The European Fashion Council (EFC) president Nadya Valeva also told Just Style the new IP rules will also protect fashion and clothing business workers from intellectual property (IP) infringements.

A long-awaited revised EU designs legislation package – proposed in April and still under discussion - concerns the EU’s outdated 1998 directive on the legal protection of designs and another old law, a 2002 regulation on designs. It will help clothing manufacturers register their creations at EU level and give more IP protection for 3D designs, for example.

A European Commission official said the new rules complement a unitary patent system, adopted on 1 June and were a “historic achievement”. With this new system, clothing manufacturers and brands only need to file a single request to the European Patent Office which will be valid in all 17 EU member states who have thus far ratified the system.

As a result of this administrative rationalisation, the cost for the average 10-year patent will be €5,000 ($5,294.75) up to six times lower than previously. All EU member states and 12 other European countries who use the EPO, including the UK, can in theory also join this new system, as the EPO itself is not part of the EU institutions.

Advantages of the new IP rules for the fashion sector?

The main advantages of the new patent to be welcomed by the European clothing and fashion industry are reduced costs and administrative burden and increased legal certainty thanks to the centralised litigation before the EPO Unified Patent Court (UPC). Micro and small enterprises also get a 40% reduction on all UPC fees going forward.

Welcoming the proposed IP rules, the EU executive’s internal market commissioner Thierry Breton said: “We are enabling the European creative innovative industry to remain a global leader and speeding up Europe’s green and digital transitions.”

Approved by the EU Council of Ministers on 25 September, the IP reforms now needs to be agreed by the European Parliament, which is expected to happen by the end of October, a council official told Just Style. However, following these informal negotiations to reach a provisional agreement, “the text will need finalising before formal adoption, which may take months,” he said, and not before spring 2024.

Talking to Just Style, Valeva, president of the presidential council of the Plovdiv, Bulgaria-based EFC, set up in 2007, said the new rules will encourage young people to create their own brands: “Every single creator, with the necessary protection will calmly develop production, increase productivity and improve the labour market.”

Valeva, also chair of the managing board of the National Fashion Chamber of Bulgaria, said the new laws would make it easier to register new, innovative products and get patents, “but maximum awareness is needed”. Following discussion with colleagues in Sweden from the Sensus adult education association and partners of the FEA-VEE [Fashion Earth Alliance] projects, she said the EU should “increase awareness in schools, universities and all institutions that have courses in fashion, textiles and clothing production”.

Projects and events should highlight and inform fashion and textile representatives about the changes to the IP legislation, said Valeva. This would increase its success and encourage “far more registrations of new fashion brands, creative ideas and patents with worldwide application, not just for the EU and Europe”.

She also called on the EU to encourage such creativity, creating “a new EU programme...to implement and promote activity with open calls for projects to gather the best ideas and practices in the EU fashion and textile industry.”

Valeva suggested expert councils of consulting teams and consortia should assist the commission when looking at fashion industry projects: “This could create new policies in protection of European fashion brands and production.”

Will new IP rules create stronger protection for fashion industry creators?

The EFC wants stronger protection for creators within the fashion industry, so that copyright rules could be better wielded to fight counterfeiters who steal ideas from independent designers and legitimate fashion companies.

These proposals are within an EFC ‘Fashion Horizon 2050’ investment strategy programme, which includes some 338 ideas, most designed to be implemented at national levels. The EFC wants a specified agency to protect and control copyright for fashion design: “This would carry out direct protection, not only for fashion designers, but also for everyone involved in the fashion industry including clothing manufacturers.

“We believe that the fashion industry has been discriminated against, unlike the music or film industry, due to a lack of regulated rights and protection of those rights,” said Valeva. “The new EU regulation provides this possibility, but much work is needed on how it is applied and developed.”

She added the new EU law and rules on intellectual property (IP) would help the fashion industry meet the challenges of a digital and 3D printing world where clothes are designed using these techniques, if accompanied by “full scale and comprehensive publicity” and “through existing and new specialised regulatory authorities”.

The November 2022 State of Fashion 2023 report from strategy consultants McKinsey & Co made clear that after 18 months of robust growth (early 2021 until mid-2022) post pandemic, the fashion industry is facing challenges, including inflation, the energy crisis and rising material prices, that increases its demand for skilled labour.

The report states the fashion industry needs to “find opportunities in shifting consumer patterns, new manufacturing approaches and digital marketing strategies” and “companies must refresh their talent for an increasingly flexible, diverse and digitised workplace,” as a result.

At the same time, the sector is booming, according to 2022 data from the European apparel and textile industry confederation Euratex. The industry employed 1.3 million workers in 160,000 companies in Europe, with 99% being small and medium-sized enterprises. The largest countries regarding European Union (EU) clothing industry employment are Romania, Italy, Poland, Bulgaria, and Portugal.

Why the fashion sector struggles to recruit tech-minded workforce

However, it is increasingly difficult to find and recruit a fashion workforce with the required digital skills, Lutz Walter, secretary general of the European Technology Platform for the Future of Textiles and Clothing (Textile ETP), told Just Style: “The existing workforce is rapidly ageing and there are very few young people that decide on a career in textile and clothing manufacturing. In addition, pay and working conditions in other manufacturing sectors are often more favourable.”

But while training is urgently needed for garment workers, Walter said that with the erosion of the garment manufacturing industry base, “professional schools and technical training centres have been shut down or downsized, creating another bottleneck for labour shortage resolution through training and re-skilling.”

Euratex also noted the challenge with a May 2022 Commission Sectoral Skills Strategy for the EU TCLF Industries (Textiles, Clothing, Leather and Footwear), looking ahead to 2030, saying: “Enhancing the future of the textile and garment industry is expected to be shaped by factors including technological advancements, changing consumer demands and the imperative for sustainability and circularity.”

