Export Processing Zones (EPZs)
MODULE 4:  The Impact of Export Processing Zones on the Labour Market

Do EPZs create new jobs? What kind of new jobs do they create?

    *including a large number of enterprises that are not located within EPZ areas but do enjoy the same status as EPZ enterprises.

looking at the table

What do you think about job creation in EPZs?

EPZs in which countries have been successful in creating jobs? In which countries have they not? Why?

Is the growth in employment sustainable? What has happened to EPZ jobs in the 1990s in Africa and elsewhere? Why?

What type of jobs are created in EPZs?

What types of jobs do EPZs create?

Are they unskilled, semi-skilled?

What are the opportunities for skills development?

As shown in the table, many EPZ jobs are low skill jobs.

Discuss the case study below:

Case studies of job types and skills development issues

Mauritius - Use of female migrants

The Export Processing Zones in Mauritius began to experience labour shortages at the end of the 1980s and began to import foreign labour. As Mauritian labour became scarce and more demanding, wage levels rose. EPZs thus chose one of two strategies: either to move to regions were labour is still cheap and plentiful or to import foreign labour. In Mauritius, some EPZs industrialists chose the second option.

Most migrant workers are young women from India and China. They are mainly single young women without family responsibilities who are therefore more available for overtime work. The EPZs provide dormitories only for migrant workers, and social problems may arise. They live in overcrowded conditions and some of the dormitories in which they are housed were found to be in a deplorable state.

Mauritius - assembly line production

Most of the light assembly workers are women. Women are the preferred workforce as they are seen to be docile, easily manipulated and willing to do boring, repetitive assembly work. Inside the low, modem factory buildings, rows of young women, work at their stations without talking. The room is air-conditioned to protect the delicate semi-conductor parts they work with. Electronic companies require perfect vision in new employees but most women need glasses after a few years on the job. During the bonding process, women peer through microscopes for a full work day attaching hair-like gold wires to silicon chips.

As a Malaysian government brochure advertises:

The manual dexterity of the oriental female is
famous the world over Her hands are small, and
works fast with extreme care..., who, therefore, could
be better qualified by nature and inheritance, to
contribute to the efficiency of a bench - assembly
production line than the oriental girl?"

Sri-lanka - break-up of apprenticeship programme

Prior to the introduction of Export Processing Zones (EPZs), workers used to be engaged in a variety of vocational training programmes where they were taught a number of skills. With the introduction of Export Processing Zones (EPZs) large numbers of people who complete their secondary education find employment in Export Processing Zones where there is no longer the system of apprenticeship of training schemes. There are fears of the de-skilling effects of Export Processing Zones industrialisation.

Everybody goes into the factory as soon as he/she finish school. This has led to a concern and effort to encourage vocational training of workers. The fact that Export Processing Zones workers spend long hours in factories makes it difficult for them to benefit from education and training courses. Officials engaged in vocational training programmes have reported problems encountered to meet workers even lunch time.

From the case studies above what is the quality of jobs in EPZs?

Are EPZs helping develop workers?

Why do most EPZ jobs go to women?

The effects of EPZs on unemployment is variable. Mauritius which introduced its EPZ programme in 1970 reduced official unemployment from 23% in 1979 to 2% in the early 1990s as the Mauritius EPZs generated 88 000 new jobs. In most other EPZ countries, however, the employment effects were far less dramatic'. In Mexico and Hong Kong and other Asian countries, EPZs accounted for less than 10% of total manufacturing employment in the mid 1980s. Most EPZ jobs are for unskilled or semi-skilled workers.

EPZs attract labour intensive, simple manufacturing processes. EPZ workers have little control over the production process. Most EPZ workers are engaged in low skill activities, and knowledge transfer merely occurs through on the job training. Such training is of short duration and covers assembly type of activities.

Women make up at least three-fourths of the labour force in most EPZs and two-thirds in the Dominican Republic. Women usually hold most of the semiskilled jobs, while men are in most of the skilled and management positions. The women in the EPZ labour force tend to be young, typically 16 to 25 years old, and most leave within a few years to marry and raise children.

