WTO regime results in employment losses to textile sector

By Monem Farooqi

The experts are claiming employment losses in textile sector following the conclusion
of Multi fiber agreement in wake of WTO regime, however, the policy makers are yet
to focus on the labour implications of problems in post quota regime, official sources
in Ministry of Commerce confirmed.

Sources in Textile Wing of Ministry of Commerce told Money that despite the fact the
government had spent Rs 4 billion during last years to meet the challenges of WTO
implementation, but unfortunately, the government has yet to focus labour
implications as Pakistan textile started facing the impact of post quota regime.

Multiplicity of taxes and departments and huge industrial electricity tariffs, which are
affecting cost of production, needs to be brought down to a considerable level. These
kinds of impediments not only are threading for unemployment but also dampening
more job openings in the sector.

Policymakers, FPCCI and researchers should have focused the worsening conditions
of workers, especially women, of cotton production sector, ignoring them would
ultimately harm the textile industry of Pakistan in WTO regime.

The loss of jobs is a social problem and we should not see only money and
economics because employment loss is a loss of generation and the quota regimes
were not blessings and disguise for Pakistan rather a punishment, the experts said.

Dr Karin Astrid Siegmann, researcher of Sustainable Development Policy Institute

(SDPI) while sharing her research study on “The Agreement on Textiles and
Clothing: Potential effects on gender equality in Pakistan”, told Money that increased
competition would not only lead to deteriorate condition of female workers in the
sector but would also increase the risks regarding their health and safety after
change of the textile quota regime from January this year. She said post quota
regime would increase quality of the textile products but may negatively affect
female working conditions as 30 per cent female are working in textile and clothing
industry of Pakistan.

She said that in the context of “purdah”, a social seclusion of women commonly in
Pakistan, female labour market participation would negatively be affected.

Dr Karin was of the views that the full implementation of the ATC from January 2005
represents a quantum leap in the liberalisation of global trade in textiles and
clothing. She said the existence of quotas has reduced the supply of these goods in
the restricted markets so far and had raised their prices.

She estimated that an average European family loses about Euro 270 a year
resulting from the higher costs of textiles and clothing induced by the quota regime
(Oxfam International, 2004). On the other hand, the current regime has depressed
prices in unrestricted markets as the existence of quotas has diverted some trade to
those markets (World Bank, 2004). As the current quota markets are the main global
demanders of textiles and clothing, the abolition of the quota regime will lead to a
global decrease in prices for textiles and clothing, thus boosting global demand, and
intensifying global trade in textiles and clothing.
Dr Karin recommended more stress and implementation of labour standards,
enhanced training opportunities for female workers, improved transport to work
facilities after post quota era regime.

She said that female rather than male workers would 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 common. Stressing on labour
standards she said to protect workers from harmful consequences of trade
intensification was necessary. This, she said, included the establishment of effective
enforcement mechanisms to ensure compliance with labour legislation, particularly in
ensuring the women workers’ enrolment to a social security system for health,
maternity, disability, and retirement benefits. Workers’, especially women workers’,
right to organise should be emphasised. She suggested that positive incentives, such
as tax cuts or subsidies for those companies that protect workers’ rights were
conceivable. “For the industry, it might have the welcome side effects to help ensure
quality, and to counter expected NTBs related to poor labour standards” she added.

Displaced women workers have more difficulties in finding job alternatives than men
due to their higher concentration in few sectors in the labour market in Pakistan.
Thus, to protect women workers from potential long-term job losses, policy reactions
should include enhanced training opportunities for female workers. Information
centers related to employment opportunities and orders may be established.
Besides, the industry’s quality requirements that are likely to increase after the
quota regime has been abolished will require better-educated workforce. Human
resources development is therefore advocated by the sectoral strategy “Textile Vision
2005”, by the World Bank (2004), and others (e,g. Kazmi, 2002).

It is, however, not reflected in companies’ policies. What is needed is a special focus
on female workers due to their greater vulnerability on the labour market.

The experts suggested for the improvement of transport to work, which is necessary
to enhance female access to jobs. Given the expressed interest of managers in the
textile and clothing industry to have greater access to female labour 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.

Vice President of Federation of Pakistan Chamber & Commerce Industry (FPCCI)

while expressing satisfaction that there would be no job losses in the textile sector
but rather more definite employment opportunities generated after post quota era.
Pakistan textile sector was prepared well to meet the challenges.

Criticising some government policies the experts said that lack of coordination,
wastage of time, duplication of efforts and isolated directions by various line
government departments are threat to face challenges after abolition of textile
quotas, needs to be addressed urgently.