CHAPTER ONE
Recent Changes in TCF Industries
1.1 Over the last decade the Textiles, Clothing and Footwear industries
(TCF) have undergone major restructuring. In 1986, following a comprehensive
Industries Assistance Commission inquiry, the Government announced an
Industry Plan which would reduce the level of tariff support and consequently
force TCF industries to become more internationally competitive. The Plan
came into operation on 1 March 1989 and operated until 29 February 1996.
[1]
1.2 The major elements of the Plan included the phased removal of tariff
quotas by 1995, reductions in bounties, phased reduction in tariffs to
1996, the simplification and rationalisation of the concessional entry
system, an Industries Development Strategy of $120 million to facilitate
industry restructuring, and a Labour Adjustment Package (LAP) for workers
displaced by the Plan. At the same time, the Government established a
Textiles, Clothing and Footwear Development Authority to administer the
Plan.
1.3 The progress of the Plan was such that changes to tariff protection
were met earlier than expected and global quotas were removed nearly three
years prior to that originally forecast. The objective of having a maximum
tariff of 60% by 1 March 1966, was met in December 1994. The maximum tariff
is now 37%, to be reduced to 25% by the year 2000. After a phased reduction,
bounties were removed completely in July 1995. [2]
1.4 At June 1994, textiles, clothing and footwear industries in Australia
comprised some 3500 businesses which employed over 73,000 wage and salary
earners, and had an annual turnover of almost $9 billion. The industries
accounted for 9.5% of Australia's factories, and within them 8.5% of manufacturing
employment. [3]
1.5 In anticipation of the cessation of the TCF Development Authority
in 1996, the Government commissioned in 1994 a Future Strategies Committee
to review the strategies that the industries should pursue over the next
decade. In turn, that Committee engaged consultants Werner International
to conduct a detailed review. [4] The resultant
report concluded that there were good prospects for Australia's textiles,
clothing and footwear industries and that the best Australian firms were
equal with their international peers. [5]
1.6 Subsequent to the review, in May 1995, the Government announced the
TCF 2000 Development Package: a $45 million program to be implemented
progressively from 1 July 1995 by the Department of Industry, Science
and Tourism.
1.7 According to the 1994/95 Annual Report of the Textiles, Clothing
and Footwear Development Authority:
… it is still to early to determine conclusively whether the Plan
has been successful in its primary aim of restructuring the TCF industries
to be internationally competitive and less reliant on government assistance.
However there are clear indications that many firms are now internationally
competitive and that this can be directly attributable to the Plan.
[6]
1.8 However, aside from any benefits to individual companies that may
have arisen from the Plan, the structural changes that have occurred within
TCF industries have had a detrimental impact on factory-based employment.
In fact, according to the Textiles, Clothing and Footwear Union of Australia
(TCFUA or 'the Union'), reductions by the Federal Government in industry
protection have had 'devastating effects on employment in the TCF industries'.
[7] For example, as claimed by the TCFUA:
- total factory based employment of clothing workers fell from 62,900
in 86/87 to 34,000 in September 1994; [8]
- in women's fashion wear, factory based employment fell from 16,000
in 1986/87 (when the Plan was announced) to 9,700 in 1992/93; [9]
- at least 40,000 people have lost their jobs in TCF industries since
1989; [10]
- during the period 1987/88 to 1992/93, employment in footwear dropped
45%, in knitting mills it dropped 42%, yarns and fabrics 39%, and clothing
38%. [11]
1.9 The two major changes that have contributed to a reduction in factory-based
employment are, first, the move from Australian manufacturing production
to offshore production and, second, the move from factory-based employment
to the use of a home-based workforce: that is, outworkers.
1.10 In terms of manufacturing needs, clothing can be divided into two
groups. One group comprises those garments which are stable in the market-place,
having relatively unchanging style and little variation in demand over
season (for example, men's business shirts). These garments can be manufactured
in long production runs. However, the companies which produce them are
highly vulnerable to competition from manufacturers who can minimise production
costs, such as material and labour. Thus because of lower labour costs
overseas, many Australian manufacturers in this sector have moved to offshore
production.
1.11 The other group is characterised by garments which change greatly
in style and which have high variability in seasonal demand (for example,
women's day-wear). These clothes require a short response time and are
usually made in short production runs. There is a strategic advantage
in having these types of clothes made in Australia, either in factories
or by outworkers. [12]
1.12 Therefore, in parallel with the reduction in factory-based employment,
and stimulated to a large extent by decreased industry protection and
increased import competition, there has been an increasing trend towards
transient and informal employment relationships in TCF industries. That
is, there has been a large increase in the use of outworkers to sew clothes.
By doing this, companies have been able to shift some of the costs associated
with a fixed labour force onto contractors, or onto the workers themselves.
