The European second-hand clothing (SHC) industry is making a significant contribution to economic output and employment both in Europe and in destination countries. This is the conclusion of a comprehensive report entitled "The Socio-Economic Impact of Second-Hand Clothes in Africa and the EU27+" compiled by the British consultancy firm Oxford Economics on behalf of the organisation Humana People to People and the Dutch textiles recycler Sympany+.
The report focussed on the impact of exports on value creation and employment in the EU and the United Kingdom (EU27+) as well as in three selected African countries, namely Ghana, Kenya and Mozambique.
The report's authors found that in 2023, the SHC industry contributed a total of around €7bn to the GDP of the EU27+ states, €3bn of which was generated by the second-hand clothing industry directly while the remaining €4bn came from multiplier effects. In Germany and the United Kingdom alone, the SHC industry stimulated €670m and €420m in GDP contributions, respectively.
The direct added value within the EU27+ is split between profits (€700m) and employee compensation (€2.3bn). The retail sector accounts for 62 per cent of this gross value added (GVA), followed by sorting and collection companies, which each contribute 19 per cent.
Around 150,000 jobs in the SHC industry in the EU
The SHC industry also had a positive effect on employment, with an estimated 110,000 new jobs created in the EU27+, primarily in retail (around 67,000), and an additional 35,000 jobs in sorting facilities and 11,000 in collection firms. A further 40,000 jobs are created through indirect and induced impact channels such as supply chain spending and wage-induced spending by employees, taking the total number of jobs generated by the second-hand clothing sector in 2023 to around 150,000.
According to the report, the average gross income of the industry’s employees in the individual EU countries was some 12 per cent higher than the respective national minimum wage. The industry has also created significant employment opportunities in less economically developed regions of the EU27+, including Bulgaria, Romania and Poland, where around 22,000 workers were employed in the second-hand clothing sector. The European SHC sector also fosters equal-pay female employment opportunities, with women making up around 79 per cent of the workforce and no differences in pay between men and women reported.
Major impact on employment in recipient countries
The report also identifies significant economic benefits for the three African countries examined, with second-hand clothing imports to Ghana from the EU27+ contributing an estimated $35m to the country’s GDP in 2023. This impact stem primarily from the employee wages and salaries, which account for 71 per cent of the direct GDP contribution. As to employment effects, second-hand clothing imports from the EU27+ have created around 14,000 formal jobs in Ghana, compared to Kenya, where the direct GDP contribution amounts to around $9.2m combined with around 3,600 formal jobs.
In Mozambique, the direct contribution to GDP is estimated at $2.7m – mainly due to the relatively high employee compensation in the SHC sector – alongside 1,000 formal jobs within the second-hand clothing industry.
The overall economic impact of second-hand clothing imports from the EU in the three African countries studied goes beyond direct contributions and can be seen in the economic activity generated through the supply chain as well as wage-induced consumer spending. In Ghana, the total socio-economic contribution of these imports across all impact channels amounted to around $76m combined with around 22,000 formal jobs. As a result, the industry achieved a GDP multiplier effect of 2.2, with every dollar of GVA generating an additional $1.20 elsewhere in the economy.
Similar impacts were observed in Kenya and Mozambique, with second-hand clothing trade with the EU27+ generating $24m in GVA and 6,300 formal jobs in Kenya and €11m in GVA and 5,700 formal jobs in Mozambique, not only from the indirect impacts of the industry but also from procurement and wage-induced spending by employees.
Tax revenue from SHC trade with the EU27+ in 2023 was also noteworthy, accounting for between 0.1 and 0.4 per cent of the total national tax revenue across all impact channels in the three African countries studied. This included heavy import duties and VAT revenue, underlining the sector’s crucial role in supporting government revenues.
Informal retail market
The report also included key data on what is known as the informal retail market, an especially important sector in many countries of the Global South, including Ghana, Kenya and Mozambique. In fact, far more clothing is often sold here than in the formal retail sector.
According to the study, over 80 percent of second-hand clothing imported from the EU27+ is sold to end consumers via informal channels in Ghana, Kenya and Mozambique. Informal retailers buy bales of clothing from wholesalers and individual items from formal retailers, increasing the market value of the clothing items by washing, ironing and refashioning them. Other informal retailers also operate as tailors and repairers, adding value to lower-quality clothing. Informal retailers are also instrumental in distributing clothing to remote areas, ensuring access to affordable clothing for a wider population.
EU and the UK continue to lead in global second-hand clothing trade
According to Oxford Economics, the EU27+ had a leading position in global trade in second-hand clothing in 2023, exporting 2.2 million tonnes valued at $2.2bn, while imports to the EU27+ amounted to as little as 752,000 tonnes valued at $923m.
The United Kingdom is the third largest exporter of used textiles worldwide in terms of individual countries after the United States and China. The European Union’s most important exporters include Germany, the Netherlands, Poland and Italy. Much of the second-hand clothing exported from EU27+ countries remains within Europe, with some countries acting as intermediaries that sort and re-export second-hand clothing.
In 2023, 47 per cent of Ghana’s imports came directly from the EU27+ compared to the significantly lower shares of direct imports from the EU27+ in Kenya (13 per cent) and Mozambique (18 per cent). Nonetheless, the EU27+ could potentially have a far greater impact on these countries’ imports, the report concludes. Intermediary countries such as United Arab Emirates and Pakistan also sort and process second-hand clothing collected in the EU27+ and are among the most important supply markets for the Global South.
