LocationsWhat did we learn #InTheField - Part 2
"We learned in detail how a team should work: how we need to communicate, how to move, and how a leader should act. These were things we hadn’t considered before, but they opened our eyes, both mine and those of the people working with us."- Workshop Owner
One key hypothesis of the Local program in Paraguay was that increasing the productivity of SMEs would make it financially possible to improve their working conditions. If their productivity improves, then SMEs can use part of the increase in profitability and security of their income to fund improvements such as paying decent wages, ensuring health and safety conditions in their workshops, and, in the medium term, incorporating workers into social security programs.
The United Nations Development Program in Paraguay conceived Local as a value-chain driven industrial policy prototype aimed at strengthening the relationship between lead firms and SMEs apparel assembly suppliers, reducing barriers to consolidate these relationships, and turning them into lasting drivers of growth and industrial formalization. The program worked with 13 apparel workshops selected in three territories: Mariano Roque Alonso, Yaguarón, and Pilar. A specialized technical support team from the UNDP Paraguay's Accelerator Laboratory (AccLabPY) implemented the program between August 2023 and June 2024, in coordination with national and municipal government institutions and with financial support from the UNDP Poverty and Inequality Funding Window.
In our previous blog post, we explained that lead firms face internal challenges to ensure a steady flow of orders reach their suppliers, and that this is as a barrier for incentivizing increased productivity. Without material incentives, it was difficult to convince workshop owners to formalize administrative practices, production planning, and human resource management, through tasks such as filling out worksheets to calculate their unit costs, labor costs, and production time per garment.
These obstacles are closely tied to the challenges we encountered in achieving the second expected outcome of the program: improving working conditions and generating decent work in the apparel industry. In a context of uncertainty and lack of predictability, the conditions for work organization and efficiency become more complex. Part of the Program's intervention aimed to break this vicious cycle and turn it into a virtuous one.
Below, we analyze, based on Local’s experience, what worked to achieve this objective, what didn’t, and what this means for improving the design of such programs and interventions.
The missing synergy between production and labor upgrading
Labor discipline—the efficient use of working time to produce marketable products or services—is an important component of productivity, especially in labor-intensive activities such as the garment industry. Analyzing Local’s results, we identified several barriers to achieving greater labor efficiency and then translating it into better working conditions.
First, each workshop owner tends to set piece rates based on instructions from the lead firms or according to custom, without any reference to the actual production times in their workshops. Without knowing how to calculate costs and measure times in general, workshops cannot calculate the necessary minutes for each operation, correctly estimate piece-rate payments, or identify the gap between the productivity expected by the lead firm and the productivity achieved in their workshop.
Local implemented training sessions on costs, value chain structure, and the use of a basic income and expense sheet, raising awareness among workshop owners about the economic losses caused by the low productivity of their workforce. However, in several cases, they responded by firing unproductive workers–rationalizing their labor force instead of taking actions to improve the efficiency and the productivity of their existing employees.
We used the income and expense sheet, and we realized that we had more losses than gains. From that point, we made personnel adjustments because we identified that a significant portion of the losses came from there. We reduced the team, and now I only have one person who works quickly and efficiently, whom I pay a little more for their performance, while the other workers take longer to complete tasks. - Workshop Owner
We observe, at least in the short term, a trade off between improving labor productivity and generating decent employment, which workshop owners resolve by reducing the amount of employment. This highlights the urgent need for interventions that improve labor productivity in the sector overall. Below we explain why these actions go beyond decisions that can be made at the individual workshop level and require public policies directed at the sector’s workforce.
Workshops’ social environment and the obstacles to improving labor efficiency
We identified three aspects of the social environment of SME clusters that should be considered in future efforts to improve labor productivity and working conditions within this industry.
First, we observed that there is little social distance between workshop owners and their workers. Workshop owners usually began their careers in the industry as sewing machine operators in large factories or other small workshops, and their material conditions—such as income level, education, housing types, and material consumption—are often not very different from those of the workers they hire.
