Innovation in Kenyan Clothing Sector

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Innovation in the Kenyan Clothing Sector and its Impact onEmployment and Poverty Reduction

Draft Final Report

By

Paul Kamau and Isabel Munandi

Institute for Development StudiesUniversity of Nairobi

Draft Report Presented During the DelPHE Workshop Held at the Kenya Utalii HotelNairobi, Kenya.

31st

August 2009


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AbstractLearning and innovation are key determinants of competitiveness and growth for

garment manufacturing firms operating in a highly competitive environment. Innovationsintroduced by firms have impact on employment growth in the industry. This exploratory

study adopts a case study method to examine the nature and sources of innovation in the

Kenyan garment industry particularly in post-MFA period. Results show that mildproduct, technological and process innovations are taking place across all firms in theindustry and seem to have a direct impact on employment. People, market and

procurement innovations are generally low and appear to be taking place among locallyowned firms rather than in foreign owned firms. Those firms in the export market

embrace process and technological innovations largely driven by increasing demands bythe buyers. The study concludes that innovation is not taking place in a systematic way,

but is ad hoc. To many firms, innovation is not given priority rather firms emphasisesurvival and any innovation taking place is an outcome of a survival tactic. Assistance

from buyers or suppliers to facilitate innovation is minimal in the garment industry. Thestudy underscores the need for quality control, availability of skills and investments in

technology as precursor for innovation in the clothing industry.

1. Introduction

The strategic significance of the clothing industry in Kenya cannot be underestimated.This industry has been a major source of exports growth and revenue particularly underAGOA. The clothing sector is labour intensive and has been an important source of jobgrowth outside of agriculture. The nature of skills involved - generally unskilled work forwomen has had important distributional consequences and has helped to mitigate theunequalising consequences of globalisation (Kaplinsky, 2005). Historically, the clothingsector and to some extent the textile has shown the face of industry to countries in earlystages of their growth paths, and has provided stepping stone for the development ofindustrial capabilities (McCormick and Rogerson, 2004, Kaplinsky and Morris, 2006).

Competition in the global garment industry has no doubt intensified following thetermination of Multifibre Arrangement (MFA) that governed trade in textile and clothingbetween 1974 and 2004. Firms in Kenya have been exposed to stiff competition in boththe domestic and export markets from well established producers in China and India.There is an urgent need for firms to innovate as a way of mitigating the adverse effects ofincreased competition. Global competitiveness increasingly depends on the ability offirms to assimilate, master and improve technologies in order to produce high-qualityproducts for demanding consumers in the market particularly in the international markets(Goedhuys, et al. 2008; Harrison et al. 2005). The main purpose of this study is toempirically examine the level of innovation in the Kenyan clothing industry. In addition,the study identifies the impact of innovation on employment creation and povertyreduction strategies as outlined in Kenya s commitment to the Millennium DevelopmentGoals (MDGs).


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The termination of the MFA in 2005 has undoubtedly altered the structure of the textileand clothing industry.1 As mentioned earlier, competition has generally increased in boththe export and domestic market as more efficient producers in China and India surge themarkets. The Kenyan garment industry has experienced down turns and the recent gainsemanating from participation in the garment global market appears to be gradually

getting eroded (McCormick, et al. 2006). According to analysts, the textile and clothingindustry in Kenya faces significant crises emanating from shrinking domestic market,cheap imports, and the termination of MFA that exposes firms to stiff competition onthird markets from more established manufacturing economies such as China (Kaplinskyand Morris, 2008; Omolo, 2006; Kamau and McCormick, 2009; Kinyanjui et al., 2004).The increased competition has implied that only those firms which embrace innovationhave potential to survive the aftermath of MFA termination (OECD, 2004).

This study is organised in six sections. Following this introduction, section two examinesthe role of garment industry in the development agenda and the innovation. Section three,discusses the theoretical approach to innovation while section four outlines the study

methodology. Section five presents major findings of the study while section six providessome concluding remarks.

2. Clothing Industry, Employment, and Innovation

The textile and clothing industry has a major role to play in employment creation andpoverty reduction in Kenya, in line with the attainment of the millennium developmentgoals (MDG). The sector has the capacity to create both direct and indirect employmentopportunities (Omolo, 2006). Though, there is lack of accurate data on the actual level ofemployment created by all the units within this subsector in Kenya, anecdotal estimatesshow that the industry has since 2000 created over 60,000 direct jobs and 200,000indirect jobs. Employment data relating to the Export Processing Zones (EPZs) are fairlydocumented and reveals that employment of Kenyans increased from 5,565 in 2000 to apeak of 36,348 in 2003 but declined to 25,776 in 2008 (see Figure 1). The number of expatriate workers in the clothing EPZs have been low as compared to local employees.

1 The global sourcing patterns were formed during decades of trade restrictions have changed anddeveloping countries which thrived on the basis of these restrictions are experiencing formidable threat.


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0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2000 2001 2002 2003 2004 2005 2006 2007 2008

Year

Number

Employment Expatriates

Figure 1: Employment in the Garment EPZ 2000-2008Source: EPZA 2009

The clothing industry has been conventionally viewed as a major source of employment

generation. In addition to this dimension, following the success of the East Asianeconomies, it is also seen as a lead sector in the industrialisation process of low-incomeeconomies. Its low skills requirements and large labour absorption potential have made itan important source of non-agrarian employment for the rural populace. To add, thegarment industry offers tremendous prospects for employment of women, unlike othertraditional manufacturing sectors (McCormick, et al. 2007; Vijayabaskar, 2002).Majority of women workers in the garment industry would ordinarily not findemployment elsewhere in the formal sector, making the clothing sector an importantavenue for addressing poverty in Kenya (Kamau, forthcoming).

The globalisation process has been paralleled by important changes in the organisation of

the clothing commodity chain. While the initial phase of globalisation was dominated bymanufacturing capital in the advanced economies, it was, from the early 1970s, replacedby retail capital (Bonacich et al., 1994, Kaplinsky, 2005). This process was once againfacilitated by the requirements of low investment and technology in the industry(Vijayabaskar, 2002). As a result manufacturers did not produce the entire output in-house. They sourced a substantial portion of their output through contractmanufacturing , whereby they contracted production to small producers, many of themlocated overseas. This was mainly driven by the need to keep cost of labour in theproduction minimum. It is for this reason that the clothing industry is classified as highlyglobalised.2 The bigger manufacturers focused on supplying designs to producers in thelow-waged regions, and ensured control over quality of output sold to wholesalers and

retailers in developed economies (Gibbon and Ponte, 2005; Schmitz, 2006).3

Sincetraders could not undertake the same processes of outsourcing as well, wholesalers andretailers sought to bypass the manufacturers and began to source directly from overseasmanufacturers (Vijayabaskar 2002; Kaplinsky 2005). In the process the pricing system

2 See McCormick and Rogerson (2004) for details.3 The sourcing of garments from distant location was found profitable not only because of the lowwages but also due to improvements in transport and communication technologies.


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for the garment products shifted from being based on cost of production to whatcustomers could afford to pay (Bonacich et al. 1994). Since the retailers couldaggressively market the output, they could peg the prices at a much higher level ascompared to the cost of production, a process that has ramifications for the modes oforganising production in the sector. The industry has since then become an archetype of a

buyer driven value chain.

4

Technological innovations have enabled capital to facilitateco-ordination of production in distant locations to take advantage of lower factor coststhat prevail in these areas without much increase in transaction costs.

The performance of the Kenyan garment industry has been affected by changes in theglobal and national policies. As shown in Table 1 and Figure 1, the industrialperformance within the EPZ garment sector improved following the enactment of AGOAin 2000, a performance that was reversed by the termination of the MFA in 2005.

