Photo by: Bloomberg
Despite arresting some of the decades-long gradual decline in the textiles and clothing sectors, it was time South Africa changed direction in its approach to saving this once-thriving industry.
This was the view of University of the Witwatersrand Corporate Strategy and Industrial Development (CSID) research group senior researcher Dr Lotta Takala-Greenish, who said on Friday that two contrasting stories had emerged in the fall of the two sectors.
Addressing delegates at a Department of Trade and Industry (DTI) Economic Policy Dialogue, in Pretoria East, she said the clothing and textiles industry’s decline started in the 1970s with a gradual loss of jobs on the back of rising labour costs, with the severe hit occurring in the early 2000s when imports surged and exports plunged.
Despite the decline beginning long before the trade liberalisation of the 1990s, the “China effect” tipped the scale in the early 2000s, resulting in an intervention by the DTI to assist the industry when it struggled to hold its own against global competition.
Under the rules of the World Trade Organisation, South Africa had opened its local market to global competition, leading to a flood of cheap and sometimes illegal imports which saw many clothing manufacturing companies shutting down or scaling back operations.
Government had invested close to R3.5-billion in the clothing, textiles, leather and footwear sectors since 2009 through the Clothing and Textiles Competitiveness Programme, which stabilised the sectors and saved some 67 000 jobs.
However, Takala-Greenish said a focus on labour costs, a lack of exports or import competition as the key obstacles for the sector were only part of the picture.
South Africa was looking at the “wrong” causes when examining the decline or looking for ways to develop and grow the textiles and clothing sectors.
What was needed was a shift away from the core of production, such as output and innovation, to one where the core was demand for domestic output through consumption.
The sectors should focus on increasing consumer purchasing power through its labour using minimum wages, which would, in turn, boost demand for output, lead to a more skilled and motivated workforce, deliver scope for improvements in production processes and innovation and reduce imports.
“Look at labour as an integral and varied component of the production process,” she said, encouraging companies to stimulate domestic demand by leveraging labour to create the source of consumption.