conditions
In addition to being hired only when work is available - as a contingent or peripheral workforce - those who stitch garments typically work under sweatshop conditions. They are typically paid by the piece (according to how many items they produce), earn very little, and do not receive overtime pay. They often have no sick leave or paid vacations.
Further, most of them are not unionized. Given the competitive pressures down the whole system, manufacturers prefer their suppliers to be anti-union. In export processing zones, garment factories typically do not allow unionization.

Within this general picture, there are important differences between workers, depending on whether they are hired by large factories as core or contract workers, hired by small units, or work under sub-contracts from their home. Click on the following links to see descriptions of the status of different categories of garment workers:

In many garment exporting countries, a large share of production is done by homeworkers: sub-contracted workers who work for a piece rate from their homes. Estimates suggest that 20-60% of garment production, especially of children and women’s clothing, is produced at home in both Asia and Latin America (Chen, Sebstad, and O’Connell 1999). In addition to low piece rates, homeworkers often are not paid for months on end. Further, homeworkers have to cover many of the costs of production, including: workplace, equipment, and utilities. In sum, those who bear the heaviest share of the burden of the downloading of risks and costs associated with global production are those at the bottom of the production chain: the sub-contracted workers who work from their home. There is arguably no greater gap in economic wealth and bargaining power than between the garment homeworker and the owner of the large garment manufacturing or retail firm for which she produces. Read more details on homeworkers.

4. Female Employment
Garment workers around the world, especially those who do the basic stitching of children’s and women’s garments, are predominantly women. However, while the garment sector is a prototypically female industry, it is important to nuance this stylized picture. To begin with, some of the higher-skilled tasks within the sector such as cutting are often done by men: as is the stitching of men’s clothing. Also, in a few countries, men are also engaged in large numbers in the stitching of children’s and women’s clothing: particularly after the technologies used in the industry get upgraded. Secondly, it is important to note that the export factories tend to hire young women before they are married or become pregnant; and let them go once they are. Third, it is also important to note that many garment factory workers are immigrants or migrants. In developed countries, many garment workers – whether they work in factories or from their homes - are immigrant women from Asia or Latin America: in Los Angeles, USA, most of the garment factory workers are from Latin America and (less so) Asia; in Toronto, Canada, most of the garment workers are Chinese immigrant women, who used to work in small factories before the North America Free Trade Agreement (NAFTA) but now work from their homes. In developed countries, notably in China, many garment factory workers are migrant women from rural areas.


WIEGO RESPONSE

Since home-based workers (many of whom produce garments) are a key constituency of WIEGO organized by several of our Institutional Members, and because of the features described above, we decided early on that our Global Trade Programme should have a special focus on the garment sector. Our activities in support of garment workers have taken several forms over the past decade: developing, using, and disseminating a method for global value chain analysis in the garment sector that includes a focus on home-based workers; undertaking comparative cross-country research studies; convening research workshops and policy dialogues; documenting good practice examples; and promoting fair and ethical trade for garment workers.

1. Value Chain Analysis Manual and Resource Packet

As we began reviewing the literature on garment workers, we realized that home-based garment workers – both the self-employed as well as sub-contracted workers (called homeworkers) – were not studied by most researchers. We also found that most analyses of global production or value chains focused on the industry as a whole and on the value chains of specific firms: with little (or no) focus on garment workers of any kind. We decided, therefore, to add a focus on workers, including informal workers and specifically homeworkers, to global value chain analysis in the garment sector. To do this, we commissioned a manual and a resource toolkit on researching homework in global garment value chains.

Sally Baden 2001 – Researching Homework and Value Chains in the Global Garments Industry: An Annotated Resource List and Binder

Dorothy McCormick and Hubert Schmitz – Manual on global value chain analysis in the garment sector

2. Set of Comparative Garment Sector Studies

The core activity of WIEGO on garment workers was a comparative set of studies in eight countries which began with a background issues paper and research design workshop (at the North South Institute in Ottawa, Canada in April 2002); followed by a workshop to discuss the empirical findings and policy lessons from the research (at the IDS, Sussex in Brighton, UK in April 2004); and later summarized into a synthesis overview including an update of the impact in each study country of the phasing out of the Multi-Fibre Agreement.