“According to the report, the demand for traditional skills will likely decrease, while digital skills oriented towards logistics, branding, marketing and design processes will become more important,” said a senior Euratex official.

Data analysis, digital design, ecommerce skills are now crucial skillsets for fashion workforce

“It means workers in the TCLF industries will need to possess a broader range of skills to navigate the digital landscape, so in addition to proficiency in operating machinery and equipment repair, digital skills such as data analysis, digital design and e-commerce are highlighted as crucial. Soft skills like creativity, problem solving, and communication are also emphasised.”

The report notes that adaptability and a quick ability to learn new skills will be vital as the industry evolves, said the official: “Made-to-order items may become more prevalent, requiring skills related to customisation and personalisation. Furthermore, the industry’s shift towards sustainability and circularity will require workers to develop eco-design, recycling and upcycling skills.”

And while accepting the “complexity and diversity of TCLF products, processes, value chains and end markets” and “vastly different national or regional industry ecosystems,” the report predicts “a gradual shift from lower towards medium and higher skilled employees across the four sectors”.

The document was published at the end of the Commission’s Skills4Smart TCLF Industries 2030 four-year ‘blueprint project’, also aiming to create a "sustainable upskilling and reskilling industry" in the sector, notably by expanding apprenticeships by 20%, creating and supporting 20 regional partnerships across the EU and establishing a TCLF Skills Observatory with industry, policy and education partners as members. to observe and monitor the skills needs of the textile industry. This is particularly important given the industry’s ageing workforce: 34% of TCLF employees were over 50 in 2019, compared to 23% in 2009, said the report.

Eu training programmes to develop tech skillsets for fashion workforce

To help, training programmes are being promoted at EU level to develop these skillsets, noted Euratex. For example, the EU funds ‘massive open online courses’ (MOOCs) for the industry, under a TCLF Skills4Smart 2030 project, which comes under the EU Erasmus+ programme, offering eight online courses to promote upskilling and reskilling, covering topics including textile technology, clothing computer-aided design (CAD) pattern making and footwear CAD designing and pattern making.

One of the most important EU initiatives is the textile and clothing work of the EU's TCLF Pact for Skills that develops workers’ skills through diverse activities and programmes. One of these is the TCLF Skills Alliance, the ETP’s Walter said.

Coordinated by Euratex, along with the CEC (European Footwear Confederation) and COTANCE (Confederation of National Associations of Tanners and Dressers of the European Community) this alliance supports public and private organisations with upskilling and reskilling by offering career days to create awareness about opportunities to work in the textile and clothing sector and funding opportunities, for example to enhance education in the sector.

Similar tech workforce challenges facing US apparel sector

In the United States, the tech challenges facing the fashion workforce are similar, Joao Barros, senior technical consultant on garments at Virginia-based Werner International Management Consultants, told Just Style. While machines are increasingly technical, it is harder and harder to recruit technologically-minded garment workers, he said. In addition, and crucially, “We consider that hiring a worker with specific skills can cost companies about 30% more than one without specific skills,” he said.

In general, the hiring of highly qualified personnel depends on the type of function and size of the company, Barros argued. “In continents where the minute labour cost is high (for example in European countries, including southern Europe) there is a need to hire highly qualified personnel as the profitability intended to be obtained is higher.”

He also said that fashion brands were perhaps “indirectly pressuring companies (whatever the country) to hire more qualified tech personnel within the workforce – by the need to shorten delivery times, reduce production costs, decrease quantities, increase product diversity and even increase quality standards.”

Barros added: “This pressure depends on the company and market in question. Geographically this pressure is felt differently as the production cost varies depending on the country (continent) and this is also related to different labour/environmental laws.”

In short, location is key as “in India, Pakistan and Ethiopia you can easily find three or even four workers doing a clothing task, while in Europe there will be a maximum of two operators.”

The Werner expert said the most important skillsets required for a modern garment workforce were, “in addition to basic textile training, organisational knowledge in production and quality as well as specific equipment training,” adding: “Most companies already have training programmes and should promote specialisation courses for textile sub-sectors for their workers using professionals with proven experience in the area concerned.”

China's President Xi Jinping used the event in May to unveil an ambitious plan that aims to help develop Central Asia in terms of both its infrastructure networks and trade.

The event was also attended by the leaders of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan and resulted in a cooperation agreement signed between the five countries and China that is primarily geared towards facilitating trade of agricultural products, including cotton, incorporating improved custom clearances, advanced logistics systems, and mutual industrial collaboration.

Uzbekistan is a major cotton producer, exporting $1.61bn's worth during 2022, according to UN trade database Comtrade, while Turkmenistan, Tajikistan, Kazakhstan, and Kyrgyzstan also produce the fibre. Wool production is also significant, with Kazakhstan being a significant producer, exporting $3.96m’s worth in 2021, according to market researcher Report Linker, albeit with overseas sales projected to decline. 

China's plan could boost Central Asia's apparel industry

With such resources available in neighbouring states, the agreement could boost Chinese production: “For the Chinese textiles industry, this could greatly bolster Central Asia as an alternate significant source of raw materials like cotton and wool, as the lifting of sanctions on Uzbekistan cotton presents a new sourcing opportunity for Chinese textile exporters, which can help to offset the repercussions of sanctions on Xinjiang cotton,” said Fan Di, a professor at Hong Kong Polytechnic University’s School of Fashion and Textiles. 

“In addition, Central Asia's robust oil exploration, production, and processing industry also makes it an attractive source for Chinese polyester producers, thereby further enhancing the potential of this agreement for the textile industry,” he added. 

Beyond sourcing, the agreement potentially enhances the shipping of products from China to Europe by land. Typically, Chinese textile exports are dependent on sea freight, which navigates the South China Sea, the Strait of Malacca and the Suez Canal. However, geopolitical tensions and unforeseen incidents in these areas may escalate the risk of shipment disruptions. 

