Decimated Clothing Industry Casts Workers into Poverty. Developing countries across Asia will see their economies grow a collective 0.1 percent this year, the slowest rate in 60 years, according to the Asian Development Bank.
A key reason is the decimation of the clothing industry.
From Bangladesh to Myanmar, millions of workers – most of them women – climbed out of poverty by working in factories turning out T-shirts, shoes, and other apparel for the developed world’s consumers.
Clothing comprised more than 80 percent of Bangladesh’s export earnings and provided four million jobs. One in five Cambodian families had at least one member working in the garment trade. Vietnam and India also were heavily dependent on clothing exports, according to the World Trade Organization.
In 2019, more than 120 new garment factories registered in Myanmar. The nation shipped $6.7 billion worth of apparel and accessories last year, reported SMART Textile & Garments, a project that works to improve working conditions in the factories.
Commonly, the women who made those goods in Asian countries lived in dormitories or shared rooms and sent money back to families in rural villages to pay for food, medical care, school fees, and other necessities.
When the global economy shut down in March, factories were left with billions of dollars’ worth of goods for which orders had suddenly been canceled. The factories shut down and fired hundreds of thousands of workers.
The loss of jobs is even more painful because these countries’ economies have “no alternative right now to the apparel model,” said Raymond Robertson, a professor at Texas A&M University who studies labor and development economics. “That’s why it’s not just a temporary setback.”
The old jobs are unlikely to return in the same numbers.
As many as 30 percent of the clothing industry’s supply line could disappear, either by being bought or closing down, said Achim Berg, an advisor to the apparel industry at McKinsey & Co. He sees a “massive shakeout” ahead for the industry.
Agreeing to what we had long forecast, Rubana Huq, president of a garment manufacturers trade group in Bangladesh said, “I don’t think this is a sector which is going to come back to the same point again.”
Western companies are expected adopt “near-shoring,” dealing with factories closer to retail markets. Production for Europe will likely move to Turkey, Eastern Europe, and North Africa; and to Mexico and Latin America for U.S. markets, Berg said.
The worldwide economic collapse could increase the number of people living on less than $1.90 a day – the World Bank’s definition of “extreme poverty” – by 71 million to 100 million, the bank has calculated.  Almost half of the projected new poor would be in South Asia, the bank said.
TREND FORECAST: From luxury to bargain basement, retail sales in clothing will continue to slump as more people work from home and tens of millions more are fired and unemployed.
With fear spreading and mask wearing the new ABnormal, people will be afraid to go out and “party” or to fine dine. Staying at home, the feel to be dressed up and be in with the “in crowd” will not be societal motivation.
“Furloughed” Becomes “Fired.” Fallout from the global economic shutdown has persisted so long that many employers are running out of reserves or federal bailout funds and are telling furloughed workers there is little prospect that they will return to work in the foreseeable future.
The scale of job losses in the first half of this year is ten times worse than at the beginning of the Great Recession, according to the Organization for Economic Cooperation and Development (OECD).
The number of job postings across the OECD’s 37 member countries is half those when the shutdown began, the group’s analysis showed.
“In a matter of a few months,” the worldwide economic shutdown “wiped out all improvements in the labor market since the end of the 2008 financial crisis,” said Stefano Scarpetta, the OECD’s director of employment.
The shutdown also has damaged or destroyed careers among gig workers, who often are the first to be let go when times are hard.
Overall employment is unlikely to return to pre-pandemic levels before 2022, the OECD said.
Jobless rates will average 9.7 among the OECD’s 37 member nations at the end of this year, the group forecast, but could rise past 12 percent if the pandemic strengthens in the fall and winter, forcing the shutdown’s return.
“The jobs crisis risks turning into a social crisis,” the report added: the lowest-wage workers will have the hardest time finding new jobs or regaining lost income, creating a languishing underclass.
The crisis “is widening the chasm that existed even before COVID-19 struck,” said Angel Gurria, OECD’s secretary general.
Also, a new generation of workers will find fewer doors into the workforce, limiting the trajectory of their careers and earnings growth.
The European Commission has worsened its economic forecast for the continent this year, now foreseeing an 8.3-percent economic contraction instead of the 7.4 percent in predicted in May. Countries sharing the euro currency will share an 8.7-percent loss of GDP, it said.
Early day from May and June indicates “the worst may have passed,” the commission added.
The bleak jobs outlook was seconded by Randal Quarles, vice-chair of the U.S. Federal Reserve.
“The corporate sector entered the crisis with high levels of debt and has necessarily borrowed more during the event,” he said in a recent speech, “and many households are facing bleak employment prospects.”
Quarles also noted another threat to the future jobs market.
“The next phase” of economic turmoil “will inevitably involve an increase in nonperforming loans… as demand falls and some borrowers fail,” he said, resulting in more businesses closing their doors and eliminating jobs.
TREND FORECAST: The worst is yet to come. Yes, there will be short bounce backs in employment, however, the long-term trend is unemployment rates higher than at the height of the Great Depression… and it will be worldwide.
Never mentioned in the mainstream media was our Top Trend for 2020, “The New World Disorder.” In 2019, from France to Chile, from South Africa to Lebanon, riots, protests and demonstrations were breaking out across the globe.
Why? Poverty, lack of basic living standards, government corruption, crime and violence.
And they are breaking out again… in Bulgaria, Serbia, France… to Israel where thousands protested last night outside Prime Minister Benjamin Netanyahu’s residence calling on him to resign over his indictment on corruption charge.
Again, this is just the beginning of a long-term trend where civil wars will erupt into regional wars as they spread across borders.
Gerald Celente has long forecast that as economies decline into the “Greatest Depression” and civil unrest escalates, “When all else fails, they take you to war.”
Cash-Poor Tech Start-Ups Lay off Next Gen. U.S. tech start-ups laid off 112,000 employees in April, according to analysis firm CompTIA. Silicon Valley alone did away with 25,000 spots, including layoffs at high-profile companies Groupon, Lyft, and Uber.
Young companies in finance, transportation, and travel logged many of the layoffs. However, the hardest-hit sector has been tech itself, such as companies developing artificial intelligence applications.
Fewer than 40 percent of the 140 Seattle-area tech start-ups surveyed by the Washington Technology Business Association had received aid through the Paycheck Protection Program; 25 percent had laid off employees.
Other sources of funds to keep staff in place also are drying up.
Worldwide, private funding for start-ups dropped 22 percent to $67 billion in this year’s first quarter, down 22 percent from a year earlier, CB Insights reported.
The economic shutdown has spooked many venture capitalists, making it especially difficult for start-ups seeking less than $100 million in capital to find support.
The layoffs and lack of capital worry industry observers, who note that start-ups are a key source of innovation as well as employees for larger companies in all sectors of the economy.
Almost half of Kentucky Unemployed. From 6 March through 13 June, about 47 percent of workers in Kentucky filed for unemployment benefits.
Only Georgia has a higher unemployment rate, with 54 percent jobless.
During the week of 13 June, 1.5 million people across the country – about five of every 1,000 U.S residents – claimed unemployment benefits. In the same week, eight of every 1,000 Kentuckians reported being newly laid off.
Kentucky’s jobs depend heavily on manufacturing or personal services, both of which were suspended under the state’s stay-at-home rules.
TREND FORECAST: Beyond the loss of income, homes, the inability to pay rents, credit cards, student loan debt, already 5.5 million people who lost their jobs between February and May of this year also lost their health insurance, according to findings by Families USA.
The consumer health care advocacy organization said yesterday that as a result of the COVID-19 lockdown that locked millions out of work, this is emerging as the greatest health insurance loss in American history.