Slovak Republic

The Slovak Textile and Clothing Industry

the present situation and prospects with an emphasis on enhancing export engagement s ex towards Eastern European countries

The textile and clothing industry textile and clothing industry
has had an important position in the Slovak economy structure for a long time. However, developments have placed the Slovak textile and clothing industry under strong pressure from the external and internal environment in recent years, just like in other developed countries of the world. Its outward eff ect is a decline in production and in particular in the employment rate.
The industry production index in the Slovak textile and clothing industry has been declining for the last fi ve years on the level of an annual average of 0.25%; however, the number of employees in the sector dropped by 10,000 people in the same period (by 6.4% annually on average). However, the positive aspect of development is that the labour productivity on the basis of sales is growing on the level of an annual average of 7.3% in the same period. The share of the textile and clothing industry in the Slovak industrial production output in 2006 is on the level of 1.6%. The textile and clothing industry represents 3.2% of added value and 3.4% of Slovak industrial production export, however, the share of this sector in industrial production employment rate is as high as 9.6%. In 2006 the Slovak textile and clothing industry achieved annual growth of production on the level of 3.4% in comparison with the previous year; however, the employment rate in the secto ped by 6.8%, or in absolute numbers by 2.6 thousand people. The creation of added value in the sector has increased annually by 5.6%. The added value rate in the sector is one of the highest amongst all sectors of Slovak industrial production (39%); however, in conversion to one SKK of wages, it is well below the level of the Slovak average (it only reaches the value of 1.61 SKK). In 2006 the labour productivity achieved annual growth of 11.0%. The rate of investment into the textile and clothing sector has been increasing in recent years. E.g. in 2006 the share of investments in revenues of the sector was 9.3%. The value of this indicator rates the textile and clothing industry among more active Slovak industrial sectors with regard to investments. In 2006, almost 36 thousand people were employed in approx. 250 organizations of Slovak textile and clothing production with 20 and more employees and another 12 – 15 thousand people were employed in small enterprises with up to 20 employees. The total number of employees in the sector is higher than e.g. the chemical industry, metallurgy industry or wood processing industry. A specifi c feature of the Slovak textile and clothing industry is the high share of female employees (85% of the total number of those employed are women) and employment of disadvantaged groups on the labour market (employees over 50 years old, disabled employees). Moreover, production capacities of the sector are prevailingly allocated in socially weaker regions.

The textile industry achieved signifi cantly better results in 2006.
Sales production in the textile industry has increased annually by 11.6%; however, the employment rate dropped by 7.7%. Labour productivity has dynamically increased (by 20.7%). Sales production in the clothing industry has dropped by 5.7% and the employment rate by 6.3%. Labour productivity remained on the level of previous year. The domestic market of the Slovak Republic is too small for extensive capacities of textile and clothing industry. Therefore a substantial part of its production (as much as 83%) is exported by the sector. Such a level of export engagement rates the textile and clothing industry among top industry sectors. The markets of European Union countries were an absolute priority for Slovak textile and clothing exporters in previous periods. In 2006, more than 90% of all textile and clothing exports were directed to these markets. Current Slovak exports of textile and clothing to markets of Eastern European countries do not come close to taking full advantage of the opportunities these markets off er (at the moment less than 3% of textile and clothing exports are directed to markets of these countries). A typical example is the Russian Federation. The current share of the Russian Federation in the total turnover of Slovak foreign trade represents 6.7% (1.6% on the side of exports and 11.3% on the side of imports). However, only 0.3% of Slovak exports in the textile and clothing goods are directed to the market of Russian Federation. For instance, in absolute values, the volume of exports to the Russian Federation is comparable with the volume of exports to countries of substantially smaller economic weight (e.g. Latvia, Croatia). Slovak textile and clothing products have a long-term tradition on this market and at the same time have a good reputation. Also volumes of textile and clothing imports from the Russian Federation to the Slovak domestic market do not correspond with the real abilities of both partners. In 2006, only 0.4% of all textile and clothing imports came from the Russian Federation. The present competitive capability of the Slovak textile and clothing industry is chiefl y based on cost factors and acceptation of its production by foreign markets. Producers are aware that such an assortment structure requires radical changes. Therefore, also at the present time, the Slovak textile and clothing industry is undergoing thorough fundamental restructuralization changes. These closely relate to broader application of state-of-the-art technologies and general reorientation to products with higher added value. The result is the fact that there is already a strong group of producers in the industry representing the absolute cutting edge in the sector within Europe and an equally strong group of subjects with signifi cant growth potential. The future of the whole Slovak textile and clothing industry is, like in other developed European Union countries, in stimulating innovation development and in restructuralization of production towards assortments on a high quality

ATOP

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