“This cooperative venture between China and Central Asia could nurture the development of an alternative logistics route via the New Eurasian Continental Bridge,” said Di. 

“This would allow Chinese textile exporters to diversify their freight risks and maintain a steadier flow of exports,” he added. 

Di added that Central Asia also represents an emerging market for the Chinese textile industry, as with a population exceeding 72 million and steadily growing economies, Central Asia provides an expanding consumer base. Chinese textile producers could capitalise on improvements in the logistics system, simplified custom clearances, and e-commerce collaborations stipulated in the agreement.  

“This would allow them to tap into this burgeoning market, reaping potential benefits from the increased demand for their products in the region,” said Di. 

Similarly, Ben Cavender, managing director of Shanghai-based China Market Research Group (CMR), said that there is room in Central Asia for Chinese firms to invest in textile and clothing manufacturing.  

“This would be a benefit as China tries to offshore a lot of its apparel industry and would also position Chinese brands and factory owners more closely to their European customer base,” said Cavender.  

On the Central Asian side, Khusniddin Matvapaev, marketing manager of Uzbekistan-based Gurlan Global Teks, a vertically integrated company that grows cotton and makes yarns, fabrics and garments, expressed enthusiasm over the developments. He told Just Style that Gurlan is currently adding China as its third export market after Turkey and Russia. This is made possible by improving logistic links, with cargo trains now connecting landlocked Uzbekistan to eastern China needing about 20 days to complete a journey at relatively low transportation fees. Gurlan Global Teks currently serves Turkey and Russia with trucks.  

“We are confident that our men’s and women’s T-shirts will be competitive in China as $2.50 per piece are similar to what Vietnam or Bangladesh have to offer, with our cotton quality being superior to Chinese cotton thanks to the good weather conditions in Uzbekistan,” said Matvapaev. 

“While we are planning to make China account for 5% of our total output in the near future, we are also expecting the better trade links to be beneficial for our sourcing of polyester from China,” he added. 

With Uzbekistan continuing to be the largest exporter of cotton yarn (as well as cotton) in Central Asia, China Railway Express’ Yixinou, an operator of China-Europe cargo rail services, has since late-2020 been running “cotton yarn trains” from Tashkent, Uzbekistan, to Yiwu in Zhejiang province, which is widely referred to as the “world’s small commodity wholesale market.” According to Chinese-language media reports, Yiwu's trade with the five Central Asian countries reached Chinese Yuan Renminbi CNY7.55bn ($1.1bn) in 2022, up 17-fold from 10 years ago.  

Mike Flanagan, CEO of UK-based apparel sourcing intelligence company Clothesource, said central Asian countries – colloquially dubbed ‘the Stans’ - "making use of a friendly China are more likely to turn into developed clothes-making centres than Stans economically ignored by their biggest neighbour”. 

He also predicted that Central Asian states may end up sending more clothes to China than to the West, despite the European Commission, the same day as Jinping’s speech, committing to strengthen EU-Central Asian trade with “financial guarantee programmes” to support the business environment.

According to Luxembourg-based European Union (EU) statistical agency Eurostat, Uzbekistan exported a small fraction of its cotton - EUR101.8m’s worth – to the EU in 2022. 

While some garments can be made in Central Asia more efficiently and economically than in China, “the market really has not found the right niche yet,” said Flanagan. Elke Hortmeyer, director communications and international relations of the Bremen Cotton Exchange (Bremer Baumwollbörse), said when the Soviet Union broke up in 1991, central Asian countries produced about 1.8 million tonnes of cotton. But this has declined, with the US Department of Agriculture (USDA) forecasting that 675,000 tonnes of cotton would be produced in 2022/3 in the region’s largest production centre, Uzbekistan, whose dominant cotton export market is currently Turkey, with the EU a distant second for 2021/2, and China not currently in the running.  

China is, however, a significant buyer of Uzbekistan cotton yarn, with 258,814 tonnes exported in 2021 and 80,985 tonnes from January to September in 2022. So, the potential for boosting China/Central Asian backward linkages is there – time will tell if President Xi Jinping’ policies bear fruit. 

EU electricity prices are often around EUR0.56/KWh (US$0.60) at present, compared to $0.10/KWh in competing garment industrial centres, according to EU data.  

The European apparel and textile confederation (Euratex) senior policy officer for trade and industry Paolo Sandri warned EU clothing and textile imports increased 35% in 2022 year-on-year. Along with increasing energy costs hitting the bottom line, the import surge and resulting decline in demand for European-made products has caused EU garment factories to operate at a loss or even close down, he said. “If no immediate action is taken by EU and national authorities, many companies will be pushed out of the market and the EU would lose its ability to manufacture essential products in a sustainable way,” Sandri told Just Style. 

Euratex wants a more proactive approach helping EU manufacturers source raw materials and semi-finished products, cutting energy prices – with a price cap no higher than EUR80/MWh (considerably lower than the existing EU wholesale price cap for energy at EUR180/MWh), and longer-term assistance towards securing cheap, sustainable energy. This approach should be European and leave “much less space for member states’ individual action,” Sandri added. 

There should also be “ambitious investments”, with a radical change to the EU’s stance on state aid to help clothing businesses survive the energy crisis, he said. This does not mean, “simply allowing member states to spend what they think is necessary, which would destabilise the EU internal market,” he said. 

Will EU garment brands relocate due to the energy crisis?

Antonio Franceschini, general secretary of Italy’s CNA Federmoda, the national association of SMEs, producing ‘Made in Italy’ fashion, warned garment and footwear companies may have to stop production in the EU or relocate due to insufficient energy and high costs. 

“Price increases are inevitable, even on orders already placed,” Franceschini told Just Style. “In some cases, organisations prefer to block production and processing on existing orders. Globally, companies are unable to deal with short-term planning, cannot afford to produce at a loss and therefore risk closure.” 

