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UEH UNIVERSITYCOLLEGE OF ECONOMICS, LAW, AND GOVERNMENTASSIGNMENTSUBJECT: DEVELOPMENT ECONOMYGROUP 2AN ANALYSIS OF SOUTHEAST NATIONS' INVOLVEMENTIN THE GLOBAL VALUE CHAIN IN THE LABOR-EMPLOYMENT-GARMENT INDUSTRYHo Chi Minh City, 2021-11-ABSTRACTThe readymade garments (RMG) sector is a critical drive...

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UEH UNIVERSITY COLLEGE OF ECONOMICS, LAW, AND GOVERNMENT

ASSIGNMENT SUBJECT: DEVELOPMENT ECONOMY GROUP 2 AN ANALYSIS OF SOUTHEAST NATIONS' INVOLVEMENT IN THE GLOBAL VALUE CHAIN IN THE LABOREMPLOYMENT-GARMENT INDUSTRY

Ho Chi Minh City, 2021-11-22

ABSTRACT The readymade garments (RMG) sector is a critical driver for Southeast Asia's economic and social development. As a result of the severe effect of COVID-19, the RMG sector has been confronted with a neverseen-before occurrence. Because the supply chain has been significantly impacted, businesses and regulators are concerned about how to mitigate disruptions caused by pandemics. As such, this research intends to examine the vulnerability and capability factors affecting the RMG industry in Vietnam, their connection, and the effect on the supply chain resilience of these variables. Also, this study investigates the impact of Covid -19 on woman labor working in the RMG industry. So that we can propose some solutions to improve the situation postpandemic. 1. INTRODUCTION The COVID-19 epidemic has impacted the worldwide supply chain. Natural catastrophes (floods, earthquakes, etc.), terrorist attacks, pandemics, and other occurrences that have a low likelihood but great effect cause supply chain interruptions (SARS, Ebola, Swine flu, COVID-19, etc.). The latest COVID-19 outbreak is undoubtedly the century's most cursed pandemic (Parsons, 2020). By June 2020, it will have killed 0.5 million people and infected 10 million. COVID19 has disrupted supply chains for 94 percent of Fortune 1000 companies (Ivanov, 2020; Fortune 2020). According to Dun & Bradstreet, 16 percent of Fortune 1000 businesses have tier-1 and tier2 suppliers in Wuhan. Tier-2 suppliers offer raw materials to tier-1 suppliers, whereas tier-1 suppliers give raw materials to tier-2 suppliers. At least 5 million global enterprises have tier-2 suppliers in that region (Smith, 2020). As a result, China's exports decreased 17% in January-February 2020, and global trade might fall up to 32% in 2020. (Sarkis et al., 2020). However, demand for pharmaceutical items has surged as a result of the pandemic (McKinsey & Company, 2020). While afflicted nations have employed social isolation, communal quarantining, and lockdown to limit the virus, widespread unemployment has created social and economic issues. The COVID-19 problem might cost up to 25 million jobs, according to the ILO. Garment, garment, and footwear production in several Southeast Asian nations are competitive because of cheap labor costs, strategic location, privileged access to the market, and favorable government regulations. At the same time, other nations continue to place a premium on producing large quantities of low-value goods using cheap labor as their principal competitive edge (Huynh 2015). Because they relied on a small number of key raw material suppliers, Southeast Asian garment manufacturers are particularly vulnerable to supply chain disruptions. They are also more dependent on foreign suppliers because of the unpredictability of electricity supplies and the insufficient reliability, timing, and scale of local input production. While growing labor expenses are putting economic pressure on certain nations, poor worker productivity must also be addressed (Andersson, Machiels, and Bodwell 2019).

