This thesis should contribute to opening up a new line of studies on the links between Development Studies (theory and policy) and HRM. This will refine the research framework, which then hopefully be applied, both nationally and internationally. The pertinence of this study is to clarify the link and complementarity between HRM and Development Studies (theory and policy) by discussing pertinent issues related to social and human capital, industrial development, economic growth and their relevance to development theory. In many developing economies, the textile and clothing industry is a source of sustainable economic growth and job creation. This study examines issues related to de-industrialisation, labour cost cutting or retrenchment, value added production paradigm, what works in the textile and clothing industry, firms’ survival and competitiveness, what can be done to ensure things in the industry will perform efficiently in the future.
The significance of this study consists of understanding the basis of sustainable industrial activity. The pertinence of local industry promotion, national development and good policies implementation are playing an important role in promoting the textile and clothing industry’s competitiveness. This industry is an important contributor to the increase of economic activities which plays a major role in GDP formation, investment, foreign exchange earnings, exports and employment creation. How much did the textile and clothing industry contribute to the economy? Responding to this question, the researcher proposes to critically describe only two variables (GDP formation and employment creation) in two countries of the SAR namely South Africa and Mauritius - due to easy accessibility of information.
According to Nowbutsing and Ancharaz (2011:12), the Mauritian manufacturing accounted for 15.7% of its GDP in 2010 while the textile sector contributed 9.1% of Gross Domestic Product (GDP). For example in 2010, Mauritius exported mainly wearing apparel under the Africa Growth and Opportunity Act (AGOA). Over 80% of Mauritius exports to the US consisted of textiles and clothing, which benefit from duty-free access under the AGOA (p.19). Textile and clothing sub-sectors accounts for 73% of total direct exports in 2010. In 2001, 61200 women were employed in the textile and clothing industry whereas in 2010, 24400 which represents a huge decrease. Male employment has remained more or less constant, 28900 in 2001 and 24400 in 2010 (Nowbutsing and Ancharaz, 2011:24). Textile and clothing sub-sector also employs a high percentage of expatriate workers representing 31.6% of textile and clothing employment (David Clarke and Rupert Winchester, www.mbendi.com, Accessed, 12 November 2010). Additionally, Perman, Duvillier, David, Eden and Grumiau (2004:42) found that the export processing zone is now the main source of employment in Mauritius. Some 90,000 men and women are currently employed in the zone, including 75,000 in the garment industry.
According to TRALAC (2010), the contribution of manufacturing to GDP remained stable during the period under review, despite a decline from 17.2% in 2002 to 15.9% in 2008. The same organisation further indicated that the contribution of the textile and clothing industry to GDP was not substantial (0.6% in 2008), but the industry is amongst the most labour-intensive in South Africa, employing approximately 100 000 people in 2008, down from 127 000 (11% of total employment in manufacturing) in 2007, hence the continued support from the Government. State intervention in the manufacturing sector remains substantial. Incentives are one of the South Africa’s key industrial policy instruments: a wide range of schemes continue to benefit manufacturing. These include general incentive schemes and structural adjustment programmes for specific industries (e.g. automotive, and textile and clothing), innovation, and research (TRALAC, 2010:338).
The highest rate of protection continues to apply to textiles, wearing apparel and leather industries with 21.2% (TRALAC, 2010:340). Tariff protection in these industries also shows positive escalation (i.e. raw materials receive lower levels of protection than final products), which is consistent with South Africa’s industry policy of protecting and targeting certain “important” industries, such as textile and clothing, for further development (p.340). The industry has been faced with a number of challenges; it has not been able to compete with low- cost imports due to its lack of competitiveness, caused by the low levels of investment; insufficient skills and innovation, and consequent decline in exports. Exports of textiles and clothing declined from 2.2% of total merchandise exports in 2002 to 0.6% in 2008 (TRALAC, 2010:341, accessed on 10th October 2012 from www.tralac.org/wp-conter). According to Official Employment Statistics, textiles and clothing employed almost 143,000 people in March 2005 and contributed 12% to total manufacturing employment. Of these, the majority are employed in the clothing sector (97,544 vs. 45,319 in textiles). If one includes informal employment in the statistics, employment could be estimated at about 200,000 (Vlok, 2006:229). Statistics SA data indicates that employment dropped in the clothing, textile and footwear industries from 206 947 in January 2003 to 142 203 in June 2006 (a loss of 64 744 jobs).
The motivation of this study is that the textile and clothing industry in the SAR has undergone many structural pressures and there is a need to explore and critically analyse the survival firms. Thus, the study will try to explore the foundations of competitiveness in an industry which has experienced severe crisis and consider whether this has anything to do with labour policies. This thesis seeks to explore what underpins a firm’s survival in the textile and clothing industry and understand what works in the industry, how it works and what can be done to ensure things in the industry will perform efficiently in the future. Concerning the choice of the three countries under investigation, the researcher argues that South Africa and Mauritius choice were motivated by the fact that the two countries had a successful textile and clothing sector for a very long time and a lot could be learnt from them on how to adapt face to the changing environment. The DRC choice was very interesting because almost all the textile and clothing firms experienced severe crisis resulting on their closures. SOTEXKI is the only firm which survived. This study will help SOTEXKI and many African firms to learn from the South African and Mauritian successful story on how to keep firms going.