The Rome-based CNA head warned that if the EU did not act quickly enough, “the scenario could be dramatic: yet another weakening of some portions of the supply chain, with an even greater dependence on imports, energy and on raw materials from outside the EU.”   

That would stall or roll-back post-pandemic trends encouraging reshoring of clothing and fabric production to Europe to diversify sourcing away from low-cost centres and reduce supply chain risk. Because of this, despite the inflationary pressures of energy costs, Franceschini noted that “a widespread phenomenon [of relocation or bankruptcies] is not currently observed”.  

In addition, while Franceschini said “strong public support would be needed” for public spending on green energy, investments to install self-production plants from renewable sources, in particular photovoltaics, would help Italian garment companies compete internationally. 

Can the EU garment sector still compete?

In short, despite increased competition and the energy and cost of living crises, with innovative energy-saving measures and essential EU aid, the sector can hold its own, clothing industry specialists told Just Style. 

Indeed, Lutz Walter, secretary general of the European Textile Platform for the Future of Textiles and Clothing (ETP), said: “Companies have employed all sorts of strategies and temporary measures to save energy,” and to survive. He added: “Some still benefitted from longer term fixed gas and electricity supply contracts, others benefitted from various government support measures and wherever possible they tried to pass on increased production costs at least partially in their product prices.”  

As a result “longer term there will be new strategies in terms of energy mix, including where possible some local renewable energy generation,” Walter told Just Style. “Some processes that are gas-powered today may become electrified, but this is mostly a medium-to-longer term solution.”  

For garment production, the energy price impact is more indirect, he said, as the costs to garment manufacturing are not as significant as in textile processing and finishing: “The impact will rather be felt through a decrease in sales, due to consumers hit with high energy bills and inflation generally not being willing or able to spend as much on clothing.” 

Meanwhile, European Commission environment spokesperson Adalbert Jahnz told Just Style the EU provides “an array of funding opportunities to help garment and textile companies, particularly SMEs, to build up and attract investment,” so maintaining industry competitiveness, such as regional aid ‘cohesion policy’ funding and EU “recovery and resilience” plans, which can modernise or establish “the most appropriate infrastructure”.  

He cited in particular co-financing projects under Horizon Europe, the EU’s key funding programme for research and innovation; Life financing for the environment; and the EU Pact for Skills, that supports clothing businesses with upskilling and reskilling.  

Research and innovation are also being promoted through “various platforms and funding schemes”. Garment companies are encouraged to share data, information and research, for example on materials and fibre development, said the Commission official. 

And two months ago (26 January), in another bid to boost the garment sector, the Commission launched a multi-lingual campaign called ReSet the Trend, to encourage more sustainable fashion purchases and “demonstrate the opportunities sustainable fashion opens up for businesses and consumers”.  

Meanwhile, in the face of Euratex criticism that it is not acting quickly enough, another Commission official assured Just Style the EU offers a myriad of measures to combat the energy crisis impact. These include green energy investments under its RePowerEU plan; the EU temporary crisis framework, which allows national governments more leeway on subsidy payments to troubled industries, now extended until the end of 2023; and ‘toolbox’, a similar authorisation for member states to make urgent payments to help businesses and workers deal with inflation and recession. 

“The Toolbox in particular, adopted by the Commission in October 2021, has allowed us to address the immediate impact of price increases with state aid for companies and targeted tax reductions,” said the official. Priority is given to measures to mitigate price rises for small businesses, representing the most active EU textile businesses, he said. 

The EU is also developing additional proposals to “achieve the transition to clean energy including the acceleration of renewables,” he added, which will bring the garment sector increased resource independence. 

Earlier this month an EU-funded project proposed a new approach to recycling textile waste through a knowledge-based blueprint for the optimised cycling of textile waste.

The proposal's new product safety rules for the apparel industry, which was approved by the European Parliament’s internal market and consumer protection committee on 16 June includes addressing potential flammability, dyes that may cause allergic reactions and dangerous drawstrings.

There will still be further votes, leading to additional amendments at the parliament and the EU Council of Ministers, however it shows tougher consumer rules are coming that will also cover European Economic Area (EEA) members Norway, Iceland and Liechtenstein.

The rules will not automatically apply in Switzerland however, where Dr Pierfrancesco Fois, executive director of the international Ecological and Toxicological Association of Dyes and Organic Pigments Manufacturers (ETAD) is based.

He told Just Style this planned revision of the EU general product safety directive aims to tackle compliance more effectively, “in particular, but not only, as regards online sales” as well as in traditional bricks-and-mortar shops.

Under the current text, all economic operators, such as apparel manufacturers, importers and distributors, will have to comply and if they are not established in the EU, they will have to designate a responsible person in the EU to ensure compliance. There are also strong financial implications and not only at the expense of ensuring products received from suppliers are not dangerous.

Apparel industry's new product safety rules and penalties

If clothing businesses fail to meet the new rules, the directive insists that EU member state regulators impose penalties that can reach up to 4% of an apparel business’s annual turnover.

The updated requirements consider risks to vulnerable consumers such as the elderly and children. They will improve protection for people buying apparel online, who will have to be informed by marketplaces about recalled products and can claim refunds in such cases.

Lead negotiator for the European Parliament, its vice-president Dita Charanzová (a member of the liberal Renew Europe group), emphasised: “All economic operators and online marketplaces will be required to inform all consumers they can identify about a recall of a product and if ordered to remove something, must do so within one day.”

The Czech MEP said the new rules will ensure products are safe in Europe and give consumers more rights. The clothing industry, including online marketplaces, will be given more responsibilities in a way that protects small businesses – comprising the vast majority of the EU apparel industry.

Apparel industry new product safety rules start date

A European Parliament official told Just Style that once there is a provisional agreement on the text at anticipated negotiations between the EU parliament and council (representing member states), an agreed text will probably be adopted by the two institutions: “We cannot give a precise date, but negotiations will not start before autumn and usually take a few months.”

