The Race to the Bottom in Labor Standards: A Critical Perspective on the Flow of Foreign Direct Investment in the Ethiopian Textile and Apparel Industrial Parks
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Date
2020-02
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Addis Ababa University
Abstract
In an attempt to attract Foreign Direct Investment and gain access to the western markets, developing countries most often compete with each other. Due to this competition, nations put downward pressure on wages and working conditions leading to a phenomenon called the race to the bottom. This research aims to explore the effect of labor standards in the flow of FDI in the textile and apparel industries in Ethiopia with a particular focus on the Bole-Lemi Industrial Park and a flagship Hawassa Industrial Park. The study employed a qualitative research design. For the practical investigation of the research questions, data were collected from both primary (through a Key informant semi-structured interview) and secondary sources and analyzed through the theoretical lens of the race-to-the-bottom thesis. The research has found out that the core labour standards are being violated in the Hawasa and Bole-Lemi industrial parks where by none of the industries in the parks have the basic labor Unions and the workers are not able to exercise their rights of collective bargaining and the right to strike. Concerning conditions at work, it is found out that the workers are laboring under poor conditions, among other things, an unpaid or forced over times, off –the clock jobs and verbal abuses as well as offered poor quality food. Moreover, although it is believed to be in accordance with the workers productivity, Ethiopian workers are being paid a meager wage of $26 per month in the industrial parks. With this, they are the least paid workers compared to any of the countries producing textile and apparel for the international market. This study identified that the the low implementation of national labor laws, the impotence of top level trade unions and absence of minimum wage policy in the country has subjected the workers to grave exploitation in a way that does not represent their human dignity. This, in turn, is paving the way for profit seeking companies to invest in the country and causing a race to the bottom in labor standards in the Ethiopian textile industries. As a result of these dynamics, poor jobs are becoming the rule of the game in the country. In the end, the research has suggested that the state must strive to reconcile the effort to attract investment with the standard of jobs generated in its industrial parks through setting a wage structure that could still preserve the country's competitive advantage while practically applying labor regulations in the industrial parks.
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Keywords
Ethiopia, the race to the bottom, labour standards, textile and apparel industries, Foreign Direct Investment