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6 Facts About the Garment Industry in Nepal

Garment Industry in Nepal
Nepal is one of many developing South Asian countries that plays a substantial role in the global ready-made garment industry. These mass-produced textiles have become a staple export from Nepal, but they have also normalized the unethical practices of fast-fashion chains within the country. Over the last two decades, Nepal has struggled to regulate both economic and ethical issues within the garment industry, but the last few years have produced a shift towards a brighter future for garment workers. Here are six facts about the history of the garment industry in Nepal and the efforts to address both the problems of fast-fashion chains and the country’s economic reliance on them.

6 Facts About the Garment Industry in Nepal

  1. In the 1980s, the garment industry in Nepal boomed because of interest and funding from Indian exporters. Due to the product quota limits in India, exporters looked to Nepal to increase their production. This expanded production served to boost not only Nepal’s economy but also its reach on the global production scale. Thus, Nepal became a viable option for countries to produce and export various textiles.
  2. In 2004, intense competition in the global garment market broke out after the World Trade Organization’s Agreement on Textiles and Clothing expired. Nepal struggled to outproduce their competition and subsequently saw a fall in revenue from garment exports. The Multi-Fiber Agreement, an international trade agreement that allowed duty-free access to the U.S. for Nepal, also fell through in 2005 and further exacerbated the country’s declining international revenue.
  3. The international economic aftermath of 9/11 also negatively affected the U.S.’s reliance on the garment industry in Nepal. The U.S. was the recipient of 87% of Nepal’s readymade garments until 2002. In subsequent years, Europe, Canada, Australia, and India have become the largest markets for Nepali garments, making up 90% of the country’s exports.
  4. In the 2018 fiscal year, the garment industry in Nepal hit a new high. The industry made approximately RS 6.34 billion (approximately  $84.9 million), up 6.52% from the previous year. Despite this rise in revenue, Nepal had exported fewer garments than it had the year before.
  5. Chandi Prasal Aryal, president of the Garment Association of Nepal, claimed that the financial growth was due to a shift from quantity to quality. By focusing on producing better garments instead of more garments, other countries were willing to pay extra for better products. Because of the fine quality of the exports, those same countries are now willing to buy even more of the pricier garments.
  6. The focus on quality over quantity changes the focus of the garment industry in Nepal. Instead of relying on fast fashion practices that prioritize creating as many items as possible within a set amount of time, the industry can now shift to more ethical work forms. Thus, the quality of the garments will continue to improve and raise the value of each item, bringing more money back into the Nepali economy.

The exact reach and impact that the garment industry has had on Nepalese poverty remains unclear, but the future looks bright. The Nepalese government reports that employment data within the garment industry is “not readily available” but at the peak of its power, the garment industry employed 12% of the overall labor pool of the Nepalese manufacturing sector. As of 2019, the World Bank calculates the poverty line in Nepal to be $1.90 per person per day. Nepal lacked substantial policy in terms of a minimum wage, but the Library of Congress reports that since 2016, Nepalese workers across industries now make a minimum wage of approximately $3.74 per person per day. The modern garment industry, regulated with a minimum wage, can help lift Nepalese workers above the poverty line of the country, even if the garment industry of the past once presented a potential hurdle.

There still exists substantial work to transform the garment industry in Nepal into both a thriving industry and an equally ethical one; the country is making the first successful steps towards achieving both. This change will provide garment industry employees a better quality of life, as well as ensure that they and their families receive fair treatment.

– Nicolette Schneiderman
Photo: UN Multimedia

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What is Corporate Social Responsibility?

Corporate Social Responsibility
Corporate Social Responsibility (CSR) is a term that is becoming more and more common in the workplace. According to Mark Whitman of Sustainable Business Forum, a study by MIT in 2011 showed that sustainability is a permanent part of about 70 percent of corporate outlines.

This is more important than just adjusting for corporate philanthropy. As it turns out, Whitman said, doing good is good for business as well. There are several large benefits of CSR.

1.) Corporate Social Responsibility is good for business:

According to Better Business Journey, a Small Business Consortium from the United Kingdom, “88% of consumers said they were more likely to buy from a company that supports and engages in activities to improve society.” Furthermore, according to Simply CSR, customers do not accept “unethical business practices,” and using CSR methods can effectively increase customer retention and win business that is entirely new.

According to One4All, an organization committed to informing companies about CSR, a Harvard University study found that companies that are stakeholder-balanced “showed four times the growth rate and eight times employment growth when compared to companies that focused only on shareholders and profit maximization.” As it turns out, important stakeholders expect corporations to become socially responsible. Customers, consumers, and investors expect a corporation to “understand and address” relevant social issues.

2.) Talented employees want Corporate Social Responsibility:

Aside from customers, practicing CSR helps a company retain valuable employees as well. Whitman said that 53 percent of workers said that “a job where I can make an impact” was necessary to maintain workplace happiness. Furthermore, Whitman said, 35 percent would take a pay cut “to work for a company committed to Corporate Social Responsibility.”

According to Jeanne Meister for Forbes, “employees now want more from their employer than a paycheck. They want a sense of pride and fulfillment from their work, a purpose and importantly a company’s whose values match their own.” She said CSR is crucial to attracting talented employees to a corporation.

3.) Implementing Corporate Social Responsibility sets you apart from your competition:

Simply CSR said that using Corporate Social Responsibility improves a business’s reputation and standing within public forums. Companies that strive for a unique ethical standpoint are set apart from the rest in the eyes on consumers, according to John Paluszek of the Santa Clara University Markkula Center for Applied Ethics. Branding an organization as ethical builds a positive reputation.

In an interview with Forbes in May, Garratt Hasenstab, Director of Sustainability at the Verdigris Group, a real estate development and consulting firm, said that they save money by operating efficiently, but that they believe setting a good example is the greatest benefit. They have inspired other organizations to do the same, Hasenstab said.

“Our CSR policy is at the core of our daily operations and guides our future progress,” Hasenstab said. “Our clients want to work with us because we are focused on a healthier and more productive world.”

– Alycia Rock

Sources: Simply CSR, Forbes, Sustainable Business, One4All CSR, Forbes Corporate Responsibility
Photo: Global MED