Research Design Workshop – April 2002 (North-South Institute)
Background issues paper - Julie Delehanty, NSI – “A Common Thread: Issues for Women Workers in the Garment Sector”
Training component on GVC analysis
Workshop report

Summary of Country Studies – 2002-2003

Research Findings Workshop – March 2004 (IDS, Sussex)
Workshop report
Presentations and notes

*Researchers involved in research on the garment sector from eight countries as well as outside experts met at IDS, Sussex on March 29th and 30th, 2004, to present their studies, which examined the impact of changes in trade regimes on employment patterns within the garment industry.  Two cross-cutting themes discussed during the workshop were a) labor standards and garment workers and b) the likely impact of the phasing out of the Multi-Fibre Agreement (MFA) in 2005 on women’s employment in the garment sector. 

3. Policy Dialogues
South Asia Regional Conference on Home-Based Workers (Kathmandu 1999)

Los Angeles Workshop Report – October 2001
English
Spanish

4. Research and Policy Dialogue (with WIEGO’s Social Protection Programme)
Working collaboratively with the ILO and the World Bank, WIEGO developed a framework for and commissioned comparative case studies on risks and access to social protection of workers in two GVCs in two countries each: garment GVCs in Thailand and the Philippines; and horticulture GVCs in Chile and South Africa. As far as we know, this was the first time that value chain analysis had been used as a lens through which to explore social protection. We developed a methodology which added three layers of analysis to the standard “mapping” of workers/units/value-added under GVC analysis: the depth of labour legislation and social protection coverage in the chains; the identification of key institutions and stakeholders, including those governing production and employment relations along the entire chain; and identification of key pressure points in the chain, including existing downward pressure points (currently leveraged by big companies) and potential upward pressure points (to be leveraged by workers and their organizations).

Case studies were then used as the concrete basis for a dialogue between representatives of three international organizations - the ILO’s Social Security Division, the World Bank’s Social Protection Network, and the WIEGO Network - to scrutinize their own social security/ social protection approaches, to identify the extent to which they addressed the social protection needs of informal workers. A book (presented the framework, the case studies, key themes of the discussion that followed, and the policy implications.

This book, entitled Chains of Production, Ladders of Protection: Access to Social Benefits of Workers in Garments and Horticulture, was edited by Francie Lund (Director, WIEGO Social Protection Programme) and Jillian Nicholson and published by WIEGO in collaboration with the ILO-STEP Program and the World Bank Social Protection Network(Lund and Nicholson 2003). This edited volume includes two case studies of whether and how workers in garment value chains (Philippines and Thailand) and horticultural value chains (Chile and South Africa) gain access to social protection; comparative approaches to social protection of three organizations (ILO, WIEGO, and World Bank); and an introduction synthesizing the proceedings and recommendations of the technical consultative workshop at which the case studies were presented and discussed. View Philippines and Thailand case studies.

5. Other Research and Case Studies
Background Papers for 2005 World Development Report
In 2004, WIEGO was commissioned by the World Bank to write three background papers on the investment climate for informal businesses for the 2005 World Development Report on the investment climate. Two of these background papers feature self-employed garment workers, as follows:
Chen, Marty, Renana Jhabvala, and Reema Nanavaty 2003 – “The Investment Climate for Female Informal Businesses: A Case Study from Urban and Rural India”

Lund, Francie and Caroline Skinner – Background Paper for the 2005 World Development Report: The Investment Climate for the Informal Economy: A Case of Durban, South Africa. Case study on garment manufacturers and street traders in Durban, South Africa

Booklet on SEWA’s Membership
In 2006, Marty Chen (WIEGO International Coordinator) wrote a booklet on the membership of SEWA which featured a write-up on the garment workers among the membership: entitled Self-Employed Women: A Profile of SEWA’s Membership.. View the section on garment workers.

Chapter for Edited Volume called Rethinking Work
Mirai Chatterjee, Marty Chen, and Jeemol Unni have written a chapter called “Autonomy, Security, and Voice: Informal Women Workers in Ahmedabad City, India” which features garment workers. This will soon be published electronically by WIEGO.

6. Engagement on Fair and Ethical Trade
Fair Trade
SEWA's Trade Facilitation Centre - WIEGO played a technical advisory role in the development of SEWA’s Trade Facilitation Centre (TFC) set up to link rural producers in SEWA’s membership to global markets. Marilyn Carr, then Director of WIEGO’s Global Trade Programme wrote the original funding proposal for the International Finance Corporation (IFC); and two UK consultants (identified by WIEGO) have provided design and marketing services.