Table 1: Performance of the Kenyan EPZ Clothing Sector 200020082000 2001 2002 2003 2004 2005 2006 2007 2008

No. of Firms 6 17 30 35 30 25 24 22 19

Exports (US$ Mln) 30 55 104 146 221 195 207 205 201Investment (US$ Mln) 16 48 88 128 108 132 143 123 118

Source: Compiled from EPZA (2009), Kamau (2007), McCormick, et al. (2006)

In today s competitive environment, firms must pay a great deal of attention to the waysin which they initiate, nurture and leverage their innovative efforts. Innovation is widely

4 Given their relatively less knowledge of production, they competed primarily on the basis ofdesign, marketing and fashion creation (Vijayabaskar, 2002).

Figure 1: Performance of the Kenya EPZ Clothing Sector 200002008

0

50

100

150

200

250

2000 2001 2002 2003 2004 2005 2006 2007 2008

Years

Value

Number of Enterprises Exports (US$ Million) Investment (US$ Million)


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considered as the primary source creating competitiveness among firms and countries(Harrison et al. 2005; Roy et al, 1999). Innovation goes often with enterprise upgradingwhich effectively increase competitiveness. A garment manufacturing firm that seeks tocompete effectively in a globalised market needs to formulate and implement innovativebased strategies. Individual firm innovation may stimulate demand, enable a firm to

survive and grow, thereby increase employment. Innovation is widely considered to be aprimary source economic growth, and policies to encourage firm-level innovation arehigh on the agenda of most countries. There is no doubt that learning and innovation arekey determinants of competitiveness and growth of nations and firms (Morrison et al,2008). In addition, the incentives of managers and workers will determine the types ofinnovation that are introduced and their subsequent effects on prices, output, employmentand poverty. Understanding these incentives and welfare effects at the micro level isessential for the effective design of innovation policy and for predicting how otherinterventions, such as labour market regulations, might affect the rate of innovation(Harrison et al. 2005).

There are various definitions of innovation depending either on disciplinary focus (forexample, sociological or economical) or perspective (for example, user, producer orseller). Innovation has several characteristics, prominent among which are uncertainty,interactive learning and a degree of innovativeness which leads to characterizations suchas minor-major and radical-incremental (McCormick and Oyelaran-Oyeyinka 2007:8).Broadly speaking, an innovation is the implementation of a new or significantlyimproved product (good or service) or process, a new marketing method, or a neworganisational method in business practices, workplace, organisation or external relations.Innovation involves undertaking tasks more efficiently, improved production, andadoption of new technologies. Thus, innovation based strategy requires the simultaneouscoupling of three functional components: research and development, manufacturing andmarketing.

Therefore, innovations consist of the process by which firms master and implement thedesign and production of goods and services that are new to them irrespective of whetherthey are new to their competitors, their countries, or the world. Innovation thus involvesmore than research at frontiers of knowledge (Mytelka, 2007). It includes the many largeand small improvements in such areas as product design and quality production,organisation and management routines, and marketing. It includes modification in theproduction process, and techniques that collectively reduce costs, increase efficiency,provide for human welfare and ensure environmental sustainability.

Innovation can increase or decrease employment, depending on the nature of theinnovation. Some innovations create new markets that lead to expansion and are labourcreating. Others affect efficiency and may actually reduce the amount of labour needed.

3. Methodology

The main fieldwork for this study was undertaken between May and August 2008 withsome further follow ups in January- February 2009. The study used both primary and


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secondary data with the primary data forming the bulk of the analysis. It adopted aqualitative approach to studying the sources of innovation in the Kenyan garmentindustry. Primary data was based on 10 case study firms purposively selected, identifiedto represent different structures of the industry. These firms were distributed in such away that five were drawn from the EPZ and MUB programme, while the other five

constituted local firms. From each firm, two workers were randomly selected to give atotal of 20 workers. These workers were studied to gather qualitative data relating to theirwork experience as well as their perceptions on employment opportunities in the industryand their well being. Workers were also asked about their future expectations. Thecomposition of the workers was 10 male and 10 female, drawn mainly from theproduction cadre of the factories (Appendix 1), in specific, operation section of garmentmanufacturing. The bulk of workers studied comprised operators, helpers, ironers andpackers. In some few cases, supervisors were included in the workers case study. Fromthe latter, we sought to know what skills they had prior to joining the current factory ortheir current position.

In addition to the case-studies, key informant interviews were conducted among stafffrom government ministries, investment and export promotion agencies, industryrepresentative bodies and trade unions. In total 14 key informant interviews wereconducted and provided expert overview opinions on the impact of MFA termination onthe clothing industry and the role of innovation as a coping strategy for the industry.

The study also utilised observation method whereby enterprises were observed on howthey were currently doing. The aim was to find out whether a firm has always been doingthe same thing or was changing and, if there were any changes, what was driving it. Wewere also interested in finding out if a firm was getting any assistance in its innovationprocess. Finally, the study utilised published materials relating to innovation and theclothing sector. In section 5, we report some of the key findings from the case studies ofboth the firm and workers.

4. Theoretical and Empirical Literature Review

Innovation is defined as the process by which firms master and implement the design andproduction of goods and services that are new to them, irrespective of whether they arenew to their competitors their countries or the world (Mytelka, 2007). In this framework,innovation has its sources in a wide variety of places and in activities such as R&D,design, production on the shop floor, quality control and marketing (Oyelaran-Oyeyinkaand McCormick, 2007). Actors engaged in innovation are embedded within a widenetwork of agents in a system or a system of innovation.

Innovation theory of profit suggests that profit is the reward for successful introduction ofinnovation. Moreover, the value of innovation decreases with more competitors andincreases with more users (Baumol 2007). This theory is based on the work ofSchumpeter which emphasizes the role of entrepreneurship and the seeking ofopportunities for novel value-generating activities which would expand (and transform)


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the circular flow of income (Cantwell 2003, Mytelka 2007). According to this theory,innovation capacity and economic performance are much more the result of the smoothinterplay between the stakeholders of firms than of high-tech or the intensity of researchand development.

Combining Schumpeter entrepreneurial theory with the profit strategy approach showsthat innovation needs to be embedded in coherent profit strategies in order to be effective.Innovation capacity and economic performance are much more the result of the smoothinterplay between the stakeholders of firms than of high-tech or the intensity of researchand development. Thus, innovation depends upon the generation of feasible newcapabilities, the operation of which adds new value to the existing circular stream ofincome, and thereby creates new profits and higher income (Cantwell 2003; Goedhuys etal. 2008). Accordingly, there is a reward for developing new ideas, new constructiontechnologies, and for finding new markets.

Innovation is neither research nor science and technology, but rather the application of

knowledge in production. It consists of the processes by which firms master andimplement the design and production of goods and services that are new to them(Mytelka, 2000:18). Thus, innovation includes modifications in the production processand techniques that collectively reduce costs, increase efficiency, provide for humanwelfare and ensure environmental sustainability (Mytelka, 2007). Firms engage in avariety of activities to reduce costs, improve output quality and develop new products andmarkets (Goedhuys et al. 2008). These activities are innovative since they mightincorporate a strong component of technological learning and may result in products andproduction processes that are new to the firm. Investment in, and mastery of, newmachinery and equipment is still the most important way for technological learningleading to the improvement of production processes.

Innovation in the clothing industry is fundamental in enhancing competitiveness ofKenyan firms. Innovation activities can be classified as mechanical, invention, marketingstrategies, procurement of inputs, developing new inputs (dye, fabric, threads etc.),introducing new products, and enhancing human resource by employing professionals,and training workers. Therefore, one can talk of four major innovations possible in theclothing industry: product, process, marketing, and procurement, technological andorganisational.

5. Characteristics of Innovation in the Garment Industry

This section reports findings based on the case studies conducted in 2008 among thegarment manufacturing firms in Kenya.

