Asia-Pacific labour market insights

What future for the Asia garment industry post-COVID?

The COVID-19 crisis has hit the global garment industry hard and nowhere has this been felt more than in Asia, where the majority of the industry is based. A new brief from the International Labour Organization looks at what the future holds for the Asian garment sector, how the pandemic is shaping industry trends and the opportunities for a more resilient, sustainable and human-centred future.

Analysis | 04 August 2021
The garment manufacturing in Asia. © ILO/M. Crozet
The garment industry can enjoy a bright future if it builds back from the COVID-19 pandemic on a foundation of stronger social dialogue and worker protections as well as enhanced investments in skills, productivity and infrastructure, according to a new research brief released by the International Labour Organization.
The post-COVID-19 garment industry in Asia reflects on how the pandemic is shaping major global trends that determine growth and sustainability in the sector. It examines how decisions taken by key stakeholders such as global brands and retailers during the crisis have had far-reaching consequences for workers and the supply chain and how their actions will be critical in determining the shape and direction of the industry in the coming years. 

The Asian garment industry has been hit hard by the COVID-19 pandemic. The correct choices need to be made by policymakers, employers, brands and consumers for a more resilient, sustainable and human-centred industry to emerge and prosper."

Chihoko Asada-Miyakawa, Assistant Director-General and Regional Director for ILO Asia and the Pacific
Amongst major trends expected to reshape the industry after the pandemic are continued market concentration, consolidation among both buyers and suppliers as well as sourcing shifts out of mainland China. Levels of automation are also expected to continue growing, albeit at a relatively modest rate.

Industry reconfiguration is likely to have uneven impacts on workers. The manufacturing landscape is likely to be dominated by ever-larger and well-capitalized global manufacturers receiving ever-larger orders from dominant global brands. Where high social and environmental compliance is a feature of these ‘strategic’ buyer-supplier partnerships, expanded opportunities for decent work are possible and indeed likely. However, such gains may not be guaranteed more widely, as an increasingly two-speed industry may become more prominent in the coming years.

Climate change looms large over Asia’s future as a sustainable long-term sourcing destination. Rising sea levels and extreme weather events will impact suppliers and factories with large swathes of the region’s apparel-producing centres predicted to be underwater by 2030. Escalating heat stress caused by rising temperatures may further undermine worker safety, wellbeing and productivity.

The brief points to longstanding gender gaps in the industry, and the disproportionate burden women workers have borne during the pandemic. Without deliberate policy interventions in the recovery, many women will continue to face discrimination at work, whilst also potentially losing out from a general contraction in lower-skilled job opportunities in the sector.

Also critical to the industry’s future in Asia is the labour governance landscape, both at national level and across the global supply chain. Broadening legislative efforts to regulate global supply chains, particularly from sourcing countries introducing mandatory human rights and environmental due diligence legislation, as well as the increasing prominence of labour provisions in trade agreements, will wield growing influence in this regard.

Future Scenarios

By plotting the industry’s pre-pandemic trajectory and predicting possible changes in direction, the brief lays out three possible scenarios for the future, referred to as repeat, regain and renegotiate.

The repeat scenario foresees few if any deliberate changes or structural reforms to the industry after Covid-19. As some larger and more diversified enterprises emerge stronger and more resilient from post-crisis industry consolidation, some workers will benefit from improved skills, opportunities, pay and conditions. However, these will likely be a minority, as many workers –and particularly women- may be dislocated or remain stuck in low quality jobs beset with a range of decent work deficits.

The second scenario regain, envisages accelerated changes to industry structure and sourcing habits but governance changes that are externally driven and merely accommodated at best. This scenario foresees an even starker bifurcation of outcomes for workers – with few benefiting from the improvements in labour governance in large, formal enterprises, and a majority of workers at intensified risk of labour rights violations or job losses due to technological upgrading.

The final scenario renegotiate, is more optimistic and transformative. It foresees deliberate and wide-ranging supply chain reforms, which place social and environmental sustainability at the heart of the post-pandemic business model. ILO views this as the only viable way to build a human-centred future for the industry, one that is both sustainable in the long-run and delivers a fairer deal with broad-based benefits for all supply chain actors. However, the degree to which the industry will deliver improved working conditions across the board, i.e. beyond the biggest and best manufacturers, will depend at least in part by governance improvements and the presence of independent trade unions that are able to bargain effectively for improved pay and conditions of work.

The research brief was jointly produced by Better Work, the ILO’s Regional Economic and Social Analysis Unit, the ILO’s Decent Work in Garment Supply Chains Asia project funded by Sweden, and the New Conversations Project at the School of Industrial and Labor Relations at Cornell University. The brief builds on extensive research presented in a Better Work Discussion Paper by Jason Judd and J. Lowell Jackson, and is a companion piece to The Supply Chain Ripple Effect: How COVID-19 is Affecting Garment Workers and Factories in Asia and the Pacific.