Asia is the world's largest and most populous continent. So this continent's fashion history is likewise vast and varied. The clothing business has evolved to meet the changing requirements of the people. Asia's clothing industry has risen considerably with the use of technology. This industry's growth has generated many workers, notably female workers. It has also addressed people's necessities despite limited income. China, India, Bangladesh, Vietnam, and Turkey are the top five garment exporters by region (accounting for 53 percent of global garment export turnover). The present COVID-19 epidemic has impacted many parts of Asia's economy and society, including the clothing industry. The epidemic that has halted manufacturing has had a severe impact on Asia's clothes-consuming partners. Workers lose earnings due to delays in cross-border commodities delivery. 2. GARMENT INDUSTRY ANALYSIS IN SOUTHEAST ASIA’S NATIONS: 2.1. Southeast Asia Overview: Many Southeast Asian nations can compete in the labor-intensive garment, garment, and footwear manufacturing industries because of their comparatively low labor costs, strategic locations, market accessibility, favorable schools, and supporting government policies. Simultaneously, other nations continue to prioritize high volumes of low-value-added products, relying heavily on cheap labor as their primary competitive edge (Huynh 2015). While there are certain benefits in the global market, the garment and apparel sector faced several severe obstacles when the COVID-19 epidemic erupted. To begin, the suspension of commerce between nations to prevent the spread of the illness has had a devastating impact on global supply networks. An excellent example is Chinese handcrafted items that have been trapped in the nation for an extended period, resulting in nearly abandoned orders. This demonstrates the vulnerability of Southeast Asian garment and garment makers to supply chain disruptions as a result of their over-reliance on a few major raw material sources. Numerous Southeast Asian businesses have been forced to cease operations and lay off staff as a result of order cancellations and production constraints. Additionally, the COVID-19 outbreak altered people's behaviors, resulting in adjustments to everyday demands. Along with the supply chain shortfall, there is resource scarcity, including the timing and size of local input production; and the industry's productivity has been hampered by the industry's inconsistent power supply system. Rising labor expenses, particularly in some countries, have increased economic pressure and contributed to low worker productivity, both of which are issues in the context of the COVID-19 pandemic. 2.2. Garment industry in some Asian nations (Bangladesh): COVID-19 has had a profoundly damaging effect on the world economy's economic sectors. It is also hard to avoid the strong wave of arriving from this century's pandemic, particularly in Asian nations whose manufacturing strength is in garment items.

Bangladesh - one of ten Asian nations with significant garment and apparel production capability - also suffered from COVID's influence - 19. Previously, particularly during 2018 and 2019, Bangladesh was the second biggest garment provider in the global clothing supply chain, with 34.13 billion USD in export revenue. However, until the COVID-19 epidemic in late 2019 or early 2020, this country's garment exports were badly harmed. Export revenue was 27.94 billion USD, down roughly 20% with an absolute value of more than 6 billion USD from pre-epidemic levels (according to data of the Export Promotion Bureau - EPB of Bangladesh). Bangladesh had lost its status as the world's second-biggest garment maker at the time and had been supplanted by Vietnam, which projected an export revenue of around 29 billion USD by the end of 2020 (According to statistics of Vietnam). In response to this circumstance, the Bangladesh government has also taken measures to give prompt assistance packages to assist companies in resolving their problems. Additionally, several measures such as deferring loan payments, lowering interest rates, and promoting payment services have all contributed to the garment industry's prosperity in this country. It is the Bangladesh government's timely support that has increased the country's garment export turnover to 31.5 billion USD in the 2020-2021 fiscal year (which ends in June 2021) (the total industry reached 38.7 billion USD), an increase of nearly 13% over the same period last year, but still 7% below the result of 2018-2019 before the epidemic. Exports of knitwear climbed by 21.94 percent year on year to about 17 billion USD, while exports of woven products increased by 3.24 percent year on year to 14.5 billion USD, led by exports of knitted goods. Domestic garment exports climbed by 49.17 percent year over year to 1.13 billion USD. 2.3. Vietnam's garment industry: Garments and garments are regarded as critical sectors in several economies, including Vietnam. Vietnam's garment and apparel sectors have made significant progress in recent years, both in terms of output and export. Whereas the average annual growth rate of garment and apparel manufacturing was 7.9 percent from 2016 to 2020, it rose by more than 33 percent in 2018. The garment and garment sector has shown greater signs of progress in the first nine months of 2021 compared to the same period last year, owing to the recovery of the production chain and an increase in conventional orders. According to the Vietnam Garment and Apparel Association (VITAS), Vietnam's total garment and apparel export revenue reached $29 billion in the first nine months of 2021, up 13.2 percent from the same period in 2020 and down 0.04 percent from the same time in 2019. This means that all of the major export items gained in value over the same time last year, specifically: Apparel reached 21.7 billion USD, an increase of 5%; fabric reached 1.8 billion USD, an increase of 37.4%; fiber reached 4 billion USD, an increase of 56.2 percent; nonwoven fabrics reached USD 557 million, an increase of 77.3 percent; and garment and garment accessories

