AccLabPY 

30/01/2023 

Employment Formalization (through labor productivity)

This activity is framed within the frontier challenge "Employment formalization", as increasing productivity of the garment workshops in Yaguarón can be pathway toward their formalization.

The original learning question of our action plan was: how can we increase access to social insurance and improve the economic and physical security of employment in Paraguay's informal economy, particularly for women and in the recycling, construction, domestic work, and apparel industries?

Asociación de Confeccionistas de Yaguarón Municipality of Yaguarón Martel (private garments distribution and selling company) Education and Science Ministry National Innovation Strategy / Presidential Delivery Unit

Our intent is to evaluate the effect of technical training and quality monitoring in the productive efficiency of new products within a garment cluster in the city of Yaguarón, Paraguay. 

Our hypothesis suggests that a combination of (1) training workshop owners on industrial time measurements, and (2) training workshop workers on production techniques while implementing continuous quality control of their work, should improve the productive efficiency of the workshops.

The intervention was carried out in 2021, for a 2-month period in November and December. It consisted of a baseline component and an experimental component. The baseline component included the following activities: (a) the production of 7 prototypes of school overalls by each garment workshop interested in participating of the experiment, to diagnose their production and quality problems. (b) the training of 21 instructors from the Textile and Garment Department of the Professional Promotion National Service (SNPP) in industrial timing and quality control specifically for school overalls, and (c) the production of 3,000 school overalls by 15 small and medium-sized garment f workshops. The experimental component included the following activities: (a) half-day training for workshop owners on industrial time control, operational sequences, and production cost per minute, to generate awareness and knowledge of the value of the cost-time of production of the school overalls, (b) 20-minute basic training for operators (seamstresses) on sewing techniques manufacturing and quality control of school overalls, and (c) continuous quality control during the manufacturing process of the school overalls by the monitors who received training in the baseline component. The objective was to stop the production when detecting quality or efficiency problems and proposing alternatives and techniques of production to optimize production time and quality for the batch assigned to the garment workshop, in addition to recording production times and the percentage of rejections, which were later used in the evaluation of the experimental intervention.  An important side note: all the school overalls produced by this experimental intervention were donated to the Education and Science Ministry, which in turn has donated these overalls to low-income schools in different regions of the country. The production of the overalls was, in turn, part of a real contract between each garment workshop and a well-known private garments company, which in turn handled the logistics of delivering these school overalls to the Education and Science Ministry. The experiment was, therefore, an excellent case of multisectoral collaboration on a learning-oriented activity, which in turn had a positive externality: the donation of school overalls to low-income schools. 

The unit of analysis is the garment workshop. We measured the productive efficiency of each of the 15 participating workshops from the existing cluster in the City of Yaguarón. 

Starting with a pool of 24 interested workshops, 18 agreed to participate of the experiment. We assigned garment workshops to the treatment group through random sampling of 9 blocks of garment workshop pairs. Each block included 2 garment workshops with the greatest possible similarity, based on the following variables, which we collected before the intervention: 1. Number of sewing machines per worker 2. Number of specialized machines per garment workshop 3. Membership of Yaguaron’s Garment Workshops Association 4. Type of electricity connection (single-phase or three-phase) 5. Number of collaborators (women and men) On each of the 9 blocks, one garment workshop was randomly chosen and assigned to the treatment group, while the other was assigned to the control group. As a result, both treatment and control groups were balanced with respect to the five control variables we described previously. After randomization, 3 garment workshops dropped out of the study. The experiment was finally carried out with 9 garment workshops in the control group and 6 garment workshops in the treatment group. The balance was not greatly affected by this change in the sample and both groups continued to keep a high degree of similarity. In general terms, the intervention sought to improve the productive efficiency of garment workshops during the production of a new product. For this investigation, productive efficiency refers to the efficiency achieved during production, measured in minutes worked per product and per workshop, also considering the number of garments reprocessed and the number of garments rejected during the quality control. To calculate the minutes worked in the production of one school overall (𝑀𝑇) in the workshops of Yaguarón, we measure the following variables during the production phase:  1. Basic minutes (𝑴𝑩): is the actual time taken to complete the production of one school overall in each garment workshop. 2. Standard allocations per package produced (𝑨𝑬𝑷): it is the sum of 10% of the value of basic minutes achieved by each workshop, which is based on standardized metrics that affect performance during the productive process. 3. Assignments for machinery and operators (𝑨𝑴𝒚𝑶): it is the sum of 20% of the value of basic minutes achieved by each workshop, based on standardized performance and productivity metrics, understanding that the productive of each day is not constant and that there are low, regular, and high productivity levels depending on external factors. Thus, the minutes worked in producing one school overall (𝑀𝑇), are calculated as follows: 𝑀𝑇 =𝑀𝐵 +𝐴𝐸𝑃 +𝐴𝑀𝑦𝑂 (1) To estimate the productive efficiency of the workshops, we also resort to another variable used in the literature to measure production processes. The standard minute allowed (SAM) is the time that is allocated to a task or work content in a garment in a given industry (Abtew, et al., 2019). In other words, it is the time it takes an operator to complete the corresponding task within the productive process indicated in the operational sequence, with 100% of efficiency. In our case, the SAM=30.77 minutes is a constant that reflects the standard time (minutes of production) in which the local garment industry produces a unit of school overalls. Using these concepts, the main variable of the study is the productive efficiency measured as a proportion of minutes worked per batch in relation to the SAM. The formula used is the following: Productive efficiency=MT/SAM×100 It is important to mention that as production is faster (in minutes) and the quality is maintained (rejections do not increase), efficiency is gained. In this sense, a lower indicator value represents a gain in efficiency. In order to calculate the indicators for the treatment and control groups, we register the information needed for each garment industry, using a survey that was completed by the instructors. 

