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.

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