High numbers of both redundant factory workers and new migrants willing
to sew clothes at home has meant that there is a ready and large pool
of outworkers. [13]
1.13 As anticipated, recent TCF restructuring has resulted in strong
competition between manufacturing companies. This has in turn resulted
in a change in the pattern of stability of garment companies, and a large
section of the industry now has a very high failure rate. According to
the submission from the NSW Government, many garment manufacturing companies
are short lived and frequently change location. Research conducted between
November 1993 and September 1994 by a departmental task force found that
nearly 40 per cent of businesses initially surveyed were no longer operating
six months later:
… the industry is volatile in nature, … businesses start
and cease operations, transfer locations and/or change ownership on
a regular basis. This in itself presents a problem in not only ensuring
the effective regulation of the industry, but in merely identifying
the location of garment outworkers manufacturers. [14]
1.14 Similarly, an analysis of membership statistics of the Australian
Chamber of Manufactures showed that there was a huge turnover of companies
in the clothing sector compared with other industries. [15]
This has also contributed to higher levels of unemployment and employment
instability in the industry.
1.15 As summarised by the TCFUA Report The Hidden Cost of Fashion,
there are now very few 'inside' workers compared to the number of outworkers.
Statistics provided in that report indicated that, in 1995:
- one third of all companies respondent to the Federal award had less
than 10 inside workers and two thirds of these companies had less than
five inside workers;
- in the unregulated sector, 90% of companies had less than five inside
clothing workers;
- up to three quarters of clothing companies had only 5-10 inside workers
and the majority of their production was carried out by outworkers;
- most of these companies employed at least 10 outworkers, many used
at least 50 outworkers and some used over 200 outworkers. [16]
1.16 In fact the Union claims that outworking is now so prevalent that
is not just a characteristic of the industry, the entire industry is structured
around it and it has become essential to the survival of locally-based
production. In the meanwhile, the Union argues, those companies which
either use a factory-based workforce or pay outworkers award wages, struggle
to remain competitive against companies which use underpaid or exploited
labour. [17]
1.17 Despite the firm shift in the industry towards home-based work,
both the Werner Report and the Future Strategies Report which followed
it, made little mention of the role of outworkers in TCF industries. The
Werner Report simply noted that the level of employment in the industry
would be significantly more if self employed home workers were included,
[18] while the Future Strategies Report noted
the concerns of the TCFUA regarding outworkers, particularly in relation
to exploitation and equity, and concluded that it was a complex issue.
The Future Strategies Committee recommended that 'the Union program for
informing outworkers of their entitlements should continue to be adequately
funded'. [19]
1.18 Over the last decade there has been a number of specific studies
carried out on the role and position of outworkers in the Australian labour
force. These include, in reverse chronological order:
- March 1995 - The Hidden Cost of Fashion - Report on the National
Outwork Information Campaign which was conducted by the Textile
Clothing and Footwear Union of Australia from July to November 1994;
- September 1989 - Out of Sight - Out of Mind: Outwork in South Australia,
Women's Working Centre;
- April 1987 - Report on Areas of Work Without Enforceable Minimum
Standards produced by the Committee to Inquire into the Status of
Women in Employment in Commerce and Industry and presented to the NSW
Ministers for Industrial Relations and Employment.
1.19 Thus because of the dramatic restructuring that has occurred within
TCF industries over a relatively short period of time, outworkers involved
in garment manufacturing occupy a particular place in the labour-force.
As outlined in the following chapter they are isolated, unseen, unorganised,
non-unionised, ignorant of their employment rights and have poor English
language skills. For these reasons, the Committee believes, outworkers
as a group require special consideration.
Footnotes
[1] For more detailed information, see the Textiles,
Clothing and Footwear Development Authority Annual Report, 1994-95.
[2] TCF Future Strategies Committee Future
Strategies for the Textiles, Clothing and Footwear Industries 1996-2000.
December 1994, p. 4.
[3] Werner International Inc. Review of the
Textiles, Clothing & Footwear Industries Development Strategy - Final
Report. Prepared for the TCF Future Strategies Committee Australia.
October 1994. pp. III1, and TCF Future Strategies Committee Future
Strategies for the Textiles, Clothing and Footwear Industries 1996-2000.
December 1994, p. 3. Note: this level of employment did not include self
employed people (outworkers).
[4] Werner International Inc. op cit.
[5] As cited in the Textiles, Clothing and Footwear
Development Authority Annual Report 1994-95, AGPS 1995, p. 23.
[6] Textiles, Clothing and Footwear Development
Authority Annual Report, op cit, p. 18.
[7] Evidence, p. E 12.
[8] Evidence, p. E 9.
[9] Evidence, p. E 12.
[10] Textiles Clothing & Footwear Union
of Australia The Hidden Cost of Fashion - Report on the National Outwork
Information Campaign. March 1995. p.4.
[11] Werner International Inc. op cit.
Figure 5, p. III.5.
[12] It is clear from clothing industry statistics,
for example, that imports supply only a minority of the Australian market
for women's fashion wear. Evidence, p. E 12.
[13] Evidence, p. E 370.
[14] Submission No. 38, p. 2.
[15] Evidence, p. E 326.
[16] Textiles Clothing & Footwear Union
of Australia The Hidden Cost of Fashion - Report on the National Outwork
Information Campaign. March 1995. p. 5.
[17] ibid p. 4.
[18] Werner International Inc. op cit.
p. III1.
[19] TCF Future Strategies Committee, op
cit, p. 16.