The majority of EPZs jobs have certainly been taken by women as the chart on the next page shows.

Women are usually in the low-skill jobs and have limited options to advance their careers in EPZ jobs.

Women dominate the workforce in EPZs, especially in the electronics and textile industries. EPZ companies consider female labour to be more docile and subdued than male. Young rural women who come fresh from school are preferred especially in the electronics factories, because employers believe that they are more likely to take orders, to embrace company ethics, to accept lower pay, and to have less "bad habits" such as tardiness. They are also seen as being less inclined to join trade unions and better able to perform monotonous, repetitious work. Single women are considered as more productive due to less household responsibility. Such young women workers are described as "docile and cheap workers with nimble fingers."

EPZ work was more attractive than the other job opportunities that women faced, such as staying at home, entering domestic service or agricultural work. This is probably a stronger indication of the extremely bad conditions in those traditional areas of female employment than of good working conditions within the EPZs. Wage employment in processing factories offer young women at least some degree of economic independence. EPZ employment may have beneficial effects on the social status and economic power of women, improving the economic standing of women. But EPZ manufacturing also reinforces and intensifies the subordination of women. The general quality of EPZ jobs is very poor, not only because of low wages but also due to a lack of job security and a low level of skills acquisition. Women are usually assigned labour intensive assembly and finishing work but hardly get skilled jobs involving mechanised techniques. Male managers create employment strategies which allocate dead end, manual jobs for women, while supervisory and leadership positions go to men. This reinforces women's role as secondary workers as their income is too low to assert themselves independent of their husbands and fathers. Thus, EPZ employment reinforces and intensifies traditional gender roles.

There is little permanence or even long term prospects in EPZ employment. It can be even more oppressive than previously for former female EPZ workers to have to return to the kind of work and social status they had been subject to before experiencing the relative 'advantages' of waged employment in an EPL For many such young women, having been wrenched out of and alienated from their family/community roles, the alternative is to join the massed ranks of the unemployed in the urban areas or enter prostitution as the only form of wage earning available.

But do labour laws apply in EPZs?

The table below indicates that this is not the case.

TABLE H:  LABOUR LAW APPLICATION IN EPZs
COUNTRY	LABOUR STANDARDS FULLY APPLIED	LABOUR STANDARDS PARTIALLY APPLIED	LABOUR STANDARDS SUSPENDED
AFRICA - Mauritius
Kenya, Namibia Zimbabwe Mozambique, Tunisia Malawi
ASIA - India Bangladesh, Sri Lanka Malaysia, Phillipines Thailand, Korea
AMERICAS - Haiti Jamaica, Mexico

Source:  Chinyangarar and Loewenson, 1995.

CASE STUDIES

ZIMBABWE

Section 56 of the ZEPZ Act stipulates that the Labour Relations Act, 1985 shall not apply in relation to licensed investors operating and employees in an export processing zone. The resulting suspension of the Labour Relations Act in EPZs in Zimbabwe has far-reaching consequences. It bars the application, for example, of Part, II of the Act which defines the fundamental rights of employees and unfair labour practices. This includes:

• the right of an employee to be a member, officer or founder of trade unions;
• the prohibition of discrimination in employment on the grounds of race, tribe, place of origin, political opinion, colour, creed or sex;
• the right of any employee to a fair labour standards (e.g. minimum wage, working hours);
• the right of any employee to democracy in the workplace (e.g. workers committees, protection from reprisals by employers).

The suspension of the Labour Relations Act further entail the suspension of a number of provisions regarding inter alia

• general conditions of employment (e.g. minimum age, sick leave, maternity leave)
• termination of employment
• wage setting mechanisms
• workers' committees: and
• freedom of association and collective bargaining.