Despite the strengthening of the legislation, the European Consumer Organisation (BEUC) has criticised the new proposals, such as deleting an obligation for authorised representatives to carry out random sample testing of products – although this plan was not accepted in the text approved by the parliamentary committee.

That said, the BEUC senior communications officer (product safety, sustainable mobility and international affairs) Laurens Rutten welcomed how the reformed law sets safety requirements for products, including textiles, that do not have sector-specific rules.

“It steps in where sector-specific rules would not adequately cover new risks and so functions as an overall safety net,” he told Just Style. Once the review process is complete, the updated rules will cover apparel and fabrics, as well as bed linen, carpets, curtains and tablecloths, he said. Mr Rutten added that the new rules cover all types of clothing, “but also shoes and accessories such as jewellery, belts, handbags, hats, gloves and scarves.”

Under the current reformed text, EU consumers will receive new rights including the ability to claim a refund of the initial purchase price if an item of clothing is recalled, Mr Rutten emphasised: “Market surveillance authorities will also get more powers, to do online ‘mystery’ shopping for example,” when people pose as a customer and report on the quality of service received and how well a store or chain of stores is being run.

Mr Rutten added that BEUC tests had indicated safety problems with clothes. In 2019, six BEUC member organisations and national consumer groups tested 250 products bought from well-known online marketplaces in 2019. “We also bought clothing for children,” Mr Rutten said. “[Almost all] - 14 out of 16 clothing pieces – such as hoodies – fell short of EU safety prescriptions because their cords were too long or present in places where they were not allowed to be. This increased the risk of accidents such as suffocation.”

Although the European apparel and textile confederation Euratex is yet to comment on the general product safety review, it is a member of the Confederation of European Business (BusinessEurope). Its response to the proposal, highlighted that many non-compliant products, including clothing enter the EU from non-EU countries, creating an uneven playing field for European businesses.

A 2021 European Parliament briefing note says that business organisations “were more likely to argue that while a significant revision of the GPSD is necessary, the solution is better enforcement.” Following the March (2022) release of the European Commission’s sustainable textile strategy, Euratex (which does not cover this consumer law reform, also called for better enforcement, saying the key to safety is to “solve the market surveillance paradox in which laws are made but not checked,” in an EU market where 28 billion products circulate each year.

Mr Rutten called for more transparency, regretting that in the EU’s database on dangerous non-food products, the ‘Safety Gate’ rapid alert system, it is difficult to say how many products are linked to one notification, especially as “many products are nowadays imported from outside the EU and online marketplaces are not sufficiently controlled”.

Earlier this week, Just Style reported that a political agreement could see a European Union directive guiding member states on setting minimum wages to boost pay in lower salary sectors, such as apparel manufacturing.

This article was written for Just Style by Liz Newmark in Brussels.

European countries have traditional strengths in making apparel and textiles, especially luxury lines, but relatively high costs have left the region exposed to competition from near-sourcing hubs in north Africa and the Middle East, such as Turkey. 

The new law, which is now expected to come into force by the end of 2024 may make it harder for apparel and textile companies to pay wages that compete on cost in global markets, warn some industry experts.

A note from the EU Council of Ministers said it struck a deal on the law with the European Parliament in June ensuring the directive will promote collective bargaining on wage setting, increase controls by labour inspectorates and make it easier for enforcement authorities to chase non-compliant employers.

The criteria to set wages will include the purchasing power of statutory minimum wages, taking account of the cost of living; the general level and growth rate of wages; and, long-term national productivity levels, the EU official added. 

That said, the law does not mandate a European minimum wage per se, with average levels varying widely across the EU. These (as of January, according to European Commission data) vary as widely as EUR2,250 per month in wealthy Luxembourg to around EUR300 per month in Bulgaria. In Romania, rates exceed EUR500 per month and Portugal EUR800 per month - both countries with significant textile and apparel industries.

Some EU countries do not have minimum wages – such as Italy, a major apparel and textile manufacturing player – and the law will not force them to install such a system. 

How a political agreement on European minimum wage rules could impact the apparel sector

The official confirmed to Just Style that “EU ambassadors [have] endorsed the compromise agreement with the European Parliament,” adding the next steps will be a vote in parliament and final adoption in council, likely to happen in September or October. “After entry into force, member states have two years to transpose the directive.”   

With the apparel and textile sector remaining a complex web of international relationships, lobbying on the topic is a complex issue, and EU textile association Euratex has yet to adopt a stance on the law. 

Sweden’s Hennes & Mauritz (H&M) is a good example of a company having to negotiate the politics of minimum wages, being accused in September 2018 by workers’ rights movement the Clean Clothes Campaign that it had not met a 2013 commitment to ensure its suppliers would pay a living wage to some 850,000 textile workers by 2018. 

Of course, with H&M sourcing around the world, these promises did not just apply to Sweden.

Fast forward to today, H&M says on its website that it is working to drive fair and competitive wages in the supply chain, taking a global approach while considering national contexts and legal settings: “Our work is adapted to better meet the conditions in production countries and help suppliers improve workers’ wages.” In addition, the brand emphasises “we monitor the level of wages paid in our factories constantly.” 

However, H&M adds the company cannot set a minimum wage: “Like most fashion companies, we don’t own any factories or make our own clothes – we outsource production to independent manufacturers. This means we don’t pay garment workers’ salaries, nor can we decide how much they are paid.” 

The wage challenge for European apparel sourcing countries

For Europe-based manufacturers, that is a different story, of course. One country where the minimum wage law may bite is Portugal, which has maintained a sustainable textile and apparel industry, despite the onslaught of outsourcing.

