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Impact of COVID-19 on Garment and Textile Industry

It is now December of 2020- exactly a year since the pandemic started in Wuhan City in China in December 2019. The pandemic is not ended yet. The vaccine against the disease is not widely available yet. People are still struggling with their financial states, social life and a lot more.

With social distancing measures imposed as the number of COVID-19 cases has been increasing worldwide from day to day, a wide closure of several businesses has taken place in various sectors. 

Of all of the businesses, the is one that has been hit hard by the pandemic. Garment and textile factories run their operation with hundreds or even thousands of workers. With the closure of retailers and brands around the world, this has also led to the closure of thousands of garment factories and related businesses are being forced to suspend their operations and discontinue their roles in the garment and textile industry. 

And no one can guarantee when the businesses will be back to normal or when the suppliers and retailers will resume their operations or the customers will make their orders again.

As per the World Economic Forum, the global textiles and apparel industry market had a retail market value of $1.9 trillion in 2019. 

However, with the rise of the pandemic in the early 2020, the markets were threatened by the decreasing rate or even cancellations of customer orders and supply chain disruptions. As consumers around the world keep themselves locked inside the house, many of them no longer need new products. This has caused the rate of orders for the products to decrease more than ever and has made a huge on the production and supply chain of the industries.

According to recent forecasts from different sources, the coronavirus outbreak led to a 3% drop in global trade values in the first quarter of 2020. 

A trade forecast report from World Trade Organization (WTO) shows that in 2020, trade volumes decreased between 13% and 32%, the World Economic Outlook report from International Monetary Fund (IMF) says that there has been a 3% drop in global growth and an article from Stopford UK Consultancy stated that the global growth rates are expected to fall by 2024.

As per the estimation by the United Nations Conference on Trade and Development (UNCTAD), the COVID-19 pandemic could cause the global FDI to shrink by 5% to 15% due to the downfall in the manufacturing sector with the factories shutting down. The organization has also proclaimed that export-oriented industries, especially those relying on Chinese inputs for production, were most exposed to supply chains which were disrupted due to the pandemic.

An average of 8 percent of orders have dropped worldwide and the expected turnover this year will be down by nearly 10 percent over the 2019 figures in the garment and apparel industry, according to a survey in April by the International Textile Manufacturers Federation (ITMF). 

The report also stated that the main challenges companies around the globe are facing include safety and health of the workers and staff, lack or delay in supply in the apparel industry and lack of demand or the fear that demand will drop significantly and the lack of liquidity.

Garment factories in Myanmar are also suffering from the consequences of the global economy during the pandemic. Raw materials for the factories in the country are imported from China by sea and also across the border but now, both of the routes have stopped working since certain travel restrictions have been set between the countries. 

According to the Ministry of Commerce, in the 2015-2016 fiscal year, the export value of cut-make-pack (CMP) garments was only $850 million, but the number has tripled over the last two financial years. Myanmar earned about $2 billion from exports of CMP garments in the 2016-2017 financial year and the figure increased to an estimated amount of $2.5 billion in the 2017-2018 financial year and $2.2 billion from April to September in 2018. It also tremendously grew to $4.6 billion in the 2018-2019 fiscal year.

However, in the past eleven months in the current 2019-2020 financial year, the revenue from the exports of CMP garments reached only up to $4 billion, as per an official from the Ministry of Commerce.

The pandemic along with the temporary suspension of factories do not only result in the sharp drop in global figures in the textile and garment industry.

The garment industry employs 60 million workers around the world, with nearly 75% of women among them. 

As thousands of factories are now shut down along with the weakened global economic situation, millions of low-wage workers are temporarily suspended from their duties and leave the workplace. They are at the high risk of facing months without pay to support themselves and their families, and not all of them may have enough savings to survive without a job until the pandemic ends. 

With the increasing rate of COVID-19 cases, quarantine and social distancing measures will also be rapidly imposed by the government to prevent it from making it worse and if it continues for a long time, those vulnerable factory workers will not have reliable jobs to fall back on to continue their living.

Thiri Winn Maung, the founder of Mori Burma, an organic cotton and natural dye handloom factory, stated, “When the COVID-19 started, sales were down but it was not very difficult for us because this is a small business that produces only limited editions using natural raw materials. But the production of our new designs needed to be stopped. We didn’t want our customers to spend their money for our new design since clothing is not more important than food. So we stopped our work for a while. But I want my employees to earn their daily income by spinning and weaving.”

“For the long-term plan for the business, women in the village will return to work on a regular basis to earn daily income while preserving the environment when all of this is over.” she added. Mori Burma is a small family business run by a young woman who is passionate in producing traditional handloom textiles, along with underprivileged local women from rural areas.

The Clean Clothes Campaign, a global network dedicated to improving working conditions and empowering workers in the global garment and sportswear industries, is calling on brands, whose businesses luckily are not suspended, to ensure that workers who contract the virus are allowed to take sick leave without repercussions from the factories and continue to receive their wages throughout their period of self-isolation.

Moreover, Scott Nova, the Executive Director at the Worker Rights Consortium, part of the Clean Clothes Campaign, said that poverty wages, unsafe and unsanitary workplaces and poor health already makes the garment workforce highly vulnerable to the worst effects of the COVID-19 pandemic. 

“Many of these workers live in countries where labour laws and protections are not upheld. The track record of how governments in garment-producing countries and the retailers who profit from cheap labour treat workers in this industry does not bode well with the weeks to come.” he added.

This definitely is an important matter to consider especially when it comes to developing countries where medical infrastructure and public health systems are already weak even before the pandemic. 

It will not be easy to overcome the hurdles brought by the pandemic. It will not be easy to recover from all the damage COVID-19 has made. However, businesses and firms need to learn to adapt to new situations to survive again once the crisis has passed.