Workshop owners identify and empathize with their employees far more than managers in large enterprises, and this often makes them hesitant to impose discipline or stricter conditions that ensure efficiency. Moreover, rather than distributing operational tasks and supervisory roles within an hierarchy, workshop owners tend to “doing everything”.
Workshop owners perceive this situation as a crisis of work ethic or the lack of a “culture of work” among their workers:
The main problem is the lack of professionalism; some are very good and know how to do everything, but they take time off or leave you hanging, while others, who are barely trainees, ask for as much as 150,000 guaraníes a day. - Workshop owner.
Second, the scarcity of "multifunctional" workers (those capable of switching flexibly among multiple production tasks) and the difficulty of training new workers increase the barriers for work discipline, because workshop owners fear that if they make more demands on their workers, they will leave to work at another workshop or in another sector, like construction:
Before, out of fear or to keep them from leaving, I would let the workers talk a lot or use their phones during production. Until one day they fought, and I realized I had to intervene and set a limit. - Workshop owner.
Third, tensions between experienced and new workers making training multifunctional workers more difficult:
I left many places because they told me, 'your work is bad.' If she's better than me, she should help me improve so her boss can have better staff, because she gives us work. - Workshop worker.
These limitations of individual workshops to improve work discipline and training multifuncional workers point toward the need to develop training programs and institutions that target the local apparel industry workforce and not only individual workshops.
On the other hand, the empathy and closeness between owners and workers has the potential to form the basis of collective forms of work organization and product upgrading, such as production and worker cooperatives. As we will see in the next blog, this is still far from the current reality, mainly due to market instability and informality in the sector.
The impact of Local on working conditions
The issues of lack of leadership, interpersonal tensions related to competitive attitudes, lack of motivation, and poor communication between colleagues create a work environment where the lack of collaboration hinders both productivity and labor conditions. Local successfully addressed these challenges in two ways.
First, it provided a series of trainings on decent work, covering topics such as motivation, attitude, interpersonal relationships, empathy, communication, leadership, and conflict management. This was one of Local’s components most valued by workshop owners who described a positive impact on their self-perception, authority, and responsibility in managing interpersonal tensions within the workshops. After one of the talks, a workshop owner proposed limiting phone use and conversations among workers during production, two barriers to her team's performance:
The girls were using their phones too much during work and talking a lot among themselves. This affected production, led to mistakes, and took longer. After one of the talks, we agreed to limit both. Some were upset, but I explained that these rules were necessary and that the workshop depends on their good performance. Eventually, everyone accepted, and I realized it was necessary to assert my authority and set those limits. - Workshop owner.
A workshop owner from Pilar recalled how training on interpersonal relationships brought notable changes to her workshop.
We asked to work on this issue because there were always clashes between coworkers. I told them they had to leave their personal problems outside the workplace, but they didn’t always do that. They would come to work with all their problems, and any small comment would cause arguments. After the sessions, one of the girls told me, “We were doing the opposite of what we should have been doing. I identified with a lot of what was said.” That helped a lot, now there's better coexistence, or at least more tolerance among everyone. - Workshop owner.
Second, Local’s investments in adapting physical work conditions improved the work environment and, most importantly, enhanced the safety and comfort of the workplaces. A participant from Yaguarón explained the positive impact of these changes on her workshop’s comfort.
Thanks to the furniture we received, we had a major change in our workshop, which is now much more organized and comfortable. The chairs were a huge relief because my workers used to bring their own chairs from home because the ones we had were in bad condition. The new chairs are very comfortable and of good quality. - Workshop owner.
The training on workshop layout and the lean production methodology, in addition to having positive effects on workshop productivity, also helped reduce workplace accidents, as one workshop owner from Mariano Roque Alonso mentioned:
Since we started cleaning the workshop before the week begins, we've avoided work accidents. We no longer find nails or needles on the floor that could hurt us. –Workshop owner from Mariano Roque Alonso.
In the next blog, related to associativity in clusters, we will revisit the limited social distance between workshop owners and workers, not as a barrier to labor efficiency but as an advantage for building collective organizations and ventures, with an eye toward a more just and collaborative future.
