Clothing, textile and leather industry

The OSKA study of the clothing, textile and leather industry (CTL sector) seeks to answer the question of what the sector’s labour and skills needs will be over the next ten years and provides proposals on how to meet these needs.

Employment in the sector has been declining for a long time. While in the early 2000s the sector employed more than 23,000 people, today fewer than 8,000 workers remain. The CTL sector is a labour-intensive branch of manufacturing with a long history, where a large share of production is made as subcontracting and the share of exports is high. In 2024, there were 1,101 companies operating in the sector, 87% of them micro-enterprises with fewer than ten employees. In recent years, competitive advantage has weakened mainly due to rising labour and production costs and a decline in orders. Competitiveness depends on value creation, and companies developing niche and knowledge-intensive products with long-term international contracts and strong product development are in a better position.

In 2024, 7,370 people were employed in the study’s core occupations, four-fifths of whom were production workers. The largest occupational group is sewing operators (4,010 employed), followed by other production workers (1,200) and textile machine operators (745). Of those employed in core occupations, 44% work in clothing production, 32% in textile production, 6% in leather goods production and leather processing, and 18% in other activities. Regionally, employment is concentrated in Harju County, Ida-Viru County, and Pärnu County. The sector’s average wage is below the Estonian average (in 2024, wages amounted to 77% of the Estonian average in textile production, 60% in clothing production, and 65% in leather goods production), which affects labour supply and occupational uptake.

The development of the sector and its labour and skills needs over the next decade will be mainly influenced by price competition, the geopolitical situation, environmental sustainability, the circular economy, demographic changes, and technological development.

• Price competition and geopolitical situation. The sector’s broader value chain ecosystem is one of the most globalised today. It depends on international orders and exports and must cope with strong international price competition. At the same time, global e-commerce is expanding, and companies must compete between low-cost mass production and higher-priced responsible production. To remain competitive, it is necessary to create higher added value and increase productivity. Supply chain uncertainty and geopolitical risks have created a new opportunity for Estonia – demand is growing for flexible small-batch production close to target markets. This gives Estonian companies the opportunity to enter higher value-added niches, such as medical and functional clothing markets.
• Environmental sustainability and circular economy. The CTL sector is one of the most environmentally impactful industries. European Union regulations such as the Ecodesign Regulation, the Digital Product Passport, and extended producer responsibility require companies to rethink their entire value chains according to circular economy principles. Circular design, recyclability of materials, textile handling, and recycling systems are becoming increasingly important. ESG principles must also be implemented.
• Demographic changes. The average age of CTL sector workers is higher than the national workforce average. A large share of employees are of pre-retirement age, meaning that a generational transition is approaching in the coming years, deepening labour shortages. Attracting young people into the sector and ensuring they acquire the necessary skills is becoming critical.
• Technological development. Digitalisation and automation are transforming production processes across the value chain. Although sewing will remain largely labour-intensive due to the specific nature of soft and flexible materials, more simple stages such as cutting, assembly, and packaging are increasingly being automated. At the same time, digital solutions such as 3D design, ERP systems, digital printing, and data analytics are changing the work of specialists and managers. The future is not about replacing people entirely, but about Industry 5.0 – cooperation between humans and machines, where technology supports humans.

According to OSKA forecasts, employment in core occupations in the CTL sector will decrease by approximately 2,000 workers over the next decade (about –27%). However, due to an ageing workforce, replacement demand remains high, and around 1,000 new workers will be needed in core occupations over the ten-year period. A large share of workers are older – as many as 41% of employees in core occupations are aged 55 or older, and 9% are already of retirement age. Among technicians and mechanics, 18% are of retirement age, and among sewing operators, 43% are aged 55 or older. Experts are concerned that with the retirement of this generation, Estonia may lose sewing competence and decades of accumulated know-how. This could threaten the country’s industrial autonomy and its ability to produce critical textile products and garments when needed.

According to forecasts, employment in industrial engineers, designers, and tailors will remain stable. In all other CTL core occupations (technicians and mechanics, managers, supervisors, constructors, technologists, sewing operators, textile machine operators, and other production workers), employment is expected to decline. Not all new labour needs are expected to come from formal education; it is estimated that more than one-third of workers may come through upskilling and reskilling.

Employers perceive a severe shortage of highly skilled sewing operators, while training provision is insufficient and young people’s interest in the field is low. The availability of sewing operators in the labour market has not improved compared to the previous OSKA study. Although employment forecasts show a decline in the occupation, replacement demand remains high due to an ageing workforce. In addition to low interest, challenges include low graduate employability and limited formal education provision, which should take regional labour demand into account. Sewing operators will remain an important part of the sector’s workforce in the near future.

Tailors are trained in large numbers, but their occupational uptake is low. The training has been popular among adults as a hobby or for self-development. Manufacturing companies need workers with very strong sewing skills capable of producing more complex and small-batch products. Part of tailor training graduates fill the demand for sewing operators, so training should also consider manufacturing sector needs.

The training supply of industrial engineers is lower than labour demand. However, in order to develop higher value-added, more complex products and services and to increase productivity and international competitiveness, there is a need for more high-value-added specialists.

Employers face significant difficulties in recruiting technicians and mechanics, and the supply of new workers is insufficient. The need for workers with technical basic knowledge and skills is cross-sectoral and has been highlighted in other OSKA industrial studies as well. Recruitment is difficult, the workforce is ageing, and other industries compete for the same skills. The shortage is further exacerbated by regional availability of training – for example, mechatronics training is not available in Pärnu County despite demand from local industries.

Constructors and technologists are trained in numbers exceeding labour demand, yet employers still perceive shortages. Graduates are rarely employed in their trained field. These are small but highly skilled occupations that are critical for the sector.

In addition to changes in education provision, companies in the CTL sector must find ways to increase value added in order to pay higher wages and improve the sector’s reputation among potential workers. Cooperation between educational institutions and companies must increasingly focus on regional accessibility of training.

The need to develop CTL workers’ skills is mainly related to sustainability and circular economy, the adoption of new materials and smart textiles, the expansion of digitalised production, and the optimisation of production processes.

• Sustainability and circular economy, including eco-design and circular design implementation, textile handling and recycling, and compliance with ESG principles, extended producer responsibility, and the Digital Product Passport (DPP), are becoming central throughout the product lifecycle.
• Material knowledge and materials technology are becoming increasingly important. New materials and smart textiles require skills to test, prototype, evaluate, and assess compliance. From a sustainability perspective, extending product lifespan and reducing environmental footprint is essential. Focus is also placed on repairability and recyclability.
• Data-driven production skills are essential to improve planning and resource efficiency, reduce defects and downtime, forecast demand, and design pricing and life-cycle costs transparently.
• Product development skills, including 3D design and digital prototyping, life-cycle assessment, and compliance with regulatory requirements, are important. Creativity and basic textile knowledge must be combined with automated production, digital product development, and circular economy principles.
• Practical production skills and manual craftsmanship, together with the use of sector-specific software, are required for preventive maintenance of equipment and improvement of production processes to reduce downtime, enable faster transition to small batches, and increase efficiency.
• To remain competitive in global markets, supply chain management skills are needed to reduce supply risks in a contract-based and rapidly changing economic environment and to make informed decisions about what to produce in-house and what to outsource.
• Cooperation and communication skills are important, as product development and production are increasingly team- and partnership-based and technologies and requirements evolve rapidly. Clear communication and the use of English in technical work and international cooperation support smooth transitions to new ways of working and reduce error-related costs.