Ethical Trade
Membership and Participation in Ethical Trade Initiative –
WIEGO is engaged in an experimental project with a High Street retailer of fast fashion to develop an approach to improve labour standards through changes in purchasing practices. The project involves undertaking an analysis of purchasing practices along the supply chain from end to end. The pilot will be tested in one factory in Turkey and, if successful, rolled out to other production facilities. The learning will be shared among ETI members with a view to getting wider buy-in to improving labour standards for all workers along garment value chains.
Documentation of Best Practices - Marilyn Carr, first Director of WIEGO’s Global Trade Programme, edited a book of case studies on best practices in linking women producers and workers with global markets called Chains of Fortune commissioned and published by the Commonwealth Secretariat. This book was launched at the September 2004 meeting of Finance Ministers from Commonwealth countries (along with another book prepared by WIEGO for the Commonwealth Secretariat, Mainstreaming Informal Employment and Gender in Poverty Reduction). Both books were also featured in a book launch organized by the Commonwealth Secretariat at the March 2005 meeting of the Commission on the Status of Women at the UN. One of these case studies focused on efforts to promote ethical labour standards in the Bangladesh garment industry: Kabeer, Naila and Simeen Mahmud. 2004. "Rags, Riches and Women Workers: Export-Oriented Garment Manufacturing in Bangladesh.”

6. Presentations at Relevant Seminars or Conferences
2002 Conference of International Association for Feminist Economists (June 2002, Barbados)
WIEGO researchers organized two panels for the annual IAFFE conference.  The first panel, entitled “Rethinking the Informal Economy: Definitions, Measures, and Linkages” featured presentations by Imraan Valodia and Caroline Skinner of the University of Natal, Jeemol Unni of the Gujarat Institute for Development Research, and Marty Chen of Harvard University. The panel was chaired by Kathleen Barnett of the International Center for Research on Women.  
 
The second WIEGO panel, “Informalization in the Garments Industry: South Africa and India” featured presentations by Caroline Skinner and Melissa Ince of the University of Natal, as well as Navsharan Singh of the National Council of Applied Economic Research.  The panel was chaired by Marty Chen of Harvard University.

25th. Anniversary Symposium of SEEDS Booklet Series (February 07, New York)
The SEEDS booklet series, launched in the early 1980s, documents innovative approaches to economic empowerment of working poor women. Marty Chen (WIEGO International Coordinator) has served for many years on the editorial committee of the series, wrote two of the booklets in the series and an introduction to one of two edited volumes of the series, and was a member of the planning committee for this 25th. anniversary symposium. The former and current Directors of WIEGO’s Global Trade Programme, Marilyn Carr and Elaine Jones, co-planned and co-chaired a panel on “Fair Trade and Global Markets: Access and Rights” that featured panelists from Ghana, Jamaica, and Uganda.

7. Garment Sector Studies by WIEGO Members
Several active members and research collaborators of WIEGO have done research on garment workers in the following countries:

Cambodia:
Heintz, James. 2007. “Human Development and Clothing Manufacturing in Cambodia: Challenges and Strategies for the Garment Industry.” Amherst, Mass: Political Economy Research Institute, University of Massachusetts/Amherst.

India:
Unni, Jeemol and Namrata Bali. 2002. ”Subcontracted Women Workers in the
Garment Industry in India” in Balakrishnan, R., ed. The Hidden Assembly
Line: Gender Dynamics of subcontracted Work in a Global Economy. Bloomfield, Connecticut: Kumarian Press, pp. 115-144.
Singh, Navsharan 2000 – “Situating Home-based Work in the Webs of Macroscape”
Jhabvala, Renana and Ravi Kanbur 2002 – “Globalization and Economic Reform as Seen from the Ground: SEWA’s Experience in India”

Mexico:
UNIFEM 2000, White, Salas and Gammage 2003: View a box from
Progress of the World’s Women: Women, Work, and Poverty which summarizes the findings of the UNIFEM-Mexico publication

South Africa:
Caroline Skinner and Imraan Valodia - “Informalizing the Formal: Clothing Manufacturing in Durban, South Africa”