Emerging Labor Issues in Industrial Development Zones of Ethiopia :An Appraisal of Legal and Policy Frameworks
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Date
2018
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Addis Ababa, Ethiopia
Abstract
Economic globalization as facilitated chiefly by the sophisticated transport and communication
technology enabled FDI to locate their business in areas that can fetch for them better outcomes.
States in their developmental endeavors are also competing in attracting the FDI in to their
economy by providing different investment incentives. In view of this developing countries
including Ethiopia are establishing industrial development zones (IDZ) or EPZ with packages of
incentives.
Governments and industries tend to suppress labor standards in their attempt to attract FDI in to
EPZ and to be competitive in international market by minimizing their labor cost. They reduce
workers' wage, prevent operation of unions, collective bargaining and inspection services in
EPZs. However, different studies uncover there are no evidence that FDI is attracted to areas
where labor rights are reduced, or union and inspection rights and minimum wage is absent. It is
however found that FDI location is mainly determined by factors like quality of infrastructure,
generosity of incentives, market access, ease of administrative bureaucracies and productive
labor. And cost oflabor is considered not a factor or insignificant factor.
Today there is a shift of focus from EPZ based on low labor cost to EPZ which is based on
respect of labor rights because respect of labor standards are becoming preconditions for grant of
market preferences to developed countries like EU and USA and also for engaging in business
with reputed MNEs. Therefore, EPZ competitiveness based on low labor cost is traditional and is
racing to the bottom of labor standards.
In what mechanism and how some emerging labor issues in IDZs of Ethiopia could be protected
are the main questions raised by this thesis and the answer is respecting and enforcing labor
standards in zones. This research employed a qualitative methodology is employed and literature
review, comparative study and different interviews and FGD are conducted with relevant bodies
and common themes were gathered and analyzed to proof the real data with the theories. It is
found that wage paid in IDZs Ethiopia is below poverty line and not livable. As a result, against
GoE policy objective of poverty reduction the workers in IDZs are working under extreme
poverty and are burden to the society and the economy. Unionization rights are practically
limited and suppressed due to enclave nature of zones preventing access and by acts of
government and industries in the zone. As a result there is no forum for voice of workers in IDZs
of Ethiopia. Generally the zones social condition lacked government attention. The relevant
organ of government entrusted with labor administration is weak and not committed to inspect
violation of workers' rights.
If IDZs of Ethiopia are required to succeed there should be industrial peace which relies mainly
on allowing workers get their fair share by way of wage, and the right to labor union and
collective bargaining protected and effective inspection services allowed. To this effect MOLSA,
industries and workers in IDZs and other stakeholders should work toward reforming the
practice, law and policy design of IDZs of Ethiopia by fixing minimum wages, allowing right to
organize and collective bargaining, guarantee the enforcement of labor standards in IDZs by
strengthening the inspection structure.