Beyond COVID-19: How the manufacturing industry should prepare

Soft Skills And Their Hard Business Impacts

FOCUS AREA

Closing The Skill Gap

LOCATION

Bengaluru

REACH

5 factories, 2700 female garment workers

PARTNERS

Yale University, Private Enterprise Development in Low-Income Countries (PEDL), Shahi Exports, University of Michigan, Gap Inc., Massachusetts Institute of Technology

STAGE

DESIGN

EVALUATE

ANALYZE

DISSEMINATE

SCALE-UP

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The garment industry faces huge labor turnover and attrition rates. The majority of the workers are women, who struggle to manage time between high production targets and household chores. They are often unable to speak up at the workplace. While companies traditionally invest in improving workers’ technical skills, they don’t necessarily give much importance to soft skills.

Challenge

How can we improve women’s confidence and communication at the workplace? Can businesses benefit from such investments?

Design

The Personal Advancement and Career Enhancement (P.A.C.E.) program is Gap Inc.’s flagship life skills training program for female garment workers (FGWs). Under this program, FGWs are trained in skills like effective communication, time management, problem solving, and decision making over the course of eight months, in over 60 hours.

We partnered with Shahi Exports, India’s largest apparel export house, to test the social and business impacts of P.A.C.E. via a randomized controlled trial. In five of their factories in Bangalore, India, we randomly assigned 80 production lines to treatment (P.A.C.E. training) and 32 production lines to control (no P.A.C.E. training).

Further, we asked workers if they were interested in participating in the P.A.C.E. program. Out of the 2703 workers that expressed interest, we randomly assigned 1087 to treatment (P.A.C.E. training) and 1616 to control (no P.A.C.E. training). In the control, 837 workers were part of the treatment lines, hence often interacted with P.A.C.E. trained workers.

Findings

We look at workplace outcomes captured in Shahi’s data systems and find that treated workers are:

  1. More productive by 
11% post the program.
  2. More likely to be assigned to complex tasks both during and after the treatment.
  3. More likely to report that they expect a promotion within the next six months.
  4. More productive – they produce six garments more each hour on average, relative to the control group, post treatment.

Through survey data collected by independent, external surveyors we find that treated workers are:

  1. 15% more likely to request for skill development training at the firm, state-sponsored pension, and subsidized health-care.
  2. More likely to save in general for their children’s education.
  3. More rational in their risk and time preferences.
  4. More aspirational with regard to their children’s ultimate educational attainment.

Further, we combine our point estimates of impacts on workplace outcomes with program cost and accounting profit data to calculate the program’s costs and benefits to the firm. The program’s net rate of return is already considerable by the end of the program period (12%), with the program costs more than covered. By the end of the measurement period i.e. eight months after program completion, the return is about 250%. These very large returns are rationalized by the relatively low cost of the program combined with the accumulated effects on productivity and person days.

Scale up

This was the first evaluation carried out by us, and it has wonderfully set the tone for all our projects to come. Our experiment demonstrates the benefits of soft skills training to both parties in the manufacturing process.

As of late 2019, over 400,000 women in 17 countries have participated in the program. Shahi has set a target of training over 50,000 women by 2024 in the P.A.C.E. program. Gap aims to reach a million by 2022.

Image credits: Nayantara Parikh



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