Organising in Export Processing Zones ILO Knowledge on EPZs Claude Akpokavie

Outline  Definition of EPZs  Why governments set up EPZs  Why enterprises invest in EPZs  Decent work in EPZs  Employment issues  Labour law  Social Protection  Social dialogue  EPZ strategy and development policy

Definition EPZs are “industrial zones with special incentives set up to attract foreign direct investment, in which imported materials undergo some degree of processing before being exported again”

… special incentives… Economic  Exemptions from export taxes / duties on imports  Tax holiday package (taxes on profits; property tax; municipal taxes; VAT; etc.)  Exemptions from foreign exchange controls  Free repatriation of profits  Infrastructure facilities; electricity; water; …  Administrative facilities and services provided  Cost/benefit of EPZ strategy* Social**  Limitations on workers’ rights especially freedom of association (right to organise; industrial action; …)

…evolution in time…  Names: free trade zones; special economic zones; bonded warehouses; free ports; maquiladoras; development zones; etc.  Type: assembly plant; single processing plant; high tech; finance zones; free port; tourist resort; call centres; …  Form: EPZ as a defined zone → EPZ enterprise / plant anywhere → foreign investors in country  Sectors: labour intensive (garments, textiles) → capital intensive (electronics) → services (call centres

Why Governments set up EPZs  Attract foreign direct investment*  Create jobs  Diversify the economy  Transfer skills  Diversify the economy  Earn foreign exchange  Backward and forward linkages  etc

What is in it for Employers  Incentive package (subsidies)  Low labour costs  Strategic location – market access  Quality of infrastructure  Regulatory framework – limitations on labour law  Availability of appropriate human resources

Decent work : Employment Estimates of the development of export processing zones Source ILO (2003; 2008) No. of countries with EPZs No. of EPZs Employment (millions) n.a n.a n.a – of which China n.a n.a n.a – other countries with available data n.a Total countries for which data were available 2002 in(108)

…employment issues…  Significant employment growth (though some losses in some countries due to competition to attract FDI into EPZs) o Net employment creation or simple movement from domestic economy to EPZs?  Quality of employment (decent employment) issues: o High turnover of workers (average career max 5 years) o Skills upgrading? o Hiring and firing regime suspect o Working conditions o Labour management relations o etc

… profile of workers …  Majority are Women – up to 90% are women in some countries  Tend to be rather Young  Migrants  Generally Poor (minorities; discriminated groups?)  Therefore face issue like: o Discrimination o Harassment o Accommodation o Transportation from work to hostel (especially night shift) o Family responsibility issues o Pregnancy tests still existing?) o Pay equity; etc. o Profile is a mixture of Gender / Ethnicity / Poverty / Youth (important from the point of view of Organising)

Decent work: Rights  Regulatory framework = subsidy / incentive to attract FDI  Law : more countries extending coverage in law  Practice: but not in practise  Freedom of Association and Collective bargaining (FOA/CB): o legal exemptions on unionisation in zones; o refusal of access to zones to trade unions representatives; o legal restrictions on the right to strike; o interference of governments and employers in the affairs of trade unions; o acts of anti-union discrimination (reprisals, harassment, blacklisting) o restrictions to collective bargaining

… rights …  Discrimination o Harassment o Maternity protection o Child care issues o Accommodation o Transportation from work to hostel (especially night shift) o Family responsibility issues o Wages - pay equity; o Benefits and career development; o Working hours  Study in Central America on key problems: o Women: 1) wages 2) maternity rights 3) pay overtime 4) length shifts o Men : 1) maternity rights 2) wages 3) pay on rest days 4) overtime pay o CSR related issues (role of buyers; IFA;…)

Decent work: Social Protection issues  Maternity protection  Extent of social security coverage in law and in practice for EPZ workers  Wages  Working Hours (overtime)  Leave and Rest periods  Facilities and family responsibilities: existence and reality of facilities like crèches, clinics, sanitation, cafeteria, (night) transportation, housing  Health and Safety (rare exemptions)

Decent work: Social dialogue  Major area of deficit (though there are some examples)  Linked to the deficits in relation to FOA/CB  Employer push for “solidaristas” associations; workers’ councils; worker management committees; etc.  Labour inspection  generally weak  prohibited from entering zones in some countries

EPZ strategy and development policy  Area of deep political conflict  ILO tripartite actors: governments – employers –workers  More research is needed  Statistics  Impact of WTO rules  Cost/benefit of EPZ strategy However some degree of agreement that:  EPZ = Low road to creation of decent jobs  Preference for an integrated (industrial) development strategy as against enclave approach of EPZ  Forward and backward linkages are key but are often missing  Conclusions of 1998 Tripartite Meeting  Trade Unions: challenge = Policy + Organising