Bankruptcy of fashion begins, employment and wage indices fell 20% in July-September

2024-12-18 07:14:00, Ekonomi CNA

Bankruptcy of fashion begins, employment and wage indices fell 20% in

The activities of factories producing clothing and shoes suffered a sharp decline this year in all indicators, production, sales and wages.

According to INSTAT data, in the third quarter of 2024, the employment index in the textile factory industry decreased by 20.8 percent compared to the same period a year ago, while the salary index in the same period decreased by 21%

In shoe factories, the employment index decreased by 11.4 percent, while the wage index decreased by 10 percent.

INSTAT has delayed the publication of employment indicators since the first quarter of 2024, but indirect indices show that employment in fashion factories has fallen by about 20 percent this year. This contraction was announced before by the associations and representatives of the sector.

In the last two years, Albanian producers are going through the most difficult period of the last decade, where the combination of many factors with a negative impact has made the perspective unclear.

The continuous decline of the euro, the increase in labor costs and weak demand in foreign markets have put Albanian factories in all sectors in difficulty. Smaller ones are going bankrupt and many others have changed strategies to adapt to the new situation. Manufacturing for higher value chains is being applied by many manufacturing units to keep revenues under control.

The data of the 11th month of 2024 show that the exports of clothing and shoes decreased by 16.5% in value. The decline of the fashion industry began in the second half of 2023 and continued throughout 2023 and 2024.

The exchange rate and the increase in the minimum wage made Albania uncompetitive. Many contracts were moved from Albania to cheaper destinations.

As production prices in Albania have changed due to the increase in the minimum wage and the fall of the euro at a time when European markets are showing a decrease in demand for clothing from the inflation crisis, Albania's historical customers are moving to other countries where there are cheaper production costs. .

On the other hand, the global map of fashion production is changing. Manufacturers, especially from traditional centers such as India, are expanding their operations to new regions such as Africa, the Middle East, Turkey and Latin America. These moves aim to overcome geographic restrictions in search of lower labor costs, access to raw materials and proximity to consumer markets in Europe and America.

This geographic diversification is partly a response to supply chain disruptions during the pandemic and ongoing geopolitical tensions.

As machines are taking over more and more tasks traditionally performed by humans, they require qualified employees to lead them./ Monitor Magazine