3 months

Approximately 20% of the time of our Head of Experimentation, 20% of the time of our Head of Solutions Mapping, 20% of the time of our Head of Exploration, plus 50% of the time of two people hired for this learning cycle was dedicated to the design, management, analysis, reporting, and monitoring of results, throughout the duration of the intervention.  Moreover, the lab also counted with the help of, at the time, a Data Analyst, who devoted over 50% of her time to both implementation and analysis of the experiment. And for a brief time at the beginning, we had a part-time assistant helping in the process of sending out invitations to workers.  

On average, the garment workshops in the treatment group used less number of minutes and received fewer rejections than the control group. In addition, the treatment group also took fewer days to complete the production. Therefore, the experiment shows that when garment workshops receive training on industrial processes and quality control, they improve their productive efficiency. The average of the productive efficiency for the control group is 79%, while the average for the treatment group is 52%. That is, the result indicates better performance for the treatment group. The difference of 27.14 in favor of the treatment group comes from the fact that this group was able, on average, to produce a school overall every 12.6 minutes, while the garments in the control group did it in 6.4 more minutes. These results were subjected to a formal mean difference test to determine if the differences are statistically significant. With a p-value of 0.0348, the null hypothesis is rejected, so we conclude that the differences found in the average productive efficiency of the treatment and control groups are statistically significant. Likewise, we observed that there is a marked difference in the number of rejections between the treatment and control groups. The first group had an average of 10.83 rejected school overalls, while the control group doubled this number, reaching an average of 21.89 rejected overalls. Similarly, we applied a mean difference test to determine the statistical significance of the identified difference. In this case, the difference between the average number of rejections between the treatment and control groups is not statistically significant (p-value=0.1279). During the experimentation period, we also made qualitative observations that we detail below. For the garment workshops, participating in the experiment involved producing a new product for a new customer in a very short period. The production of school overalls in a cluster traditionally dedicated to the production of jeans represented a challenge of flexibility and agility. To meet the request and these challenges, the workshops mobilized both their informal family and social relationships, as well as the more formal organizational relationships present in the cluster. The blurred line between the family home economy and entrepreneurship allows, on the one hand, high flexibility to respond to short peaks in demand, extending the hours worked and involving occasional family labor to respond to said temporary demand. In addition to the particularities identified in the internal functioning of the workshop, our observations suggest that family networks, and the trust that resides within them, can be an important asset for the rapid formation of subcontractual exchanges. In addition to these informal relationships, we also observe associative relationships, articulated through the Yaguarón Garment Association (ACY), which serve as an asset to respond quickly and flexibly to demand peaks and demands for new products.

We observed the following limitations that could be improved:  1. The limited number of the sample: with a larger sample, more robust results could be obtained, covering more types/profiles of garment workshops. Likewise, a greater sample may allow results to be extrapolated to a wider variety of workshops. 2. The product that the workshops made for the experiment is not the product in which they are specialized: due to a UNDP policy, the overalls made by the workshops were donated to a school. Therefore, school overalls had to be made, instead of jeans, which is the product in which the Yaguarón clothing cluster is specialized. Although the workshops responded with success, the training and results could be more useful to the community if they were based on the product they manufacture on a daily basis 3. In the data collection, we considered only the information necessary to create the productive efficiency indicators. In another iteration of the experiment, other relevant variables could be collected, with the aim of not only calculating the degree of productive efficiency of the workshops, but also exploring its drivers.

