October 21, 2021
Introduction
Special Economic Zones (SEZ) in their various forms have expanded globally, especially in developing countries. According to UNCTAD estimates, there are more than 5,000 zones in the world with upwards of 90 percent of these in developing countries. Since many first generation zones often pursued an investment attraction strategy centered on low wages and lax employment conditions, zones were criticised for enabling the violation of worker rights across a range of dimensions. Although some newly created zones went against this trend, widespread adaptation of decent employment standards in zones remained elusive.
Research by UNCTAD presented the economic case for zones to switch from a narrow focus on cost advantages to becoming champions of social responsibility and sustainable development. Yet follow up research by ILO and UNCTAD showed that significant awareness raising and consensus building were still needed to transform SEZs into facilitators of decent work. The Handbook on Special Economic Zones in Africa, developed by UNCTAD, highlighted best practices and put forward policy recommendations on how to build development oriented and sustainable SEZs in Africa, particularly in light of the new trade and investment environment in Africa after the full implementation of the African Continental Free Trade Area (AfCFTA), which paved the way for improving decent work outcomes.
This session focused specifically on the role of zones in Africa with focus on how zones create decent jobs, attract investment, support youth employment, promote gender equality in the workplace and establish strong linkages that build stable and prosperous local communities outside the zone. The main objective of this session was to provide a forum for experts and participants to exchange views on policy measures which would enable zones to derive value from adequate labour standards and decent wages.
Issues that were addressed:
- What were the current approaches to integrating decent work into zone development objectives and operations?
- How could decent work standards enhance efficiency of zone operations and attract more investors?
- What were some of the best practices from SEZs around the world?
Session Highlights
In recent years, SEZs have proliferated in Africa having a low base of around 20 in 1990 to around 240 in 2020. These SEZs are well placed, are doing decent work in the African countries, and are attractive for their range of potential socio economic benefits. Yet, the current SEZ landscape shows there is much to be desired in terms of the Environmental, Social and Governance (ESG) standards. For instance, only one-third of the SEZs provide facilities such as gender programs, housing and other amenities. The census conducted in these SEZs revealed that around 35 percent of the labour force is females. Despite that, there has been a lack of emphasis on health awareness, education and focus on issues faced by females. Some of the key issues that African SEZs are facing at present are:
- Non compliance with the ESG standards,
- Inefficiencies in performance due to reduced labour standards,
- Few policies for housing and other amenities,
- Reduced focus on gender programs which deal with gender issues and gender composition, including but not limited to gender policy, maternity/paternity leave, child policy,
- Marginalisation and exploitation of women, and
- Using trainees to lower wage cost
The Panellists discussed the current state of affairs in the SEZs and ways to increase the focus on economic diversification, with emphasis on the role of innovation and its impact on production and job creation. Collaboration with the regional authority still forms a key component to sustain the investment. Kenya, for instance, developed programs to build capacity, introduced awards to recognise best practices in the work environment, and adherence to various regulations with respect to work environment, gender and inclusion issues.
The panel also elaborated on the issues from the perspective of the workers, who are after all the key players and without whom the discussion would be incomplete. The major challenges faced by workers were related to implementation of statutory minimum wage, non implementation of laws that allowed freedom of association to workers, etc. Despite the shortcomings, there have been various success stories along the way. For instance, Ghana, through regulation, ensured compliance with ILO standards, negotiated terms of contract, ensured rights of women were upheld, and hired experts to help workers identify and reduce occurrence of the COVID-19 virus. Enhancement in instances where employers and employees work with mutual respect and productivity, was observed. To ensure continued investment, employer-employee cooperation and increase in productivity, best practices from the success stories of other SEZs should be adopted and applied on a case by case basis.
A few steps towards this endeavour would be:
- Enable collective bargaining by forming trade unions to enable health and safety standards, ensure minimum wage, identify instances of abuse and remediation, amongst others, for the workers,
- Continue to work with different development partners to look for labour inclusive policies,
- Educate the labour force to bring awareness about their rights, improve their pay and promote lifelong learning,
- Provide freedom of choice to workers so that they can join the trade union of their choice,
- Increased focus on the work to be done in the gender field,
- Link industries with technical universities and vocational schools to enhance and develop the skills of the labour force which would lead to enhanced productivity,
- Presence of a robust compliance department,
- Continuous engagement with prospective investors and ensuring the presence of all stakeholders at the table,
- Create a one-stop shop which would help employers in procuring licences etc,
- Enhancing mobility in the zone, such as electric buses which would reduce the travel time on foot to factories,
- Help workers at the bottom of the pyramid,
- Create safety committees,
- Identify instances when workers are underpaid, and
- For COVID specific scenario, ensuring the health and safety of the workers
The experience of SEZs in various countries has demonstrated that they particularly help countries with limited capacity and help build linkages with national economies. SEZs, therefore, are necessary to bring about reform and sustain decent work. Industrialisation is required to ensure job opportunities are created, where the SEZs and Free Economic Zones (FEZs) have the capacity to deliver, stakeholders work together and the rights and aspirations of workers are respected.
Opening
- Vic van Vuuren, Director, Enterprises Branch, International Labour Organisation (ILO)
On the panel were:
- Caroline Khamati Mugalla, Executive Secretary, East African Trade Union Confederation (EATUC)
- Adewale Oyerinde, Deputy Director, Membership Services, Nigeria Employers’ Consultative Association
- Kate Abbeo, Deputy CEO, Ghana Free Zones Authority, Ghana
- Lelise Neme, Commissioner, Ethiopian Investment Commission, Ethiopia
- Stephen Obiro, Head Advocacy, Communications & Partnerships, Federation of Kenya Employers
Moderator
- Vic van Vuuren, Director, Enterprises Branch, International Labour Organisation (ILO)