5.1 Characteristics of Firms in the Study

The clothing industry in Kenya is diverse in terms of size, ownership, technology, andmarket orientation. It consists of micro, small, medium, large and very large firms, which


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form a pyramidal structure with three tiers.5 The base of the pyramid is occupied by themicro and small enterprises (MSEs) that produce mainly for the domestic market. Theseenterprises are spread throughout the country, representing about 15 per cent of all MSEs,and over one-third of the manufacturing MSEs in Kenya (McCormicket al. 2007). Theownership of these MSE firms is dominated by Kenyans of African origin, a vast

majority of whom are women. Firms in this tier are classified into three types: customtailors, contract workshops and mini-manufacturers.6

The next tier consists of medium to fairly large firms that produce mainly for thedomestic market, with some producing for the export markets, within the African regionand the EU. The number of firms in this category is not known but anecdotal sourcesindicate that they were approximately 100 firms in 2006 (see Kamau, forthcoming). Thethird tier consists of large to very large export-oriented firms. These firms mainlyestablished in response to the US - African Growth and Opportunity Act (AGOA) mostlyoperate as export processing zones or as Manufacturing-under-bond (MUB) factories(Phelps et al. 2008; McCormick et al. 2007; McCormick et al. 2006). In 2003, the

number of firms in this tier was estimated to be 45 but by 2008, this had declined to 19firms in the EPZ (Table 1) and 3 in the MUB programme. Firms in this category largelyundertake cut-make- and-trim (CMT) orders, popularly known as the assembly work forUS-based buyers.

Firms in this study were selected to represent this diversity of the industry. Table 2presents some of the basic characteristics of the firms in our study.

Table 2: Firm Characteristics of the FirmsFirm Status Year Size Products Markets Source of Fabric

1 EPZ 2003 2000 Woven Casual & Knits USA Asia

2 Local 1986 110 Woven (Shirts, Trousers, Promotionitems & Industrial)

Domestic China

3 Local 2004 100 Uniforms, Baby wear Domestic Local/China

4 Local 1996 120 Knits & Woven (T-shirts, casualkikoys, lamu-lamu, polo)

Domestic/Europe Local/Region

5 Local 1987 159 Promotion Items (T-shirts, Polo, tracksuits)

Domestic Local/India

6 MUB 2004 250 Sports wear EPZ Subcontract EPZ

7 EPZ 2001 1100 Knitwear & Sports wear USA Taiwan/ India

8 EPZ 2002 850 Woven & Knits Trousers USA Hong Kong/ China/UAE

9 Local 1994 150 Corporate uniforms, promotion items,industrial clothing

Kenya/Tanzania/Uganda/Rwanda

Kenya/Region/ India

10 EPZ 2002 2800 Jean Trousers, Casual trousers USA China/India

Source: Authors Fieldwork (2008)

Five of the 10 firms in our survey were export oriented and largely foreign owned. Theyoperated either in the EPZ or MUB programme making them purely exporting. All ofthem relied on the USA market into which they exported through the AGOA tradepreferences. Participation in the European market was extremely limited and only one

5 Drawing from McCormick et al. (2007), firms can be classified as micro (1-9 workers), small (10-49 workers), medium (50-99 workers) and large (100 or more workers).6 See McCormick, et al. (1997)


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firm in our sample indicated that it exported to this market. Although most of theexporting firms were aware of potential in this market, respondents argued that it wassegmented and trade volumes were generally low. Lack of preferential market accesssimilar to the one available in the US market constrained firms penetration. Therefore,as trade statistics show, the US market accounts for more than 90% of all clothing exports

in Kenya (see Kamau and McCormick, 2009; Phelps et al. 2009). Markets and productsdiffered depending on the nature of the firm and the export platform in which a firmoperated. All the firms in our sample were large-scale with employment size of 100 ormore workers.

Composition of employees varied significantly across firm sizes and market orientation.Generally, export oriented firms employed more female workers than those producing forthe domestic market. Similarly, older firms seem to have a higher proportion of maleworkers when compared to relatively new firms. Workers in EPZ and MUB firms weregenerally young and highly educated than those in local firms. However, respondentsreported that they were not very keen on education when recruiting but this reflects the

general high education level in Kenya. However, given the education level, a firm wouldprefer to recruit a worker with secondary education rather than one with only primaryeducation. It was reported that it was easier for a worker with secondary education to betrained on how to use machinery and to interpret designs than for a worker with primaryeducation.

Most firms in the sample adopted assembly line type of production whereby each workerwas involved in production of a small component of the garment. As such, firm managersreported that even though skills training was taken into consideration at the recruitmentlevel, it was not mandatory. Majority of the workers in the production sections weretrained on the job, Moreover majority of them were first recruited as helpers and onlyafter showing mastery of skills, were promoted to operation sections. However, mostworkers had basic tailoring skills.

Recruitment was mainly done at the factory gate or through referrals. It was not easy forfirms to determine whether a worker originated from rural or urban areas. However, theworkers interviews revealed that most workers were migrants from rural areas, whocome to Nairobi to search for job opportunities. We asked our respondents to indicate theaverage age of the workforce for their male and female workers. Results indicate thatfemale workers were generally younger than male workers. Most male workers had longexperience in garment manufacturing while women on average did not have longexperience. Specialised skills were required for supervisors and technical staff but whichwas somehow lacking. As such, firms depended on transition of workers from operationsto technical positions.

Increasingly, workers were recruited on casual or short-term contracts ranging from twomonths to six year. Only one firm in the EPZ indicated that over 90% of its workers werepermanent. The distribution of workers in the local firms showed a higher proportion ofthem being on permanent terms compared to foreign-owned firms. None of the firms inour sample reported using part-time workers. Increasingly, firms were setting production


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targets for workers in operations. The aim of setting targets was to push workers tobecome more productive and also to ensure that labour costs matched productivity.However, workers complained that these targets were unrealistic at time and would forceone to work late into the night without compensation for over time. To workers,production targets amounted to exploitation.

A vast majority of firms in our sample indicated that employment levels had declinedbetween 2004 and 2007. Most respondents reported that this was due to increasedcompetition in both domestic and export markets. Most firms indicated that threats fromChina and to some extent India were pushing them out of the market.

5.2 Product, Process and Marketing Innovations in the Garment Industry

A product is defined as an entity made up of a hierarchically ordered set of subsystemsand linking mechanisms. Thus, the locus of change in this entity which might involve

change in the hierarchy, in the subsystems and or in the linking mechanism may result toproduct innovation. Product innovation relates to changes in productivity differences of anew product within a firm (Harrison et al. 2005). It entails production of new orimproved product within the firm that may imply a change in production methods andinput mix, with a view to increasing profitability of the firm. Product innovation,literature suggests, has an impact of creating more demand for the firm s product, whoseimportance depends on the nature of competition and the delays with which rivals reactsto the introduction of new products (Roy et al, 2007). From the literature, an introductionof new product may increase labour requirements in firm commonly known as thecompensation effects.

Our study sought to find out if firms had changed their product mix between 2004 and2007 by introducing new products, if so, what new products were introduced and theirimpact on the sale and labour engagement. Many firms (80%) indicated that they hadintroduced new products. Three firms had had a complete overhaul of the product mixwhereby they shifted completely to new products while others continued producing theinitial goods in addition to new ones. An EPZ (Case study 10), for instance, initiallyestablished to produce knit garments such as t-shirts, had shifted to production of jeans.This process was gradual, starting with an introduction of one line and subsequentlyincreasing this production and phasing out knit garments. In the locally owned firms,respondents reported their operations were shifting from standard garment production tocorporate uniforms where competition was low and returns were higher. Firms that hadintroduced new products in their product mix indicated the new products fetched more intheir respective markets and had made them more competitive. However, there werefirms in our sample which had not introduced any new products between 2004 and 2007.

