What is the ruling on working in clothing design and fashion design?

Designing clothes, or manufacturing and sewing them, and
selling them, come under the same rulings as the clothes themselves.
Whatever it is permissible to wear, it is permissible to design it,
manufacture it and sew it. Whatever it is not permissible to wear, it is
not permissible to design it, manufacture it or deal in it.

What appears to be the case is that clothing may be divided
into three categories: 

1.
Clothes that are permissible in all cases

This refers to clothing that is usually used in a permissible
manner, such as ordinary clothing for men and children, and women’s clothing
that covers the body properly, or that is usually worn by women in front of
other women, or that a woman wears at home. There is nothing wrong with
designing, sewing, manufacturing and selling these kinds of clothes.

2.
Prohibited clothing

This refers to clothing for men that is made of silk, or
women’s clothes that are not covering and that are usually worn on public
occasions or in front of other people, or that it is thought most likely
that women will use in prohibited ways.

With regard to these kind of clothes, it is not permissible
to design them, sew them, or manufacture them, because that comes under the
heading of helping in that which is haraam. Shaykh al-Islam Ibn Taymiyah
(may Allah have mercy on him) said: With regard to every kind of clothing
that it is thought most likely will be used for sinful purposes, it is not
permissible to sell it or sew it for someone who will use it for sinful and
wrongful purposes.

End quote from Sharh al-‘Umdah (4/386)

It says in Fataawa al-Lajnah ad-Daa’imah (13/109):
everything that is used for prohibited purposes, or it is thought most
likely that it will be used in such ways, it is prohibited to manufacture
it, import it, sell it, or distribute it among the Muslims. That includes
what many women do nowadays – may Allah guide them – of wearing translucent,
tight and short clothes, all of which results in showing their charms and
adornment, and shows the shape of the woman’s limbs in front of non-mahram
men. End quote.

3.
Clothes that may be used for both permissible and
prohibited purposes in equal measure, depending on the choice of the person
who wears them

A woman might wear them for her husband, or in front of women
or mahrams, or she might wear them in front of non-mahrams.

The basic principle concerning such clothes is that it is
permissible to manufacture them, because they may be used in some
permissible ways, and the burden of sin will be borne by those who use them
in prohibited ways.

And Allah knows best.