Introduction

Firms face a shortage of manpower and high attrition rates, particularly in the garment industry. While companies have traditionally invested in improving their workers’ technical skills, soft skills have not been given much importance, particularly in the manufacturing sector. In this context, can training workers in soft skills improve business outcomes? Our randomized controlled trial – a one-of-a-kind, large-scale, rigorous analysis of a soft-skills training program called (P.A.C.E. – Personal Advancement and Career Enhancement) in the factory units of Shahi Exports Pvt. Ltd. – proves that the answer is a resounding yes.

Design

The intervention we evaluated was P.A.C.E. – Personal Advancement and Career Enhancement, a life skills training program designed by GAP Inc. Through two-hour weekly sessions by certified trainers, the program trains female garment workers (FGWs) in life skills such as effective communication, financial literacy, and time management. Our trial design randomly allotted 2703 FGWs to one of three groups: treatment (soft skills training), pure control (no soft skills training), and control interacting with the group of treatment workers.

 

Through the experiment our team wanted to answer three main questions:

  • Is it possible to improve transferable soft skills meaningfully for adults with initial low stocks of these skills, particularly for women in a manufacturing setting in a developing country?
  • If yes, do these improved skills change workplace outcomes for the firm (retention, attendance, efficiency, productivity, and promotion)?
  • Given high rates of turnover, does it pay for firms to impart soft skills to their workers i.e. does it make business sense?

Results

We found that treated workers:

 

  • were more productive for the firm by 7 percentage points (pp) after the program
  • had higher cumulative person days by 8.5 days during the training, and 19 days after the training
  • were more likely to save for their children’s education
  • had higher self regard
  • significantly improved their knowledge of soft skills

 

Our team also found that just placing these treated workers in the same production line as untreated workers was beneficial, highlighting positive spillovers i.e. having a trained worker on a production line enhanced the value of the entire production process.

 

Finally, we calculated the rate of return for the firm to understand if the program is viable from a business point of view. This was calculated by combining data on productivity, retention, attendance, and salary (gains) with the firm’s expenditure on the training (costs).

 

Period Net Rate of Return
End of program period 12%
Twenty months after P.A.C.E. (excluding spillovers and production complementarities) 256%
Twenty months after P.A.C.E. (including spillovers and production complementarities) 420%

Conclusion

Our impact evaluation led our partner, Shahi Exports Pvt. Ltd. to set a target of training 70,000 FGWs by 2024 in soft skills. Buoyed by our results, Gap Inc., the company that spearheaded the program, set a target of reaching 1 million women and girls all over the world through P.A.C.E. by 2020. The company has already trained over 45,000 women in 12 countries.

In an industry employing low-wage female workers with little or no education, our evaluation builds a case for investing in workers to produce returns in the form of various positive business and social outcomes, and presents a model that can be scaled up in other firms and industries.