Process innovation: Activities that are likely to reduce the quantities of factors required toobtain a unit of output, including the required labour input. Any increase in productivityresulting from a process innovation implies a reduction in unit costs. Depending on thecompetitive conditions facing the firm, this is likely to result in a lower price, which will


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stimulate demand and hence increase output and employment, with the size of the effectdetermined by the elasticity of demand for the firms products (Harrison et al. 2005). Thiswill also depend on the behaviour of the agents inside the firm and the nature of themarket competition.

Marketing innovation involves searching for new markets for the products. The impact ofmarket innovation performance of the firm depends on whether it results in business-stealing or market expansion. In our study, market innovation entailed finding newmarkets either within Kenya, within the region, or in the global markets. Results indicatethat export oriented firms in EPZ and MUB were exporting only to the US market andgave no evidence of market diversification.

Local firms were exporting, some aggressively while others were doing it passively. Twoof the firms reported they were exporting to the European market while the rest wereexporting to the African markets. There was a consensus among respondents that exportmarkets were very demanding in terms of quality and timely delivery which most of the

time were not worth the price the buyers offered.

Most large-scale enterprises produced entirely for the US retail market. All firms in thissample indicated they we producing for Wal-Mart Stores, the largest retailer in the US.Other customers included Russell, Levis, Gloria Vanderbilt, Target, JC Penny and CalvinKlein. This is in keeping with Phelps et al. (2009) who found from a survey that over50% of the firms in the survey produced for one large US retailer. The reliance on the USmarket to the exclusion of other destinations indicates a high level of failure to diversify.The concentration on buyers is very high in the export market and for most firms; theywere dealing with just one or two buyers. Analysts argue that the high dependence on avery limited number of buyers constrains innovation and growth of a firm (Phelps, 2008;Roy et al. 2003).

Turning to the local firms, the trend is somewhat different. Firms aggressively markettheir products in the domestic or regional market. However, their success is limited byfinancial capabilities. In this category of firms market diversification is limited to theAfrican region particularly Tanzania and Uganda where firms are exporting. Theinnovation in these new markets is witnessed through entry of tourism and corporateuniforms sector as opposed to the standard garment markets (Kamau, forthcoming).Local firms were also working closely with buyers in the European market, who werehelping them to penetrate this high quality demanding market.

5.3 Technological, Organisational and People Innovations

Technological innovation occurs when firms are able to assimilate, imitate and mastermodern techniques of production (Knight, 1967). Investment in new machinery andequipment is the most important way for technological learning leading to theimprovement of production process. The process of achieving technology transfer couldbe further strengthened among garment manufacturing firms by exploiting more


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efficiently the opportunities offered by the ICT for the dissemination of advancedtechnological knowledge (OECD, 2004). Human resource training is also a prerequisitefor technology transfer, such that firms that pay attention to upgrading skills of theirworkers tend to achieve higher levels of technological capabilities than those which donot train their workers.

Another way of acquiring technology is being involved in the design. Design is a highlytechnical process but also high value added activity in the garment value chain. In GVCsfor garment, design is normally done by the buyer located in developed countries(Gibbon and Ponte 2005; Schmitz, 2006). In our case, we found that most firms in theexport segment of garment trade do not undertake the design work which would facilitatetechnological innovation. Instead, the end customer, the agent or buyers, specify thedesigns for the factory to produce a prototype. This is sent to the customer for approval,after which an order is placed for the factory to produce certain quantity, size or colour.Among local firms, case studies found that innovation by way of copying and modifyingknown designs is being practiced at varied levels. The level of sophistication in the

design increased with the firm sizes. Large firms have employed designers from China,India and Sri Lanka to assist with interpretation of designs and also train local workers.Although respondents were aware of the relevance of technology transfer in theinnovation process, activities that would promote this transfer were not adequatelyaddressed. Use of ICT, involvement in the design and also training facilities in thegarment industry remain rudimentary. In one case study a respondent reported that:

The firm stopped training its production workers because it realised that after the

training, workers left the factory within three months to work with neighbouringfactories. The firm realised it was doing the training for the industry, work that should be

undertaken by the government instead(Case Study One).

Being in charge of procuring raw materials used in the production process puts a firm incontact with suppliers who may play an important role in facilitating technologicaltransfer and capabilities. According to OECD (2004:31) technological transfer should beencouraged between suppliers of machinery, raw materials and users . The nature of thegarment global value chain is that procurement of inputs is done by buyers or their agents(see Kamau, forthcoming). Suppliers of key fabrics, threads and other accessories areprequalified by the buyer or agent even before an order has been confirmed. Once a firmto undertake production is selected, it is directed on where to get the raw materials.Therefore, large exporting firms are not involved in the procurement of key inputs in thegarment production process. Thus, technological transfer that would arise frominteraction between supplier and users of raw materials is very low. Locally owned firmsare somewhat involved in the procurement of inputs and therefore stand better chances oftechnological upgrading.

Organisational innovation is the use of capabilities associated with systems to coordinateactivities from design through production and distribution of garments (Knight 1967, Royet al. 2003). It relates to the capability of a firm to coordinate all activities related withthe production and distribution of garment products. Although it is closely linked to


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process innovation, organizational innovation involves establishment of clear workassignment, authority, relations, communication systems or formal reward system withina firm (Knight 1967:482). It examines the capability of firms to have elaborate structures,use professionals and acquire skills to effectively negotiate with buyers and suppliers. Animportant ingredient of organisational innovation is the ability to plan and control

production activities, costs and management controls, quality control and assurance, aswell as to manage human resources within the firm (Harrison et al. 2005).

Human resource is at the centre of any organisation and human beings play an importantrole in facilitating change in any organisation. Analysts argue that changing people is themost important, yet the most challenging part of organisational change and so is theinnovation (Knight 1967, Harrison et al. 2005). People innovation relates to activitiesundertaken by firms with a view to changing workers' behaviour and attitudes towardswork. It highlights the human capital management practices that foster an innovativeenvironment and better understand the roles that senior executives can play in enablinginnovation from a people perspective.

Employees in the clothing sector in Kenya have recently witnessed relentless cost cutting,a deep focus on productivity and efficiency, continual merger and acquisition activity,and the closure of firms. This has led to many of them being rendered jobless. As a resultworkers are wary about their future in the clothing industry. Firms are increasinglychanging people within the organisation as a way of cost cutting. In some cases, newones are hired but on lower terms than those of the previous employees. Labourcasualisation has also become common in the industry with workers being engaged onone to three month contracts. With uncertainty about their jobs, workers are always onlook out for alternative jobs elsewhere. Their commitments to the firms where they areworking are therefore quickly waning off. With low commitment to the firms, we foundthat people innovation in the industry is generally low. Firms generally recruit youngpeople mostly female job seekers and give them intensive on-job training. In the industry,training programmes are limited to induction training which is given to new employeesfor a period of at most one month. One exporting firm reported it had started a trainingprogramme for its workers but after one year it was suspended for fear that workers werebeing poached by other firms in the industry which did not have their own trainingprogramme. Most respondents felt the government should to take up the responsibility oftraining garment manufacturing workers for the industry. There appear to be a hugedisconnect between what training institutions are currently offering and what the industryneeds in terms of human resources. This cuts across all cadres of employment.Respondents felt there was need for collaboration between the industry and traininginstitutions to ensure that relevant skills were available. Foreign owned firms justified useof expatriates because of such shortage of trained and technical manpower. The aim wasto assign local staff on work study under an expatriate so that after the expatriate leaves,local staff could take up those assignments. In spite of this expectation, workers reportedthat transfer of skills from expatriate workers to local workers was minimal if notcompletely absent.


