Raymond Robertson

Gladys Lopez-Acevedo

Erhan Artuc

Daniel Samaan

South Asia has grown rapidly with significant reductions in poverty, but it has not been able to match the fast-growing working age population, leading to lingering concerns about jobless growth and poor job quality. Could export growth in South Asia result in better labor market outcomes? The answer is yes, according to our study, which rigorously estimates—using a new methodology—the potential impact from higher South Asian exports per worker on wages and employment over a 10-year period. Our study shows the positive side of trade. It finds that increasing exports per worker would result in higher wages—mainly for better-off groups, like more educated workers, males, and more-experienced workers—although less-skilled workers would see the largest reduction in informality. How can the benefits be spread more widely? Our study suggests that scaling up exports in labor-intensive industries could significantly lower informality for groups like rural and less-educated workers in the region. Also, increasing skills, and participation of women and young workers in the labor force could make an even bigger dent in informal employment. The region could achieve these gains by: (i) boosting and connecting exports to people (e.g., removing trade barriers and investment in infrastructure); (ii) eliminating distortions in production (e.g., by more efficient allocation of inputs); and (iii) protecting workers (e.g., by investing in education and skills).

Boosting the Gains from Trade in South Asia

Exports to Jobs

The end of the MFA was followed by rising apparel exports, falling prices, and a reallocation of production and employment between countries. There were also significant changes within countries. The first main finding of this report is that export and employment patterns after the MFA/ATC did not necessarily match predictions. While many predicted that production would shift to low-wage countries, this book shows that only 13 percent of variation in export changes post-MFA can be explained by the differences in wage levels. Second, changes in exports are usually, but not always, good indicators of what happens to wages and employment within countries. This is especially important for policy because it shows that simply using exports as a metric of 'success' in terms of helping the poor is not sufficient. Third, the Book identifies the specific ways that changes in the global apparel market affected earnings. The Book shows that wage premiums change in predictable ways: rising (in most cases) in countries that were proactive in adapting to the MFA phase-out and expanded their market shares, and falling in countries that failed to respond in a timely fashion to the changing environment. The Book shows that promoting 'upgrading' (defined as shifting to higher-value goods, shifting up the value chain, or 'modernizing' production techniques) seems to be necessary for sustainable competitiveness in the apparel sector but does not necessarily help the poor. Policies that support upgrading need to be complemented with targeted workforce development to make sure that the most vulnerable workers are not left behind. Having a vision for the evolution of the apparel sector that incorporates developing worker skills seems crucial. Otherwise, less-skilled workers could miss out on opportunities to gain valuable work experience in manufacturing.

Employment, Wages, and Poverty following the End of the Multi-Fibre Arrangement

Sewing Success?

Gaelle Pierre

Trade liberalization holds both promises and perils for workers around the world. This book uses a new analytical framework to show that while globalization has been associated with improvements in working conditions in the exposed sectors (apparel and textile), questions remain about the durability and generalization of such improvements.

Raymond Robertson

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