Portugal

Portugal showed resilience and proactivity during the pandemic, with its exports last year (2021) reaching EUR5.42bn (US$5.45bn), up 4% from 2019 (ignoring 2020 which was atypical because of Covid lockdowns), according to the Textile and Clothing Association of Portugal (ATP - Associação Têxtil e Vestuário de Portugal). Wage costs may well increase, with socialist Prime Minister António Costa, promised on Twitter on Portugal’s Labour Day (1 May) to “increase the weight of wages in GDP to the European average”, namely 20% growth from 2022 to 2026, targeting low salaries. 

Ana Dinis, executive director at the ATP, explained the minimum wage applied in the textile sector, is now EUR705 per each 14 payments made usually per year in Portugal (hence the figure is lower than the EU surveyed monthly figure). The rate is reviewed regularly by the government, business, unions and consumer organisations and will take “into account the cost of living”, which is increasing with Portugal’s inflation currently running at 8.7% in June, the highest level since December 1992.  

Higher salaries “should be aligned and supported by an increased productivity, growth and wealth creation by companies, sectors and the economy,” yet this has not been the main focus and Portugal lags in several rankings on these issues, she told Just Style.

She said that without “productivity and competitiveness, especially in highly competitive and globalised sectors such as textiles and apparel,” companies will close doors. 

Dinis suggested the government liberalised Portugal labour laws, reduced taxes on companies and workers, trimmed red tape, boosted access to financing and capitalisation, and encouraged investment in innovation, creativity, R&D, internationalisation and digitalisation, for instance. 

The cost differences between apparel sourcing countries

Costs remain an issue, especially when European clothing and textile companies compete against outsourcing manufacturers subsidised by their governments and "putting products on the market below cost,” she said. Sadly, through its enthusiasm for regulation, such as the minimum wage law, the EU “is not a friend of the European industry,” said Dinis, forcing business from Europe and making the continent “completely dependent on overseas sectors, products and services”. 

Turkey
There is a different view in the Turkish garment sector, which thinks its costs will remain competitive in the European market, even though inflation is pushing up minimum wages: “We have costs favourably comparable with Europe,” said Mehmet Kaya, a board member of the Istanbul Apparel Exporters Association (İstanbul Hazır Giyim Ve Konfeksiyon İhracatçıları Birliği – İHKİB). The depreciation of the Turkish Lira (TRY), which dropped by around 40%, from TRY0.97 to the Euro in June 2021 to TRY0.57 in June 2022, has kept the sector’s pricing competitive, although inflation hit 73.5% in May. It also fell 44% against the US dollar in 2021 and by 24% so far in 2022, according to Reuters figures. 

In December (2021), the Turkish government raised the country’s minimum wage by 50.4% to TRY4,250 (US$275) for 2022. Labour ministry figures note that in 2019, the minimum wage was just TRY2,325.  

“Wage adjustments are usually made once a year, but due to high inflation, it may be adjusted in July,” said Kaya. The government has also lowered tax rates on low-income workers. 

Entry-level garment workers earn the minimum wage, he said, with salaries increasing according to skills and experience. Wages are marginally higher in western Turkey, where most apparel manufacturers are based, compared to the east of the country.  

Yet while salaries are lower, the sector is contending with higher overall prices, with imports made more expensive by the falling Lira. “This year is unpredictable for manufacturing, as energy costs have increased, and the Ukraine-Russia war has affected everybody. But in the Euro-Mediterranean zone, Turkey is the most integrated garment manufacturer, and that is why we have had an increase in demand this year,” said Kaya. 

Tunisia
There is a similar situation in Tunisia, where minimum wages remain lower than those in Europe. “The minimum wage in Tunisia is 480 dinars (EUR150) and planned to be around 700 dinars,” said Habib Hazami, general secretary of the country’s clothing and footwear association, the FGTHCC (Fédération Générale du Textile, de l'Habillement, Chaussure et Cuir). 

One concern highlighted by Hazami, however, is that higher minimum wages in Europe might make textile inputs imported from Europe to Tunisia for sewing, including finished fabric, could become more expensive. 

But it could also persuade investors to sink more money into Tunisia’s apparel and textile sector given its low production costs and low wages: “The fact that we import and export the textile products in Euros, while workers are being paid in Tunisian dinars is very profitable for investors,” noted Hazami: “An increase in minimum wages in the EU will lead investors to seek countries that guarantee a higher profit margin.”  

Nafaa Ennaifer, vice president of Tunisian clothing and textile association, the FTTH (Fédération Tunisienne du Textile et de l'Habillement) told Just Style: “The wage gap is already very large,” with European competitors. 

Morocco
Hazami said the same situation pertains in Morocco, another major near-sourcer for European markets, exporting to Germany, France, Italy and Spain, and benefiting from a sophisticated sector of well-resourced factories and training centres. 

Low Moroccan wages which usually do not exceed EUR250 a month according to Spanish workers group SETEM Catalunya, underpin this competitiveness. 

Of course, a robust minimum wage system is not a zero-sum matter and can, if efficiently applied, boost efficiency and capacity. 

Romania
That is the view of trade unions and campaigners for just remuneration in the textile sector within Romania, whose apparel and textile sector has struggled to recruit and retain skilled labour.

“Investment and exports have shown positive developments, both at the national level and at the sectoral level,” because of Romanian efforts to improve pay, including minimum wage systems, said Cristina Căpitănița, Romania coordinator for the Clean Clothes Campaign.

More decent pay “will only help employers and the industry attract qualified workers needed to produce high-quality products,” Patricia Velicu, the Romania policy advisor from the trade union federation industriAll Europe, told Just Style.

She said that a dismantling of collective bargaining at the sectoral level in 2012 resulted in four times more Romanian textile and clothing workers being on minimum wage between 2011 and 2016, blaming EU social dialogue laws and guidance for the change.

“Since these agreements disappeared, employers have also started to ‘steal’ workers from each other by simply offering EUR10 extra to the monthly wage,” said Velicu. As a result, she welcomed “the part of the minimum wage directive that refers to increasing the coverage of collective agreements” to 80% of all industrial workforces.