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6. Employment Creation and Poverty Reduction

In order to demystify issues the role of the sector in employment creation and povertyreduction beyond the macro data which are highly aggregated, in this study we carriedout 20 workers interviews. We found about 40% of workers in the operation stage had

some training in tailoring. Otherwise, majority of them had no formal training and reliedon the on-job training to gain skills for garment manufacturing. Almost 80% of theworkers interviewed were below 40 years old implying that the industry relied heavily onyoung labour force. Women tend to be younger than men.

Regarding their perceptions on the work they were doing, a vast majority of workersbelieved that it was better to work in the garment industry than to remain unemployed.Female workers on average were more contented with the work in the industry than themale workers. This was because male workers had more alternative opportunities foremployment than was the case of women. Others felt the expectations of employers weretoo high and production targets unattainable. They complained that working hours were

too long and employers were not willing to pay for the overtime.

Besides salaries, benefits for working in the industry were minimal. Workers wereparticularly concerned about statutory deductions which some reported were neverremitted to relevant authorities. In one case, a respondent reported that although his firmwas deducting National Hospital Insurance Fund (NHIF), he went to Kenyatta NationalHospital for admission, only to be told that he had not made any contribution to NHIF.

Most workers said they were supporting their extended family from the salaries theyearned in the industry. We found that among the 20 workers in our survey more than halfwere supporting their relatives. Remittances and family support accounted for a largeshare of monthly expenditures.

Challenges of working in the industry included lack of appreciation by employers,uncertainty about the jobs, casualisation of employment contracts, and low wage. Somerespondents felt that labour union was not representing their interest well. They opinedthat trade union officials in some cases were colluding with management to deny themtheir rights.

Wages paid by the industry on average puts a worker above the poverty line. However,the real value of income earned was low. Therefore, almost half the workers believedthey were among the poor people in the society. They argued the salary earned was noteven enough to meet their monthly expenditures. To make ends meet, one had to look forextra part-time work. On the other hand, some felt they were better off than most peopleworking in other industries.

One main use of income generated from the industry was education. When we askedworkers what their main achievements were, they reported that being able to educate theirchildren or siblings was important. Others had been able to train themselves or upgradetheir skills.


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A major aspiration of many of the workers is to buy sewing machines and start their ownbusiness. Others reported that their ambition was to start a business not related to garmentbecause of the fierce competition.

7. Conclusions

Innovation is the result of successful product, people, process and technological changesthat enable a new level of productivity and performance within a firm. In the garmentindustry, improved performance and cost reduction strategies yield significant benefitssuch as enhanced competitiveness, lower lead time, lower capital and operating expenses,and improved product margins. Moreover, innovation enables a firm to improve welfareof its employees. Innovation is the use of new ideas or current thinking applied infundamentally different ways that result in significant change in performance of the firm.This covers a broad view of issues including the development of new products, servicesand markets, improvements to existing operations and the creation of new business

models all of which aim at generating breakthrough results.

Case-studies in Kenya show that managers recognise the need for innovation in theindustry. Innovation in this sector is determined to a large extent by developing theclothing commodity chain backwards to stimulate the moribund cotton ginning andtextile sector. This, respondents overwhelmingly argued, would be instrumental increating competitiveness of the garment industry. Moreover, it was reported that lack ofinnovation may have been stemming from the lack of a well developed garment valuechain. In spite of the clearly stated requirements under AGOA for African countries todevelop textile and cotton growing in the region, the progress has been slow at best. Tomany, the end of derogation of the third country fabric under AGOA would mean an endto the garment industry. In Kenya the process of reviving the textile industry has beenuncoordinated. Given the high capital requirements for this kind of venture, not manyinvestors are keen to pull their investments in textile manufacturing.

Innovation is taking place in an ad-hoc manner and it is also precarious. No firm seems tohave a systematic approach to innovation. Whenever this was happening, it was mainlydriven by survival strategy than an expansion strategy.

Assistance from both the buyers and the suppliers to promote innovation was low. Buyersexpected firms to upgrade and innovate but were not willing to support them in any way.

The ability of the firms to turn around an order was low, making lead times high.

Most firms focus on a single market and in most cases, one or two buyers. For largefirms, the US market is the sole market the firms sold their products.

Investment in modern production technology is low, so is the skills availability. Productinnovation seems to be taking place but largely driven by the demands a buyer places onthe firm.


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Limitations to innovation in the garment industry include lack of access to information onnew technologies and innovations, inadequate institutional infrastructure, managementand marketing, human kills. Others include limited access to finances, regulatory. Overallenvironment is problematic: poor transport infrastructure, governance and corruption

issues, mediocre banking, high business costs and lack of technological infrastructure.


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McCormick, Dorothy, Paul Kamau and Peter Ligulu. 2006. Post-Multifibre Arrangement Analysis of theTextile and Garment Sectors in Kenya ,IDS Bulletin, 37:1, p. 81-89.McCormick, Dorothy, Peter Kimuyu and Mary Njeri Kinyanjui. 2007. Textiles and Clothing: GlobalPlayers and Local Struggles, in McCormick, Dorothy, Patrick Alila and Mary Omosa (eds.) Business in

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Oyelaran-Oyeyinka, B. and D. McCormick, Eds. 2007. Industrial Clusters and Innovation Systems inAfrica: Institutions, Markets and Policy. Tokyo, United Nations University Press.

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MERIT Working Paper. 2006:022. Maastricht

Appendix 1: Workers InterviewsCase 1 Local Firm: Julius Date: 5/06/08

Indicator

Demographic Male; 30 years old; married with 2 children; wife and children in ruralarea; wife is farming, looking after livestock & repairing clothes

Training Never attended any formal tailoring training learned on the job.learned all his skills on the job. He said he knows how to cut and sewtrousers.

Skills Machine Operator; cut and sew trousers

Employment History 1995-1996, helper at Spinner in Ruiru blanket factory;1997-2000, casual laborer in the construction industry;

2000 (four months), Falcon

2000-2003 Sameer JR Falcon

3 months, machine operator, Binti Apparels2 month, machine operator, Freba.

2005 (for six months), Machine Operator, Mash Apparel

From August 2006 to present, machine operator, Brother Shirt Factory

Earnings

(wages, housing,travel, medical)

Wages: Ksh. 282 per day since 2006;

Deducted NHIF only

no other medical cover. Hasn t been given cardthough;

Deducted NSSF no other pension scheme.Perception of thecurrent employment

Better paying compared to other firms worked for, though aware offirms that pay better than current employerHas not received this year s NHIF card despite deductions. Attempt toinquire on this issue may lead to dismissal.

Achievements Purchased two straight needle machines, goats, and a cow. Possiblemainly when worked for Sameer JAR;

Learned stitching and has trained wife how to repair clothesAble to make remittances to parents who live in rural area

Poverty situation

based on the currentemployment

He feels he is better than the unemployed colleagues even though the

working conditions could be improved.

Case 2 Local Firm Agnes Date 5/ 6 / 2008

Indicator

Demographic Female; born in 1976; married with 3 children; husband is a mechanicworking in industrial area; children living with their grandparents inrural area

Training Tailoring through apprenticeship from a rural micro-enterprise


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Skills Helper

Employment History May 2001-2005, tailor at Specialised Hardware.

Since 2005 to present, helper at Brother Shirts

Earnings(wages, housing,travel, medical)

Wages: Ksh. 249 per day

Deducted NHIF, but employer has not given a card of the same. Noother medical schemeDeducted NSSF, but on personal follow-up with institution, found noremissions. No contribution to other pension scheme

Perception of thecurrent employment

Perceives employer is exploitative

Considers self fortunate as she has never been subjected to frequenttemporary lay offs

Achievements Purchased a sewing machine

Purchases clothes for a physically handicapped child belonging to acousin;Makes monthly remittances of Ksh. 1000 to parents in rural area. Themoney is used in buying farm inputs and food;

Occasionally assists husband to pay children s school requirements uniform & examination fees

Poverty situationbased on the currentemployment

The workers are overworked and the pay is small. It is very challengingto work in the garment industry.

