Can SA apparel sector meet Zara’s expectations?

Comments by The ReDress Consultancy

Zara the leader in fast fashion quick response apparel production opened in Sandton last week. Their ability to reproduce short runs, fashionable and on-trend products cost effectively has resulted in the Spanish company being found in about 80 cities across the world. The key to their winning formula is their flexible  productivity ability, low production cost, quality products and market intellegence. Interlaced with delicate and refined communication and interaction throughout their value-chain Zara has the ability to convert creative catwalk fashion into commercial sellable products quickly, effectively and cost efficiently. The question I ask will they be able to tap into our local apparel/textile industry and receive the same output? How much local production will they procure?

With Adcorp’s latest Employment Index indicating that productivity in South Africa has fallen will our apparel and textile sector be able to meet Zara’s expectations?

SA's labour productivity at 40-year low

Johannesburg - South Africa's labour productivity fell to its lowest level in 40 years in October, according to the Adcorp Employment Index released on Thursday. "While no significant changes in all kinds of jobs - formal, informal, permanent and temporary - were seen during October, South Africa's labour productivity fell to its lowest level in 40 years," Adcorp said. Labour productivity growth - a leading indicator of job creation - has been negative throughout 2011. "This negative trend in labour productivity suggests that adding more workers does not necessarily translate into material increases in business output," said Adcorp labour market analyst Loane Sharp. The index for October shows employment dropped slightly in the mining (-7.8%), construction (-7.0%) and manufacturing (-4.5%) sectors on an annual basis.

Reference: Fin24.com, 11 November 2011

The Productivity-Wage Relationship In South Africa: An Empirical Investigation

The aim of this paper is to investigate the empirical relationship between productivity, real wages and unemployment in South Africa using appropriate time series econometric techniques. Year of study 2003

Click here to read paper.