86% Textile, Clothing and Footwear (TCF) workers in Vietnam are at risk of automation, closely followed by Indonesia at 64% and Cambodia marking the highest risk at 88%. These findings were reported by the International Labour Organisation (ILO) in a report titled, ‘ASEAN in Transformation’ released recently.
A number of technologies stand to disrupt this sector: 3D printing, body scanning technology, computer-aided design (CAD), wearable technology, nanotechnology, environmentally friendly manufacturing techniques, and lastly, robotic automation. Robotic automation poses a significant threat of job displacement in ASEAN.
Combined, body scanning sensors and CAD not only provide the perfect fit to the consumer, but also permit extremely fast delivery, which is further accelerated through 3D printing. Because 3D printing does not require as much human input, it enables production to move closer to the markets in which products are sold.
Indeed, there are early indications that the need for mass production footwear factories in ASEAN is dissipating. The footwear industry has begun using 3D printing techniques to open automated shoe factories in key destination markets. If these operations prove profitable, such automated shoe factories will no doubt reduce the need for ASEAN workers. . Overall, these advanced technologies present a different kind of challenge for ASEAN: a lack of skilled talent.
The implications of technologically induced upheaval for the TCF sector in ASEAN are profound and likely to disproportionally affect female workers, who currently serve as the backbone of the TCF sector. The TCF sector provides over 9million jobs in ASEAN, most of which are filled by young women. The female share of employment in the TCF sector exceeds 70% in Cambodia, Lao PDR, the Philippines, Thailand and Vietnam.
An additional concern for ASEAN’s TCF sector is the continued and improved production growth of China’s TCF activities: China currently produces more with less workers, and this production gap will increase as it deploys more automotive processes.
ASEAN’s TCF workforce needs will drastically change. The region will encounter both a displacement of lower skilled workers and an increase in the demand for higher skilled technicians and engineers to serve niche apparel producers.
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In both China and Thailand, sewbots are likely to be more economical if investments are made after 2020. Our estimates show that human labour can be up to 50 per cent more expensive than sewbots in China, and a break-even point could be reached in Thailand by 2025. Viet Nam’s TCF sector also struggles from old technology. Moreover, the low skills upon which many ASEAN countries rely limit their overall productivity.
The lack of local investment in R&D and upgrading technology may put the region in a challenging position, especially as other TCF players continually improve their processes. While TCF industry leaders who source from ASEAN are spending millions on R&D and continuously introducing new and transformative technology, adoption of global innovation appears to be somewhat limited in ASEAN factories due to constraints in skills and economics, partly because the region largely trades on low-cost labour.
“Across the region, productivity gaps between TCF manufacturing and overall manufacturing remain wide,” according to the report. In the Philippines and Thailand, for example, labour productivity in overall manufacturing is 3.5 times and 2.7 times greater, respectively, than in the TCF sector.
To remain competitive, industry players must accelerate partnerships with educational and training institutions to groom the next generation of TCF workers who have stronger technical qualifications, expertise and the ability to work seamlessly with multiple strands of emerging technologies.
Selected ASEAN countries will reap some benefits through preferential trade agreements like Viet Nam’s case with the TPP. This will boost export demand and create even more jobs. While the sector will continue to be associated with growth in the immediate term, we expect a plateau to be reached at a quicker rate than anticipated due to technological disruptions.
It is imperative for countries that are heavily reliant on the TCF sector to strategize economic diversification and foster additional growth sectors to avoid considerable setbacks in development.
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