Case 3 EPZ Firm: Richard Date: 7/05/08

Indicator

Demographic Male; 26 years old; married with one child; wife and child are in ruralhome; incomplete secondary level of education reached form 2

Training Dressmaking Grade III from a private dressmaking training schoolSkills Machine operator, mainly double needle; helper

Employment History 2003 2005, Machine Operator, Global ApparelFrom 2006 to present, helper, Global Apparel


Wages: Ksh.184 per day (Ksh. 4784 per month)House allowance: Ksh. 750 per month;From the Ksh. 4784, makes monthly contributions to NSSF, NHIF andTTU (Take home at the end of month is therefore Ksh. 4500)


Fortunate to have a job

Achievements Making monthly remittances of Ksh. 1500 to rural home sharebetween wife and mother for education of brother


Case 4 Local Firm: Evelyn Date: 08/05/2008

Indicator

Demographic Female; 32 years old; married with two children; husband is a driverwith one of the high commissions in Kenya; lives in Upper Hill,Nairobi middle class residential area; has dependents mother andsiblings who live in rural home; first born in her family.

Training Certificate in garment making from Kirinyaga Technical Institute.Trained for three years.


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Skills Machine operator

Employment History Started at Wool TrackPlay Back International for one yearOctober 2005 to present machine operator at Kiboko Leisure Wear

Earnings(wages, housing,

travel, medical)

Paid bonus at the end of the yearWages: Ksh. 6500 per month

House allowance: 1500Other allowance: No commuter allowanceContributes to NSSF and NHIF


Present job is better and has no difficulties in comparison to farming(which is difficult and demanding)

Achievements


College mates are doing better than her financially, but those peoplefrom her village are worse off. The firm has been helpful to her ingetting new machines to start her own business.

Case 5 Local Firm: Job Date: 8/05/08

Indicator

Demographic Male; 23 years old; married with no children; third born in the family;has one dependant a younger brother in secondary school; wife is notengaged in any economic activity; incomplete secondary level ofeducation reached form 3

Training Driving

Skills Machine operator (trained on the job)

Employment History Before joining firm, was assisting parents to sell eggs; thereafter,joined Kiboko. Initially with Kiboko, was assigned general duties specifically cleaning. On completing the task, then would join othercolleagues in the garment section. Current has held position of machineoperator for 2 years.

Not engaged in side jobs


Wages: Ksh. 250 per day (inclusive of NHIF and NSSF)Bonus: Ksh. 1000 per year and rejected garments. All these take placeat the end of the year.

Allowance: Transport allowance when going on leave; no lunchallowance; no other medical cover or pension scheme


Fortunate to be working for current employer

Achievements


Considers self poor, but better today than before he joined firm

Case 6 Local Firm: Daniel Date:19/05/08

Indicator

Demographic Male; 40 years old; married with six children; stays with family inNairobi; primary level of education; wife is working with a firm inNairobi

Training


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Skills Machine operator one needle, straight stitchingEmployment History 1989 1995, handling a lath machine (welding work) with SP

Company1995 1999, machine operator at Lestud2005 to present, machine operator at Lestud

Engaged in a side job does some sewing for persons from hisneighbourhood


Wages: Ksh. 7750 per month. This includes house allowance of Ksh.1500 per month

Allowance: Ksh. 2000 as transport when going for annual leave at theend of the year

Medical: Statutory deductions made to NHIF;

Pension: Statutory deductions made to NSSF


Comparison between current and previous jobs: Previous job wasbetter. The salary was Ksh. 6000 per month and, in addition, received atthe end of the year a travelling allowance of Ksh. 5000 and wife wasgiven a voucher. Employer also paid for overtime.Does not mistreat employees

Achievements Been able to education childrenBeen able to construct a semi-permanent home upcountry. Inheritedthe land from his father

Purchased a Singer sewing machine in the year 2004


Considers self not to be doing well

Indicator

Case 7 Local Firm: Laban. Date: 19/05/08

Indicator

Demographic Male; born in 1969; married with four children; wife and children stayupcountry; secondary level of education; wife is a teacher

Training

Skills Works at the finishing sector of firm packing as described by clientEmployment History On completing school, first got employed at Kikomi and, when

Kikomi collapsed, joined Kenya Bus Service, then Lestud

1991 to 1993, casual at Lestud

1993 to 2006, permanent contract at LestudCurrently, three month renewable contract at Lestud

Engaged in side job purchases from the firm rejected T-Shirts, printson them and gets wife to assist in selling them.


Wages: Ksh. 6750 per month

House allowance: Ksh. 1500 per month

Travelling allowance: None this year

From side job: profit of Ksh. 4000. Purchases rejected T-shirts at Ksh.70 a piece, adds value on them, and resells at approximately Ksh. 200 apiece.


Work is a lot but the salary is lowExploitation of workers in the industry is real. The employees are toldto either take what is being offered or walk out

Salary is low, while the cost of living has increased


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Achievements The side business mentioned above.


Average - Considers self not poor but also not doing well

Case 8 Local Firm: Philemon Date: 19/05/06

IndicatorDemographic Male; 30 years; married with one child; family lives in Nairobi;

secondary level of education; second born of eight siblings and is thefirst son; six dependents siblings; resides in Dandora Phase IV; wifeholds a job in an industry based in Nairobi

Training None

Skills Draughts man

Employment History 1996, tourist guide

1998, draughts man in the design section of Lestud2007, was promoted to Assistant Supervisor at Lestud

2008, was stripped of the promotion



Wages: Ksh. 7700 per monthHouse allowance: Ksh. 1500 per month

Medical cover: Employer makes statutory deductions toward NHIF.No other medical coverPension scheme: Employer makes statutory deduction toward NSSF

Benefits: No transport or lunch allowance

Salary increases: After end of last year, he started on a lower salary. Inthe year 2007, he was earning a salary of Ksh. 9461 per month and, ahouse allowance of Ksh. 2255 per month


Not well paying

Working environment is poor there is a lot of dust, no first aidservices and no medical allowance

Achievements Educating his siblings


Compared to peers, considers self not to be doing well

Case 9 EPZ Firm: John Date: 12/05/08

Indicator

Demographic Male; 50 years old; married with five children; wife is a farmer andlives in Nyeri with the children;

Training Trained at KITI as a cutter and mark maker (all garment industryrelated)

Skills CutterEmployment History First employer: Kentex Apparels

Second employer: Sakum Apparels. Kentex split to enable productionof both local and export markets. Sakum was responsible for the exportmarket

Current employer: Mash Apparels on permanent contractEarnings(wages, housing,travel, medical)

Wages: Ksh. 27,000 per month, inclusive of house allowance, NSSFand NHIFBenefits: No medical insurance, lunch or tea


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Benefits


Employment with current employer came with a higher salary and amore secure positionLikes where he is working there is no harassment

Achievements Able to educate children and live better

Poverty situation

based on the currentemployment

Considers his economic status to be good.

Case 10 EPZ Firm:Norah Ndinda. Date: 12/05/08

Indicator

Demographic Female; 30 years old; married with one child; husband works in MagadiSoda; contributes to support of two brothers secondary education

Training Basic computer skills

Skills Production coordinator, whereby responsibilities include: checkingproduction how employees are working; balancing lines; recordproduction and enter the information into a computer on a daily basis.

