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Differentiation within the South African Clothing Industry: Implications for Wage Setting and Employment

Year: 2012
Working paper number: 307
Author: Nattrass, Nicoli
Unit: SSU
Abstract:
The South African clothing industry is the most labour-intensive segment of South Africa's manufacturing industry, but it is far from monolithic, encompassing a set of different sub-sectors with different market niches andproduction technologies. These encompass a higher-wage, less labour-intensive, mostly metro-based sector producing relatively high value-addedtop quality garments for upper income niche markets; and a lower-wage, morelabour-intensive sector, mostly in KwaZulu-Natal and parts of the Free State,producing standardised basic clothing items for middle- and low-incomeconsumers in a highly competitive international market. The more labour-intensive bottom end of the industry has been competing successfully againstimports from low-wage countries – thus confounding the prevalent policyview that South Africa simply cannot compete with China – but it does soonly by paying wages below the legal minima. The different segments of theclothing industry co-exist at different wage rates (i.e. there has been no single "race to the bottom') because they cater to different product markets. Forcingall producers to pay the bargained minimum wage will result in the migrationof low-wage jobs from South Africa to China, Lesotho and other lower-wageareas, without any gain to producers or workers in other parts of the SouthAfrican clothing industry, or to South African consumers.
Publication file: WP307.pdf
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