“It is crucial for ensuring fair competition in the Romanian TCLF [textile, clothing, leather, and footwear] sectors...” This would prevent “employers from ‘stealing’ workers from each other,” solidifying labour force stability.

“It’s a win-win for workers, employers and a step towards fair competitiveness,” she said.

Looking ahead to the implementation of the new rules, Căpitănița called on the Romanian government to oblige big brands sourcing from Romania to be more transparent about sourcing and associated payments so that better wages offered to Romanian workers are highlighted, maybe boosting sales among ethically-conscious consumers.  

This article was written by Liz Newmark and Diana Yordanova in Brussels; Andreia Nogueira, in Lisbon; Imen Bliwa, in Tunis; and Paul Cochrane for Just Style.

Dirk Vantyghem, director-general of the European Apparel and Textile Confederation (Euratex), speaking to Just Style says he hopes it will enable the industry to fulfil the goals of the EU Strategy for Sustainable and Circular Textiles, announced in March.

"This policy is pushing the market towards more sustainable products and the industry towards a more circular business model,” Vantyghem said, following the organisation’s 17 June ‘Building a Resilient European Textile Ecosystem’ general assembly. 

As the textile transition fund is being developed, it should be charged with supporting the industry to meet these goals: with “ambitious targets to finance digitalisation, reskilling and upskilling of workers, and innovation towards sustainable products and materials,” he argued. 

Notably, this initiative should be a “dedicated programme” instead of being integrated in existing EU research and development schemes – where success rates can be low. In the EU Horizon Europe programmes, application success rates can be as low as 3%, he claimed. 

“Finally, we also need to work with the brands and the consumers; they need to be on board and accept to buy sustainable textile products,” which requires stronger communication and more transparency, Vantyghem said. 

“Whether this will happen or not, depends on a number of actors. First and foremost, the legislative train that has been launched to – essentially – make sustainable products the norm, is enormous,” he said, referring to the detailed policy of standardisation announced in March. 

This legislation must be ambitious and achievable, in cost for SMEs [small-and-medium-sized enterprises], measurability, timetable, and “most importantly: will products made outside Europe also comply with these new norms (and how do you control that)?” 

To create that legal framework, constructive dialogue between the legislator and industry and more effective market surveillance is essential, Vantyghem made clear. 

Valentina Superti, director of tourism at DG GROW – the European Commission’s directorate-general for internal market, industry, entrepreneurship and SMEs (small and medium-sized businesses) agreed, telling Just Style: “We want to agree on a vision for a resilient textile ecosystem and establish actions to make this come true.”  

The ‘transition pathway’ to 2030, whose final details should be agreed by early 2023, should withstand “not only fierce global competition but also future shocks”, especially given the recent Covid-19 pandemic and Ukraine war, she said. 

At the annual meeting, she stressed how clothing and textiles are amongst the most globalised value chains that exist today: “Some 39% of EU production is sold on global markets; 73% of fashion products are imported. Ensuring a level playing field is a necessity. The Commission is working with international partners on many trade negotiations and we want to enhance market surveillance so all products placed on the EU market are checked.” 

She told Just Style that Europe’s clothing and textile manufacturing sector is already characterised by high-quality products creating value-added and opportunities for investments and innovation – essential for the competitiveness of EU manufacturing. And notwithstanding Mr Vantyghem’s concerns, Ms Superti noted: “The Horizon Europe programme funds several joint research and technology partnerships relevant to the textiles ecosystem.”  

Meanwhile, the textiles strategy will boost industry sustainability, promoting circularity with actions for the entire textile products lifecycle from consumption to end-of-life, and “fostering research and innovation and skills development”, she said.  

The strategy aims to “decrease products’ environmental impacts – for example by cutting the release of microplastics from synthetic textiles – and extend their lifetime by increasing their durability and repairability,” noted the Commission director.  

Specific measures include that companies must release clearer information on textiles sourcing and that a review of EU textiles labelling regulation be undertaken.

Pascale Florant, general secretary of GINETEX (Groupement International d’Etiquetage pour l’Entretien des Textiles/the international association for textile care labelling) told Just Style on the sidelines of the meeting that better textile labelling and the organisation’s ‘My Care Label’ app helps consumers take care of their clothes, prolonging their life, boosting sustainability.  

The path to these green goals will not be easy, however. Serban Stratila, cluster manager at Astrico Nord-est Textile Cluster, a group of textile and clothing companies in north-east Romania, told Just Style before the meeting that the textile strategy is “a document in preparation far from reality”.  

Vantyghem, however, said that the European industry has already improved its CO2 footprint and is making energy savings where possible, but “some steps in the production process, especially in the finishing of textiles, have no alternatives than gas”. 

For Michiel Scheffer, project manager sustainable textiles at the Netherlands’ Wageningen University, the paradigm change calling for a carbon-free Europe by 2050 compared to 1994-2019 should have been set back in 1994. He also noted the lack of capital and human skills, compounded by an ageing workforce. Euratex latest figures show 40.4% of the European industry’s employees were over 50 in 2021. 

Daniela Toccafondi, president of PIN, a training company linked to the University of Florence, Italy, agreed that young people were needed to keep the industry resilient. She cited statistics from EU statistical agency Eurostat that for the clothing industry, from 2010-2019, there were 30.1% and 40.1% fewer 25–49-year-old workers, respectively. She said ‘training the trainers’, new training methodologies and more connections between higher education institutes, research, industry and education would help. 

With the war continuing, Russian troops bombed a theatre in Ukraine’s port city of Mariupol yesterday (17 March),  Svetlana Melnichenko, president of the Saint Petersburg-based Chambers of Textile and Fashion, noted that Russians were not in the mood to buy new clothes: “It’s spring. It’s time for a usual wardrobe update. But it’s now really quiet at the stores of our small local brands,” she said.