Employment History First garment firm: Millenium where started as a trimmer, followed byissuing needles, then checker and lastly attendance clerk.Second garment firm: Sakum

Third garment firm from year 2005: started as production clerk, thenpromoted after 3 months to Personnel Assistant and currently hold theposition of Production Coordinator


Wages: Ksh. 8500

House allowance: Ksh. 1500

Other allowances/benefits: None no medical cover, transportallowance nor lunch allowance

Statutory deductions made: NSSF and NHIF



Likes her present job

Achievements Able to educate her child


Considers self to be doing better than her peers. Lives in a better place(in Pipeline) and is able to take care of child who is staying with her

Case 11 EPZ Firm: John Date: 7/05/08

Indicator

Demographic Male; 29 years old; secondary level of education; married with onechild; family stays with him;

Training

Skills Specialised in hemmingEmployment History 2002: ironing duties at MRC. While at MRC, learnt on the job how tooperate a machine;

From 2003 to present: machine operator on permanent contract


Wages: Ksh. 5400 per monthHouse allowance: Ksh. 822 per month

Transport allowance: Ksh. 1000 during Christmas holiday to enableworkers to travel up countryStatutory deductions: NHIF and NSSF


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Other benefits/allowances: none


Better paying

Working conditions are not bad

Achievements Supporting the education of younger brother who currently is incollege

Built a house upcountry


Considers self to be slightly above the poor

Case 12 Local Firm: Mendreuin Date: 14/ 6/08

Indicator

Demographic Female; 21 years old; single; shares house with a female workmate;primary level of education;

Training Tailoring making males, females and children clothing. Trained at aCatholic sponsored vocational institution in Kibera for a period of 2years at a fee of Ksh. 500 per month

Skills Cutting, stitching, trimming, ironing, and packing. She uses a straightmachine.

Employment History From September 2006 to present: at Stitch Master, stitching only (doesnot do trimming, ironing, cutting, inserting of buttons and buttonholes)


About Ksh. 3750 per month. Payment is done on piece rate, whereby askirt, dustcoat and shirt are paid at Ksh. 25 each, while a trouser is Ksh.30 each


The job is important as it enables her stay in Nairobi as she looks forbetter paying work. Getting work with a garment industry is not easyfor her as she does not have the experience gained in working for othercompanies

Achievements Able to make remittance of Ksh. 500 per month to parents upcountryNot able to save


Considers her economic standard as slightly better when working asopposed to when she is not working.

Case 10 EPZ Firm: Ann Date: 10 /05/08

Indicator

Demographic Female; 29 years old; married with one child; husband works in thehotel industry

Training Beauty manicure, pedicure and facial. Trained for one year in abeauty school.

Skills Beauty as described above and, some computer skillsEmployment History Before joining the garment industry, was working in a salon

For about five years, United Aryan. Started as a store keeper for oneweek on the basis of her form four certificate. Thereafter, held theposition of human resource clerk which entailed issuing employeeswith swapping cards.

Currently, as from March this year, not employed with United Aryan.Terminated contract because as from January this year, employerreduced wage.


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Wage by the time of terminating contract: Ksh. 8500House allowance by time of terminating contract: Ksh. 1275Statutory contributions made: NSSF and NHIFOther benefits/allowance: none


Exploitative. Examples give in support include:

Company resisted workers demand to join a union to advocate forrights in terms of overtime and service dues in the event of terminationof service.

Target kept going up such that it was not possible to complete within 8hours company pays based on targetsEmployees doing sand blasting do not get milk as required, butemployer would lie to auditors from buyers. Employer would alsothreaten workers against informing the auditors on the sameEmployees also threatened against informing auditors about workingon Sundays and night shifts

Achievements Been able to:

Purchase some utensilsSave some money in a bank account

Make remittance of Ksh. 1000 per month to parents. Has otherbrothers and sisters who also support parents


Case 13 EPZ Firm: Catherine Date: 10/05/08

Indicator

Demographic Female; born in 1970; married with one child; child resides withgrandparents upcountry; incomplete primary level of education;

Training None

Skills Helper at the finishing section, which entails: cutting off loose ends,trimming, checking, ironing and finally packing

Hair plaiting

Employment History Plaiting ladies hair

From 2006, helper at United Aryan


Wages: Ksh. 5,000 per month as basic salary;

House allowance: Ksh. 770 per monthBonus: given Ksh. 3000 at the end of the year

Statutory deductions: NSSF and NHIF

Salary increment: none since joined firmOther: no annual leave


Employer is exploitative. Examples supporting this include:

Discourages employees from joining a workers union goes to theextend of even bribing the union people to desist from recruitingemployees

May increase working hours without corresponding compensation (forovertime)Employer not kind

Working station has too much dust. Employer provides only a facemask which is inadequate. Required to provide sufficient quantities ofmilk as well, but done sparingly


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Employer informs employees to go on leave, but on resuming,employees are informed to reapply for their jobs (sign a new contract).This is done without payment of terminal dues

In addition, employer discourages employees from disclosing theirconcerns with respect to their employment with the firm. If it is knowthat an employee has done so, s/he is immediately given the sack.

Achievements NonePoverty situationbased on the currentemployment

Considers self poor lives from hand to mouth

Case 14 EPZ Firm: Jared Date: 10/05/08

Indicator

Demographic Male; 34 years old; married with two children; second born in family;secondary level of education and, thereafter vocational training; wife isself-employed, selling paraffin upcountry

Training Machine operator. Trained at Catholic vocational training institute fora period of six months on tailoring and dressmaking, quality control,supervision and, use and maintenance of industrial machines.Basic computer skill

Customer care through seminarsSkills Machine operator

Employment History 1998 2003: Security guard with BM Security. Thereafter, gotemployed as a casual in Nairobi Hospital. Following, startedemployment involvement with garment industry first Rising Sun,followed by Rolex.

Currently: contract worker with an EPZ firm. Contract signed for aperiod of one year



Wages: Ksh. 6700 per month as basic salary

House allowance: Ksh. 850 per month

Bonus: noneStatutory deductions: NSSF and NHIF

Medical cover: Other than NHIF, none. However, firm has a first aidfacility within compound.

Salary increment: none for the last two years


Payment is pegged on the targets set per day and not hours worked.Subsequently, there is no overtime payment. In the event that oneworks more than required in a day, s/he is asked to report late thefollowing day so that overtime is not paid.

Discourages employees from joining a workers union. Currently,employer has taken union officials to court on allegations of incitingemployeesEmployer always looking for mistakes so as to sack employees

Not well paying. Earned more as a security guard and the economywas better then. Today, the cost of living in high, forcing respondent toconsider relocating family to upcountry

Achievements

Poverty situationbased on the current

Considers self to be poor. Resides in a place with neither electricity norwater supply and pays rent of Ksh. 800 per month. Owns a small radio.


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employment

Case 15 EPZ Firm: Angela Date: 10/05 /08

Indicator

Demographic Female; 24 years old; secondary level of education; single; has nochildren;

Training In house training for two days on quality control toward employment asa checker at the finishing section

Skills Checker at the finishing section specifically, quality control. Haslearnt how a garment is sown as well as various parts of a cloth.

Employment History Before involvement with garment industry, worked at Frigoken fortwo years. Frigoken deals with export of French beans and other foodproducts

Current: checker with United Aryan. First garment industry to workwith. Been with firm for a period of nine months.


Wages: Ksh. 5000 per month as basic salary

House allowance: Ksh. 775

Statutory deductions: NHIF and NSSFSeparate medical cover: none

Other benefits: none

Bonuses: given a gift pack at the end of the year


Former employer was better. Work was easier with no set target.Current employer gives targets which one cannot complete withinnormal working hour, thus forcing one to put in extra hours at no extrapayAs a checker, chances of getting promoted are very slim and, makestraining as a machine operator difficult because, as a checker one isfully occupied

Achievements Been able to:Purchase a meko; and,

Host a sister who is attending school provides foodPoverty situationbased on the currentemployment

Considers self to be poor. With current salary, only able to feed, clothand house self

Case 16 EPZ Firm: Felistace Date: 10/05/08

Indicator

Demographic Female; married with two children;

Training In-house training on checking

Skills Quality control, measuring a garment and stitching using a straightmachine

Employment History

Past six years: Assistant Quality Controller at Upan WasanaBefore joining firm, was selling garments and tapes through a stallbased at the city centre.