9

For evaluation purposes only:  1. Payment to the garment workshops for the school overalls made~ $24000 2. Other resources: time invested by AccLab Members (average or 2h-4h/week over the full period of the pilot), half time engagement of two specialists hired for this learning loop. Time invested by the SNPP instructors. 

Yes, from this activity, we detected the need to have more information on the garment workshops of the Yaguarón cluster in terms of infrastructure, investment, productivity, employment, formalization, among others, for which we designed and implemented the First Census of Workshops of clothing in Yaguarón in 2022. Moreover, our new Poverty Innovation Funding Window Project will adapt this intervention, integrating some elements of the In Motion UNDP Program (https://www.undp.org/sdgvaluechains/motion).  

Sort-of: within our new Poverty Innovation Funding Window, we are taking some of the elements of this intervention to scale, but adapting it to follow more closely the model of the In Motion UNDP Program. This will be done in 3 clusters of garment workshops: one more time in the same cluster of this experiment, another in the city of Pilar, Paraguay, and one final intervention in a cluster of San Lorenzo, Paraguay. 

A central conclusion that emerges from this learning cycle is that the development of services and common or collective assets for garment clusters is an essential step to exploit their potential to adopt flexible manufacturing strategies. The experiment carried out demonstrates that when an entity external to the garment workshops provides a collective service, such as continuous quality monitoring, has a measurable impact in production efficiency. This means that this type of investment are rational and profitable, in addition to generating an economic and social return.

We faced many logistical challenges related to the interest of the workshops to participate in the intervention. This was mainly due to the time of year in which it was made, since the production of the school overalls took place during November 2021, a month that is characterized by demand peaks for clothing manufacturers. In addition, the intervention involved the manufacture of white overalls, and the workshops had to make important logistical changes within their production processes, since the simultaneous manufacturing of jeans (the product in which they are specialized) could compromise the quality of the overalls made. These factors decreased the number of workshops that finally participated in the intervention.

The Inclusive Development Portfolio of our CO also focuses on some activities related to employment formalization and our findings could help to shape and design new projects and activities oriented to improve the productivity of some industries such as the garment workshops, strengthening their processes and capacities as a step to encourage the formalization of these workshops and their collaborators. 

1. The Ministry of Industry and Commerce, since the results show that offering training and monitoring by the National Professional Promotion Service (SNPP), s a service offered by the Ministry of Labor, can be very effective in increasing the productivity of the garment sector, one of the productive sectors with the highest growth in the last 20 years (35%) and with greater flexibility to adapt to different challenges. 2. Garment workshop that receives the trainings in quality control and industrial time can improve their productive efficiency by following the indications and knowledge they gained. 3. The Association of Clothing Manufacturers of Yaguarón (ACY) as one of the findings of the experiment is that the association and networking between the different garment workshops is key to boosting Yaguarón's flexible manufacturing capacity. 4. The municipality of Yaguarón, given that the findings of the experiment and the exploration activities of this learning loop indicate that the Yaguarón cluster has the potential to grow, which could boost the industrial and productive growth of this region, generating jobs and other socioeconomic benefits.

No, this experiment did not require iterations.

1. Once the geographical area and the dates of the intervention have been defined, make an approach to organizations/associations or leaders that allow a more direct contact with the garment workshops.   2. Survey the training needs of the workshops before defining the intervention, ensuring (if possible) that these trainings are based on the daily activities of the workshops, so that they can really incorporate the knowledge into their own production processes and the effect of the intervention is more lasting.

Yes, this experiment can be replicated in any productive sector where the factories, workshops, and workers in general need training in quality control and industrial production, and when it is expected that an improvement of the productive efficiency can be an ally to reduce the barriers to employment formalization.

Both sensing and exploration activities influenced greatly the design of the experiment, the hypotheses we decided to test, the places and people we engaged, and the things we needed to observe as the experiment unfolded.  The activities designed as a part of the mapping and exploration phases, make it possible to made it possible to know in depth the needs of the actors involved, so that the experimentation was fully based on the findings of these phases.

The response capacity of the participating workshops, which quickly learned the production processes and the manufacturing technique of a totally new product and carried it out with high quality standards. In addition, we were surprised by the family networks and the connections between the different workshops, which, although allowed them to respond to the demand and generate constant synergies between the workshops, is a double-edged sword, since while they generate agile exchanges between workshops, they can also perpetuate their informal status over time. And finally, it was surprising how open and collaborative were both the Education and Science Ministry and the Private Garments Company we engaged for this experiment. In a very short period of time, both these institutions moved fast to make this experiment happen.