With sanctions biting, she said: “Light industry is all about demand. […] Clothes are not the first necessity, and people during such [hard] times always tend to save money and buy only the most important things."

She continued: "We can do anything, but if people don’t have money to buy, the demand will fall,” and warned job losses in the industry may follow.

The sourcing countries supporting Russia's clothing supply chains

For the time being, at least, supply is unlikely to be a problem as 70% of imported fabrics and clothes sold in Russia are imported from China, while Vietnam and Bangladesh remain important sources and it also has close links to Asia and Turkey which are expected to reduce the impact.

“Those [Russian] enterprises which worked with the Chinese market, have already switched to yuan, and they are now rewriting contracts,” explained Melnichenko, which means payments can be made direct in local currencies rather than paying in US dollars or other international currencies through SWIFT – which is now largely excluding Russia. The Bangladesh government said on 4 March, it was prepared to receive payments in Chinese currency from Russia.

Melnichenko added that local Russian brands which have produced T-shirts and other informal clothing would also replace imports of such goods, easing the pressure of sanctions. Plus, Russian producers who make uniforms, including school uniforms, would not be severely affected by the sanctions because these manufacturers are supplied by Russia-based fabric and yarn producers.

Problems for Russia's luxury clothing supply chains

It is a different story for the luxury end of the textiles and clothing industry, which will experience disruption. The European Union (EU) has now banned the export of luxury apparel worth more than EUR300 a piece to Russia and: “All premium class fabrics are from Italy,” pointed out Melnichenko. She said this would force Russian premium apparel brands who usually source from western fabric suppliers (such as Italian exporters), to look for alternative suppliers, maybe in China and Turkey, whose companies have been eyeing the Russian market.

Melnichenko said one prominent Turkish supplier recently sent an offer to the members of her association offering good deals for Russian buyers. “The payment is still in dollars, […] and with today’s exchange rate, the prices have almost doubled. But [this supplier] sent his proposal with reduced prices by a few percent.’’

Given the financial sanctions will impede such payments, Melnichenko pointed out that as a short term measure, the association will support its members by signing guarantee letters to suppliers, and asking them to postpone receipt of payments. Melnichenko explained these tactics have yielded success, with partners, even some in western Europe, making concessions.

Will cryptocurrency become the norm in Russia?

She dismissed suggestions that in the longer term her members would consider using cryptocurrency for payments, saying association companies think this will not be necessary, predicting sanctions on Russia will end because western European partners are as interested in the Russian market as Russian businesses are interested in international suppliers.

Melnichenko recalled that Spain’s Inditex had signed contracts with “dozens of factories” in Russia since 2018 (after Russia’s annexation of Crimea from Ukraine) – although since this year’s invasion, Inditex was quick to quit the Russian market, leaving many Russian factories without work. It is not the only major to quit Russia over the military action – Sweden’s IKEA, a major textile purchaser, has also left the Russian market. Its Russian manufacturing partners not only produced finishing products for IKEA stores but used the resulting capacity to sell fabrics worldwide – a door that is now closed.

The software and retail companies exiting Russia

Another problem for Russian producers and brands is that major software companies have quit Russia, such as Adobe (Adobe Illustrator) and CLO Virtual Fashion (CLO 3D). “These things are unpleasant, but on the other hand, I think maybe this will encourage the development of our own software,” said Melnichenko, although she accepted such development might take time and slow down design processes.

Her prediction that Russia will look to China to keep its clothing industry operating was supported up by Paul Alger, international business director at the UK Fashion & Textile Association (UKFT).

“The Russian invasion of Ukraine is likely to have lasting effects which even President Putin may not have thought of,” he told Just Style.

Other companies closing shops in Russia this month include those run by ASOS, Burberry, Hennes & Mauritz (H&M), Next, Prada and Uniqlo.

“In the short term, most UK companies have already stopped their immediate orders to Russia on a B2B and B2C basis as there is no easy way to send goods at present,” he said. “Others have taken a unilateral decision not to sell to Russia for the time being.”

The export outlook is also bleak as far as Belarus and Ukraine is concerned, he said and there could be “indirect restrictions on other countries in a customs union with Russia,” such as Kazakhstan and Armenia.

Despite sanctions and the lack of flights - with few or none at all between the US, European Union, UK and Russia, goods from India and China can still enter Russia, explained Alger: “It is likely Russia will look to China for more and more goods as it becomes more dependent on China for its oil and gas sales as well as imports of food and consumer goods. China will likely encourage and facilitate this, as it is a win-win for China.”

He believes blocked SWIFT payments will harm the Russian textile industry and market as it makes it “extremely difficult (if not impossible) for Russian businesses and individuals to make/receive payments in the short term, but it is highly likely that Russian banks will start to use Alipay and other Chinese payment platforms or create their own.”

He also said using crypto is very unlikely as “Crypto is untried and untested”.

In the long term, “if Russian retailers cannot pay for goods, they will not receive them,” Alger explained: “Russians are very good at putting orders on hold and taking the goods when they are able to pay – even years down the line.” He recalled seeing this in the early 1990s, noting that while most Russian businesses have non-Russian bank accounts, “they are unlikely to want to pay for goods if they cannot get them over the border or sell them”. One question, he noted, was “whether Russian consumers will even want (or be allowed to want) Western goods moving forward?”

While, Mike Flanagan, CEO of market intelligence company Clothessource, predicts that if Russian clothing sellers cannot pay overseas suppliers, they will “use Russian factories – eventually, and then develop direct payment systems, outside SWIFT, from Russia to its silent supporters,” including China, Bangladesh and India.

After all, he says, Inditex and H&M will not be rushing back to Russia “because they think this will damage their business far more than any trivial benefit they might get in return,” he told Just Style.

This article was written by Liz Newmark in Brussels