Wage: Ksh. 7100 per monthStatutory deductions made: NSSF and NHIF


In the last eleven months, has been holding a position in the firm as anAssistant Quality Controller from a checker. This is normallyconsidered a promotion, but it is not reflected in her salary no salary


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adjustment. Subsequently not sure whether she has been promoted ornot.Current employment has enabled her assist husband with householdexpenses such as educating child, purchasing food stuff and, payinghouse help.

Employer does not pay for overtime. Forced to work late into the

night, exposing her to criminals. Some colleagues have been raped. Asline quality controller, she has to depart on the last person completinghis/her target.

Achievements


Considers her standard of living as has improved though marginally

Case 17 EPZ Firm: Phyllis Date 12/ 6 / 2008

Indicator

Demographic Female; 28 years old; single; leaves alone, close to the firm; secondarylevel of education;

Training Beauty manicure, pedicure and facial. Trained for one year at abeauty college based in the city

Machine operator for a period of six months by MRC

Skills Laying the garment on the cutting table, separating or sorting ofclothes, embroidery, stitching and, beauty

Employment History Before current employer: For one year worked at MRC as a machineoperatorFrom December 2005: Upan Wasana. Started as machine operator,then got promoted to current position embroidery machine operator


Wage: Ksh. 7000 per month inclusive of house allowance

Statutory deductions made: NSSF and NHIFSeparate medical cover and insurance scheme: none


The job is important to her because it is her only source of income.

Achievements Operates a savings account with a bank in which she saves Ksh. 500per month.

Able to remit some money to parents upkeep


Compared to her age mates from upcountry, her economic status isbetter

Case 18 EPZ Firm: Priscilla Date: 10/05/08

Indicator

Demographic Female; 29 years old; single; living alone; secondary level of education;fifth born; no children; contributes to supporting parents

Training Machine operator. Trained by Global ApparelBasic computer (done in the year 2004)

Skills

Employment History First garment industry employer: Global Apparel. Started as a helper,thereafter got trained to be a machine operator. Employed for one year

Second garment industry employer: MRC for a period of three years asa machine operator.


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Current employer: Upan Wasana, machine operator. Has been withfirm for a period of two years.


Wages: Ksh. 6000 per month inclusive of a house allowance of Ksh.900

Statutory deductions: NSSF and NHIF

Benefits: no separate medical cover, no lunch, tea or transport

allowanceAnnual leave: In December, gets two weeks off. Annual leave is nottaken all at once. It is spread along the year

Salary increment: none since joining Upan Wasana


No job security can be given the sack anytime even for very smallmistakes

Not comfortableTarget set is very high and therefore not able to complete the workwithin the nine hours allocated in a day. The extra hours put in are notcompensated for and, result in departing from work at night (which isdangerous)Employer discourages employees getting unionised

Employer currently has a lot of orders, hence work is continuousHas had no promotion since started working with employer and, thereare no prospects of promotion. The supervisors she found there are theones still there. These have always been supervisors recruited as such

Achievements


Considers self better off than many of her friend that she schooled with

Case 19 EPZ Firm: Hellen Date: 13/11/08

Indicator

Demographic Female; 24 years of age; single; no children; leaves in Kariobangi in her

parents house; first born; form four level of educationTraining On the job training

Skills Embroidery operator. Trained by Wild Elegance. Also learnt fromemployer is trimming.Hair plaiting acquired on the job at a hair salon

Employment History Year 2007 joined Wild Elegance as a trimmer & after four monthswas trained to operate an embroidery machine. Her job description inthe firm reads general worker. Employed on a one year renewablecontract.Before joining Wild Elegance, was working on commission at a salon plaiting hair. Learnt skill on the job. This was her first job. Workedfor a year.


Statutory deductions: NSSF and NHIF. None other scheme involvedin.

No lunch and transport allowance

Earns Ksh. 270 per dayOvertime is paid at the rate of Ksh. 70 for each one and half hoursworked. Normal working timing is from 8:00 a.m. to 4:30 p.m., with 30minutes lunch break.

Perception of the Unreliable. Twice, the firm has sent respondent home due to lack of


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current employment work. Combined number of months been out of work within the periodbeen employer with is four.Joined firm as a general worker, and is still considered a generalworker despite having the new skills thus remuneration is still that ofa general worker. Aware that in some firms, those with embroideryskills earn between Ksh. 300 and 340 per five hour shift.Better than previous employment as is assured of an income at the endof the day. Earnings in the previous employment were dependent ongetting a customer.

Achievements Been unable to save, despite leaving with parentsContributes to family budget every month. Ksh. 600 is given towardfood purchase; total of Ksh. 600 given to sibling as pocket money; and,Ksh. 500 is given to grandmother toward support.


Considers self to be poor. Earnings are low, taking into considerationthe high cost of living.

Case 20 EPZ Firm: Gideon Date: 12/11/08

IndicatorDemographic Male; 22 years of age; single; no children; leaves alone in a rented

premise in Embakasi; completed primary level of education; last born

Training On the job training

Skills Machine operator - straight, over lock, flat lock, buttonhole and buttonstitching

Trimmer.Capable of stitching whole garments

Painting.

Employment History Current employer: Wild Elegance. Been with employer for a period oftwo years as a machine operator.Previous employer: Brother Knit Wear. Joined as a trimmer, and lateracquired skills as a machine operator.

Before joining Brother Knit Wear, was a painter on demand; andbefore that, attempted to grow cabbages, but was unsuccessful due tounreliable rainfall was dependent on rain-fed agriculture


Casual labour with a three month renewable contract

Earns Ksh. 320 per day. A working day commences from 8:00 a.m.and ends at 4:30 p.m. with a 30 minute lunch break.

Incentive offered is Ksh. 50 on completing targets before 4:30 p.m.

Statutory deductions made: NSSF and NHIF. Not engaged with anyother scheme.

No lunch and transport allowance


Unreliable sometimes employer has not got work. Agreement withemployer is that he is employed only when there is work. Months onthe break, he falls back on his painting skills.

Better in pay than previous employer who offered Ksh. 280 per dayand, there were no incentives.No chance of being promoted.

Achievements Been able to purchase four goats and household goods

Saving Ksh. 1000 per month with a group through a rotating savingsand credit scheme. Has not got a personal bank account


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Offers support to cousins and parents. Support to cousins is towardpayment of school fees and clothing; while to parents is upkeep foodand clothing.


Perceives self as poor.


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Appendix 2: Survey Questionnaire Firms

Innovation in the Kenyan Garment Industry - 2008Introduction

The garment industry plays an important role in the Kenyan industrialization process andemployment creation. In this regard, Institute for Development Studies, University ofNairobi is conducting a survey to better understand the current situation of this industryand how innovation can be enhanced. Your firm has been randomly selected for thisresearch and we hope the industry will benefit from the findings of this study. Neitheryou nor your company s name will be disclosed in any document prepared based on thissurvey.

Date _________________________

A. Basic information about the company

A1. Name of the Company ________________________________

A2. Contact Person: Name _________________________ Designation: ____________________

A3. Physical Address (Location) ______________________________________________

A4. Town ________________________________________

A5. Telephone: ________________________________

A6. E-mail: _________________________________________

A7. Year of establishment in Kenya ____________

A8. Number of employees when operation started (production) ____ (administration) ____

A9. What is the nationality of the Owner(s)

Documents

Innovation in Kenyan Clothing Sector