Export Processing Zones: The question of labour rights

EPZs, however, have become institutional entities in both developed and developing countries.

Statistical information shows that the highest number of EPZs is in the United States of America (213), followed by China (124). Regionally, North America accounts for the highest number of 320 followed by Asia at 225. Globally, the number is said to be increasing. Even though India was among the earliest countries in Asia to have set up EPZ in 1966, the number now is only seven. Globally again, EPZs operate under more or less similar incentive packages. These include tax holidays, duty free imports and exports, dedicated infrastructure, abundant and relatively cheap labour, and strategic locations and market access.

Social and labour issues
These issues relate to three key areas such as wages, working conditions and labour relations. Inattention to these issues have led some to view EPZs as 'Zones of Oppression', 'links in the chain of exploitation' or 'danger zones'. It is at the same time recognised that such a view cannot be applied across the board. Nevertheless, the negative image still persists. This tends to confirm that all is not well in EPZs across the globe.

Wages and working conditions
These are meant to be in accord with Tripartite Declaration of International Labour Organisation (ILO) which sets out principles for the same. As regards pay, it is either similar to or better than other manufacturing companies outside the zone in the host countries. The principles set by ILO require the multinational investors to "maintain highest standards of safety and health". In addition, the principles also lay down that the workers in EPZs should have the right, consistent with national laws and practice, to collective bargaining. In other words, they should have the right to form trade unions.

Gap between practice and standards
As is always the case, there is a gap between what ought to be and what is there in practice. A survey conducted in Srilanka in 1993 indicates that minimum wage standards have not been followed to the extent required by its Board of Investment (BOI) regulations on 'Labour Standards and Relations'. There are a number of concerns in this area. First, the labourers without any written contract are the most vulnerable. There is no means of knowing what the wages are. Second, the practice of maintaining apprentices beyond the maximum period is specified by the regulations. Third, there is the issue of real wages in the absence of the right to collective bargaining. Other concerns include hour of work, overtime and rest periods.

Safety and health
All countries have national laws and regulations that govern safety and health conditions irrespective of their locations in and outside EPZs. Despite this, there had been serious accidents in China (May, 1993) that claimed the lives of 188 workers and injured 469. In November of the same year, in another accident, 87 workers died leaving 40 injured. Concerns for safety and health of workers also stem from the illegal practice of using buildings for multiple purposes. There are also reports of poor lighting, inadequate ventilation and first aid facilities.

Freedom of association and collective bargaining
There are two basic international instruments that seek to govern labour standards. The first of these is ILO Convention No. 87 called 'Freedom of Association and Protection of the Right to Organise, 1948'. This Convention has been ratified by 112 of ILO's 173 member states. The aim of this Convention is to promote and recognise the right of workers and employers to establish organisations of their choice. The purpose is to preserve, protect and defend their own interests. This right to form associations is not expected to be interfered with by the government.

The other instrument is Convention No. 98 called 'Right to Organise and Collective Bargaining, 1948'. So far, it has been ratified by 124 countries. The aim of this Convention is to guarantee workers' right to organise into some form of associational interest groups or trade unions. The purpose is to protect interference from employers' organisations as well as to promote voluntary collective bargaining.

ILO monitors the extent to which the members' states, which ratified these instruments, follow the standards. It has two Committees, which are responsible for monitoring Paragraph 45 of the Tripartite Declaration of ILO that clearly states, "Special incentives to attract foreign investments should not include any limitation of the workers' freedom of association or right to organise and bargain effectively".

Bangladesh context
Bangladesh has adopted an 'Open Door Policy' to attract foreign investment. The governing law in this respect is The Bangladesh Export Processing Zones Authority Act, 1980. Bangladesh Export Processing Zones Authority (BEPZA) is the official organ to provide special areas to attract and facilitate foreign investment.

Under the Act of 1980, the government has reserved to itself, the right to exempt a zone from the operations of all or any provisions of as many as 16 existing laws. Such exemptions are to be granted by a notification in the official gazette. Three of such laws as they relate to labour standards include: (a) The Employment of Labour (Standing Orders) Act 1965, (b) The Industrial Relations Ordinance, 1969 and (c) The Factories Act, 1965.

Anti-union practices in other countries
Bangladesh and Pakistan are said to be the 'good examples' of countries, which prohibit trade unions in EPZs. South Korea and Taiwan also have such laws. In some other countries, regulations, not specifically related to EPZs, can be used to restrict workers' rights. These may take the form of declaring EPZ enterprises as "essential services", "activities vital to national interest" or "pioneer industries". Industrial action by workers under the above will be considered illegal. India, the Philippines, Sri Lanka and Malaysia are said to be examples of such countries. In Turkey, ban on union activities is restricted for a period of 10 years from the date of start of an enterprise. A Supreme Arbitration Committee settles dispute during this period.

Anti-union activities in Bangladesh
Investors in EPZs are generally happy about the labour relations. This is probably because law does not permit trade union activities. Reports are there to show that there has been occasional labour unrest. The worst case relates to four deaths at the hands of the security forces at one factory during 2000. Not much investigation has been carried out to justify use of such force that led to the loss of lives. Very little indeed is known about the non-legal barriers that prevent the workers in EPZs from pressing home even their legitimate grievances.

Pressure mounting on Bangladesh
It is said that the pressure is mounting on Bangladesh to realign its EPZ law so that it conforms to the requirements of the relevant Conventions of ILO already cited. The Committee of Experts of ILO had reportedly taken up the issue back in 1995. The government is understood to have assured ILO that it will review the provisions of the law in question and that the proposals for amending it has been submitted to the appropriate authority. The US Ambassador is reported to have raised the issue with the relevant authorities of the government in the recent past.

Conclusion
A survey report in respect of India points out that the number of EPZ host countries with legislation restricting the exercise of trade union rights is significantly less than those in which such problems have been reported. It also confirms that in virtually all other countries, the national labour laws are applicable to the zones. However, even in such cases, the percentage of trade unions is generally quite low.

In case of Bangladesh, the foreign investors are opposed to workers' rights to collective bargaining in the EPZs. As a leading English Daily (The Daily Star, July 15, 2003) reported, the investors in EPZs threatened to withdraw from the EPZs and go to the court, both domestic and international, if unionism was allowed. On the other hand, the United States Generalized System of Preferences (GSP) law requires the beneficiary country to satisfy certain conditions relating to labour rights. Freedom of association is one such condition. The US labour organisation, AFL/CIO has been pressing hard since 1992 that Bangladesh allows right to form associations and has sought revocation of GSP for Bangladesh unless the right is guaranteed in the EPZs.

Freedom of association and the right to join unions is guaranteed by the Bangladesh Constitution (Article 37) but the EPZs are exempted by law. This is because such rights are subject to any reasonable restrictions imposed by law in the interests of public order or morality. In view of the above and the added pressures by ILO and the US administration, the government appears to have very limited option. It may have to balance between economic gains and the constitutional rights and find out mechanism of reasonable restrictions in the interest of public order. Evidently, the restrictions on grounds of public order appear to have no application in this case. Total ban cannot be defended on grounds of public order.

A M M Shawkat Ali, Ph.D is a former Secretary, Ministry of Agriculture