Likewise, Article 17 of the Labour Relations Act, which confers regulatory powers upon the Minister of Labour, Manpower Planning and Social Welfare, cannot be applied in EPZs. This takes away from the Minister the power to make specific regulations in the field of inter alia

• minimum wages, social security, benefits, retirement
• hours of work, including overtime
• leave including sick leave, maternity leave and bereavement leave
• special conditions pertaining to female, juvenile and disabled employees including the prohibition of child labour
• promotion of employment of disabled persons; and
• termination of employment.

EPZs will furthermore be outside the jurisdiction of the Labour Relations Board and the Labour Relations Tribunal.

The Export Processing Zones Authority may in consultation with the Minister responsible for the administration of the Labour Relations Act, 1985 provide rules for conditions of service, termination of service, dismissal from service and disciplinary proceeding that apply in export processing zones.

NAMIBIA

At the time this report was written, the National Assembly of Namibia was considering an amendment of the NEIPZ Act. The amendment proposes the changing of Section 8 to the effect that the 1992 Labour Act will apply in Namibian EPZ. The proposed amendment further foresees a ban on strike and lockouts in EPZ prescribing compulsory arbitration in cases of serious labour conflict. While the application of the Labour Act in itself is an important development, the proposed ban on strikes and lockouts in EPZs is likely to raise questions in the light of international standards ratified by Namibia. When the EPZ Act was passed in 1995 the labour Act did not apply. As a result of union protest the EPZ Act was amended in 1996 to include the Labour Act. However, the right to strike and lockout is still excluded.

MALAWI

Export enterprises in the EPZ system of Malawi will be exempted from the duties levied on imported or purchased materials. The Act does not provide further indications as to the sort of incentives offered to potential investors. Like Zimbabwe, the country is landlocked and in all likelihood will rely on the production of high value/low volume products. The MEIPZ Act does not restrict or suspend the application of labour standards in EPZs.

MOZAMBIQUE

Unlike Zimbabwe and Namibia, the regulations on EPZs in Mozambique state that the labour legislation shall apply and that national minimum wages have to be observed. Other guaranteed working conditions include:

• twenty days annual leave, plus six days mourning leave per year, but other special leave is deducted from annual leave;
• workers are guaranteed pay during leave and on days in which the employer may not have work for the employees;
• after one year of service workers are entitled to 18 paid days of sick leave plus another twelve fully paid days in case of prolonged sickness;
• women workers are entitled to two months fully-paid maternity leave which can be taken before or after birth and pregnant women may not be involved in arduous work.

The regulations also provide safeguards that job creation in EPZs benefits Mozambican nationals. EPZ firms may not employ more than 10% foreign workers and the employer must guarantee the training of Mozambicans who will replace such workers in future. To encourage this process, the charge for work permits for foreign technicians will increase 8 times after the first, 2 years, 15 times after 4 years and 20 times after 6 years.

Source: Romero AT "Labour and Export Processing Zones: Situation and Pressures for Change". Development Policy Review, Voll 13, No. 3 (September 19950 pp. 272-3)

Note: add Local ER labour law here.

Look at the labour laws in the region.

Which rights do EPZ workers and unions have in Malawi, Namibia, Zimbabwe and Mozambique?

What kind of industrial relations do you expect in the EPZs there?

Which problems will unions face when they organise in these EPZs?

Excluding labour law from EPZs subjects EPZ workers to an inferior industrial relations setting and poor benefits, mainly characterised by absence of trade union membership, absence of collective bargaining structures, low wages, sex discrimination and child labour. In practice, EPZs have, notwithstanding the letter of the law, created a separate industrial relations setting, as observed in field research.

In Kenya, for instance, a tripartite delegation from Zimbabwe in 1995 observed that the authorities gave a 'blind eye' to deterioration of labour standards in EPZs. Mauritian trade Unions confirmed to SATUCC that they have limited access to EPZs reducing their activities and influence and leading to little monitoring of wage levels and labour standards. They noted that EPZ workers work more hours than non EPZ workers. In Mauritius, while the law allowed trade unionism in EPZs after 1980, the level of unionisation in EPZs is still the lowest in the country. Hence EPZ areas generally experience a lowering of labour standards, and reduced trade union activities.

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