reached $921 million, an increase of 21.8 percent. Total imports of raw materials and auxiliary materials totaled 18 billion USD, up 27.9 percent year on year. However, until the third quarter of 2021, the situation for Vietnamese garment and apparel firms was exceedingly tough due to the extraordinarily problematic and extended growth of the COVID-19 outbreak in Ho Chi Minh City. Businesses in Ho Chi Minh City and the southern regions confront a variety of obstacles, including shutting, ceasing production, producing in moderation, being unable to complete orders, being forced to deliver late, sending products via plane, or being delayed. Order cancellations wreak havoc on the supply chain. Numerous firms in the southern regions incur significant expenditures as a result of attempting to organize production "3 on-site," "1 route - 2 destinations," or "4 green," but yet only having approximately 10% - 30% of employees report to work. This is detrimental not just to the economy, but also to the customer's reputation. These trends are evident in August exports, which fell 15.9 percent compared to July 2021 and 2.63 percent compared to August 2020; September exports, which totaled 3 billion USD, fell 9.2 percent compared to August 2021 and 10.5 percent compared to September 2020. 3. IMPACT OF COVID – 19 ON GARMENT INDUSTRY: COVID-19 has had a significant impact on the apparel sector in Southeast Asia. Order cancellations and manufacturing constraints have led several Southeast Asian businesses to close their doors and lay off staff. The industry's pre-pandemic issues have been compounded, resulting in increased volatility and shortages of key production elements such as raw materials, which affect many segments of the value chain. Closures of factories in other countries have hampered the timely arrival of imported inputs and interrupted garment manufacture. Additionally, research indicates that the COVID-19 epidemic may increase demand for sustainable fashion items as customers turn away from new clothing purchases and toward reusing them (Richetti and Palma 2020). The COVID-19 situation has also brought to light the industry's dearth of support services for vulnerable workers, aggravating disparities. In the short term, lack of access to essentials, uneven home obligations, hiring discrimination based on gender, and an increased risk of gender-based violence may make women workers in the business more vulnerable. Additionally, there are long-term effects, as restricted access to social assistance, uncontrolled working conditions, and less access to health care services may all contribute to women's economic and social empowerment (ILO 2020). The epidemic may also have a significant impact on children since economic constraints and inadequate safety nets force many youngsters into child labor (ILO and UNICEF 2020). 3.1. Supply chain disruption: Due to the fast growth of COVID-19, businesses all over the globe have been forced to examine and review their operations. As firms strive to get goods and supplies to individuals in need, supply chain management is a prime

example of this. Business supply networks must be reliable in the face of demand shocks, logistical restrictions as well as global or local shutdowns. The short-term supply chain effect is the primary focus for most firms, with a concentration on fulfillment. Several of them are there to learn from the hard lessons of COVID-19 and to reconsider their approach to supply chains, with a focus on resilience in particular. It's been a long time since the government and other organizations have taken action to alleviate the financial challenges faced by manufacturers. There should be no compromise on the safety of workers and employees at any industrial site. During the lockdown period, they reopen factories with a few fair terms and conditions to reduce their loss. Garment producers have been attempting to discover a means to remain robust in the face of calamities, like this time's pandemic. Due to the high level of uncertainty on both the supply and demand sides, which creates difficult supply and demand difficulties, a collaborative effort including the government, foreign purchasers, local groups, garment manufacturers, and labor rights organizations is essential. However, a concentrated effort involving all of the main stakeholders is very improbable, as the stakeholders' level and the dimension of interest differ. Due to the peculiar circumstances, purchasers decided to schedule a crushing season instead of the usual season, affecting the chain of all the parts. Individuals in this sector have expressed their concern that it is not easy to return to normal in a short period with financial and other help. 3.2. Women in the garment sector: The literature on women's participation in global value chains is mostly concerned with women's fulfillment of low-paid, labor-intensive jobs in the manufacturing sector, a topic that is ubiquitous across industries. Women's economic and social empowerment may be impacted in both good and bad ways as a result of this. Women's inclusion in global value chains, according to Barrientos (2019) and the World Bank (2013), represents an opportunity for developing countries and emerging economies to integrate themselves into global value chains by utilizing women as a source of cheap labor, allowing companies that employ women in their workforces to compete on price. Barrientos (2019) emphasizes the advantages that women have reaped as a result of this inclusion, saying that labor in the food and garment industries that were previously performed by women for free is now being compensated. This has the potential to economically empower these women. Women can reap greater economic benefits in countries that can upgrade their positions in value chains, as they see opportunities for promotion to traditionally more male-dominated management positions, but they can also reap greater societal benefits as they are afforded increased worker protections as a result of fulfilling roles that can add greater value. Increased demand for labor, followed by increased competition for labor, as in the case of the Kenyan flower or Nike apparel value chains, and improved working conditions as a result of public governance (as with minimum wages and labor standards, as in the case of the Kenyan flower value chain) are all examples of what can lead to improved working conditions. In such cases, enhanced economic empowerment for women in the value chain may go hand in hand with sociocultural upgrading for women in the industry (Barrientos, 2019). Women's involvement in global value chains, on the other hand, might be counterproductive

