Depth of Productivity – Opinion


Productivity isn’t everything, but in the long run, it’s almost everything. A country’s ability to improve its standard of living over time depends almost entirely on its ability to increase output per worker. Unfortunately, for a developing country like Pakistan, productivity is a problem it has faced for decades, even after its establishment seventy-four years ago in 1947. The current productivity situation in Pakistan is catastrophic in nature. and the country low productivity. This can be reinforced by the fact that, according to global economic data, CEIC indicators, charts and forecasts, labor productivity in Pakistan recently fell 2.54% year-on-year in June 2019, compared to a 3.09% growth in the previous year, as can be seen. below. On the contrary, Bangladesh’s labor productivity improved by 6.05% year-on-year in December 2019, compared to growth of 5.61% the previous year. The marked difference can be reinforced by the Global Competitive Report 2019, according to which labor productivity per worker in Pakistan increased by 1.4% per year between 2000 and 2017. On the contrary, in Bangladesh it increased by 3.9 % and other regional competitors such as India (5.8%) and China (8.5%) also reflected greater growth during the same period compared to Pakistan. In addition, Pakistan ranked 107th out of 141st country in terms of competitiveness and 120th for labor market efficiency. The scores are debilitating, requiring the attention of policymakers.

A quick look at solutions to increase the country’s productivity revolves around an in-depth analysis of productivity indicators across the value chains of its key industrial sectors in order to achieve sustainable productivity as well as growth. high economic (Asian Productivity Organization – APO). Pakistan’s industrial sector is largely made up of the manufacturing sector with few players such as textiles, where its production increased by almost 6% in the nine months to March 2021 and the sector accounted for 60% of exports. total, according to the Finance Division, Pakistan. In addition, the sector posted double-digit growth in December 2021 (17%) compared to the same month of 2020, reaching $ 1.64 billion.

The overall performance of the manufacturing sub-sector i.e. large-scale manufacturing (LSM) was influenced by the textile sector mainly with the highest weight of 20.91 in the quantum manufacturing index. (QIM) recently. The wool segment has largely contributed to the increase in production. On the other hand, Covid-19 has brought many US and European importers to Pakistani textile exporters due to the turmoil in regional countries’ trade.

According to data from Pakistan Bureau of Statistics (PBS), the total yarn production in the year 2020-21 was 3.44 million tons, on the contrary, 0.39 million tons of cotton yarn were exported during the same period, which represented only 11.33% of total production. for that year. As a result, around 89% of the cotton yarn produced in the country is available for the domestic market which has been converted into higher value-added “productivity exports”.

Subsequently, in quantitative terms, cotton yarn exports decreased by 25%, from 0.522 million tons in FY18 to 0.390 million tons in FY21, which represents 26% in value. Pakistani export textile industry includes blended and specialty synthetic cotton yarns, fabrics and finished fabrics to the international market, resulting in economies of scale and making Pakistani textile products competitive in world markets. The decline in yarn and fabric exports is evident from the fact that value-added exports increased remarkably and showed extraordinary growth in FY21, with 37% knits, 29% bedding, 32% towels and 19% clothing. This is the result of better use of resources; in other words, “productivity”.

Productivity and exports are deeply and directly proportional because the latter not only bring foreign exchange into the economy, but are also essential for financing desired imports and further reducing macroeconomic risks such as exchange rates, foreign exchange rates. unemployment and interest rates, etc., thus creating quality employment opportunities while withdrawing labor from informal economic activities with low productive earnings. More importantly, exports lead to productivity gains through increased scale and exposure to new sophisticated global customers / consumers (Varela, 2021).

Another area of ​​textiles that requires attention is product diversification. Since the sector comprises the longest production chain, it also inherently has the potential to add value at almost every step of the chain. There is immense potential in the stages of cotton production from ginning to finishing and everything in between. Product diversification has dynamic effects as reinforced by many countries as well as various studies. One case is that of Japan in particular in the 1990s where its textile companies adopted technological modernizations as well as product diversification which promoted profitability and led to an increase in productivity. This leads to a long-term growth path that generates sustainable productivity (Colpan, 2006).

The Covid-19 pandemic has led to ever greater growth in the market for nonwoven fabrics, which are mainly used in the manufacture of masks, PPE and many other medical grade products. These fabrics are arranged in patterns and fused together using chemicals, heat and pressure. The global market for non-woven fabrics is expected to reach $ 26 billion by 2026, which promises a bright future for the Pakistani textile industry, as can be seen below. Pakistan just needs to tap into the non-woven fabric market.

Global markets are now more oriented towards textile trades (nearly 60%) in man-made materials (MMF). The reason for this expansionary change in demand lies in the advantages of MMF such as elasticity, strength and resilience, etc. Sadly, Pakistan is denied an opportunity to prosper in this thriving MMF market, both internationally and the rights protection afforded to obsolete facilities. Likewise, Pakistan’s MMF tariff regimes also prevent it from being on par with global MMF markets. This is explained by the fact that the world textile trade consists of 30% cotton and 70% MMF, while in Pakistan the reverse is to say 70% cotton and only 30%. % of MMF, which must be reversed. We are still forced to produce mainly short staple raw cotton rather than going forward with MMF based on global demands.

This highlights another problem, that of polyester staple fibers, which dominates the global synthetic fiber industry. It is irrational to apply homework to him. Yet surprisingly, there is currently a 7% tariff on the import of polyester staple fibers, racking up the total import duty. That figure then falls into the 20% range, including anti-dumping duties as well. This aspect is in itself responsible for the lack of diversification towards new synthetic materials and therefore of productivity.

The effective and efficient management of the textile industry‘s supply chain is an important factor that promises a bright spot for productivity. The long supply chain includes the production of raw materials and the production of clothing, among others. Stricter supply chain management (SCM) leads manufacturers to strive to improve the quality of their products, reduce the costs of products and services, and shorten product delivery and time to purchase. answer in a constantly changing globalized world with a highly competitive market. Bangladeshi textile industries have been successful in managing lower inventories, which has resulted in improved productivity, lower costs and shorter lead times, more customer loyalty and higher profits by adopting SCM effective (Ali M. & Habib Md., 2012). SCM should be the main objective of Pakistani textile industry to increase competitiveness and productivity.

Finally, various studies have found that improvements that target labor productivity in factory conditions and services to workers by increasing workers’ incomes, well-being and skills therefore have a multiplier effect on productivity ( Ahmed, N. 2009). Working on this model, APTMA proposed a 20% increase in the minimum working wage in March 2021, which was positively implemented by the government. However, it remains to develop a comprehensive and rigorous technical and non-technical training module for the workforce in the textile sector based on professional skills in order to improve their skills and therefore their productivity. This would require close liaison with a public-private partnership of training institutes such as the Technical Education and Vocational Training Authority (TEVTA), the National Commission for Vocational and Technical Training (NAVTTC), the Institute of Professional & Technical Training Private Limited (IPTTPL), etc. .

A multidimensional policy approach to restructuring Pakistan’s textile sector is a sine qua non for any significant change in terms of national productivity. The sector is lagging behind in its competitiveness on the international market because of the obstacles mentioned in this article. Therefore, it is absolutely necessary to improve productivity for a sustainable future.

Commercial copyright recorder, 2022


About Author

Comments are closed.