to their empowerment. According to Barrientos, Bianchi, and Berman (2019), when global value chains induce price squeezes, such as when they are controlled by a limited number of lead purchasers, employees' human rights, as well as their income, may be harmed. This has the greatest impact on people of certain ethnicities. Men and women are treated differently in global value chains, according to Barrientos and colleagues (2019), with women seen as an easily available supply of low-cost labor. Barrientos (2019) points out that when manufacturers employing women compete aggressively on price, their pay and workers' rights would be undermined. This is especially true when women provide the majority of labor-intensive low-wage labor. In such conditions, the social compliance of businesses is weak, with employees missing the ability to protest decisions and social audits failing to detect gender-based discrimination and harassment, among other things (Barrientos et al., 2019). In times of crisis, this might leave women particularly vulnerable. In times of crisis, women are more susceptible, according to the Work and Opportunities for Women study. Forstater (2010) focuses primarily on the effect of the global financial crisis of 2007–2008 on the global value chains of the clothing industry. This arrangement, which saw trends in suppliers diverge, helped to shape the garment sector's dynamics before the crisis. A tier of highly competitive "commodity manufacturers" competed on low costs, while a higher value-add consolidated supplier was differentiated from the lower cost "commodity manufacturers." Existing patterns were intensified as a result of the crisis, with pressure being applied to low-cost suppliers resulting in layoffs. Among women and migrant workers, this was especially widespread in countries where garment manufacturing had already begun to experience a steady structural decline before the crisis, as well as in countries where garment production had already begun to decrease. As Forstater (2010) points out, women in certain countries were exhibiting their susceptibility by participating in low-wage, labor-intensive employment in value chains. 3.2.1.COVID-19's economic effect on women in the clothing industry The economic effect on persons working in the garment value chain was caused by COVID-19 supply and demand shocks (CastaedaNavarrete, Hauge, & LópezGómez, 2020). As a result of their dependency on China for raw materials and equipment, Bangladesh, Cambodia, Myanmar, Pakistan, Sri Lanka, and Vietnam were unable to sustain manufacturing (Leitheiser et al., 2020; Sen et al., 2020). In Bangladesh, for example, 93% of manufacturers reported experiencing supply problems during the outbreak (Leitheiser et al., 2020). While supply from China swiftly recovered as virus instances decreased, demand from the US and Europe fell as a result of increased virus cases and accompanying consumer lockdowns. While global textile trade increased 40% in Q3 2020 and 16% in Q4 2020 (UNCTAD, 2021), the decline in demand has substantial implications for several manufacturing nations' workforces. Output quantities depended partly on demand, but also on a country's capacity to sustain production. In contrast, nations with fewer COVID-19 instances were better able to meet the remaining demand: Vietnam, for example, recorded a maximum production drop of -18.3%. Indonesia (Yayasan CARE Peduli, 2020), Myanmar (Hall, 2020), and Cambodia (von der Dellen, 2020).

Given that women execute the bulk of manufacturing labor, especially unskilled employment, we may assume that negative economic repercussions on garment value chains have disproportionately harmed women. There is insufficient evidence on the particular consequences of supply and demand shocks on women in Asia. Due to supply and demand fluctuations, all garment makers reported being influenced by supply and demand shocks (IMF, 2021), notwithstanding Vietnam's greater resistance to COVID-19 (Giang & Hong, 2020). In a survey with just six women and three men, both male and female employees reported income losses of ...