Labour standards

Types of ZSR

How ZSR can be implemented:

SEZ industries should uphold at least minimum domestic, and preferably international, labour standards.
Working conditions in SEZs should be free of labour abuse, uphold occupational health and safety provisions, and not impose excessively long working hours or engage in other breaches of labour regulations.
Authorisation should be granted for state and independent labour inspections to be carried out in SEZ factories.
Unionisation and other forms of labour organisation should be tolerated within SEZs.

Overview of the problem:

Working conditions and labour standards are often deficient in industries based in SEZs. Problems include various forms of verbal and physical labour abuse, insufficient attention to occupational health and safety provisions, punitive deductions from wages, excessively long working hours and other breaches of labour regulations. Workers may find labour relations to be demeaning, inhumane and lacking a sense of dignity.

These problems are not specific to SEZs, of course, but also exist elsewhere, especially in the context of the systematic weakening of labour institutions and mass casualisation of labour that has followed structural adjustment reforms, labour market deregulation and privatisation in many developing countries. However, SEZs can be differentiated from other parts of their host countries through their specific exemption from various forms of regulation, which functions as an inducement to investors. Thus, SEZ legislation often qualifies application of national-level labour law, with significant restrictions on the ability of workers to engage in unionisation or collective bargaining, thus limiting workers’ ability to negotiate higher wages and improvements in other workplace-related arrangements.

In some cases, labour laws may apply on paper, but regulatory bodies lack access in practice, with labour inspectors not readily authorised to enter zones. In other cases, the function of labour inspectors is devolved to alternative, sometimes zone-based officials, leading to evident conflicts of interest. Such differential regulations in SEZs may promote an environment in which labour standards are not observed, and may compound existing labour rights issues in the country, though the heightened presence of multinational enterprises within SEZs may serve as a driver to uphold some labour standards.

Examples:

Calabar Free Zone, Nigeria:

Nigeria’s federal labour regulation agency was denied entry to the country’s oldest SEZ, Calabar Free Zone in Cross River State, in 2007, when an inspection team was sent after reports of labour abuse. Zone authorities informed the federal labour inspectors that they were in violation of clause 4(e)of the Nigerian Export Processing Zones Act, which requires the federal agency to establish harmonious relations in the zone, and that any such future requests to inspect had to go through the Nigerian Export Processing Zones Association first (International Labour Organization, 2011). Further labour inspections were not attempted.

Nokia SEZ, India:

Although in theory India’s national labour laws apply in SEZs, in practice many tactics are used to prevent industrial disputes, including the designation of SEZs as “public utility services” rendering strike action near impossible, as well as the delegation of the usual role of labour commissioner, responsible for dealing with violations of Indian labour laws, to the SEZ’s own development commissioner (Singh, 2009). Nonetheless, some SEZs have experienced industrial action: the Nokia SEZ near Chennai in Tamil Nadu state saw massive labour protests in 2009-10, with workers, majority women, organising sit-in strikes over wages and working conditions (Dutta, 2016). The SEZ was eventually shut down in 2014.

Lekki Free Zone, Nigeria:

There has been a wide range of labour problems in Lagos State’s Lekki Free Zone. Most jobs in the Lekki factories are assembly line positions, with long shifts six days a week, typically 7am–7pm or 7pm–7am, with only a one-hour break. Workers complain that the pace of work is much faster than they are used to, with few breaks, and the risk of industrial accidents is high with a shortage of protective equipment. Reports of labour abuses are common in most types of firm (Goodburn, Knoerich, Mishra & Calabrese, 2024).

It is difficult for Nigeria’s federal labour inspectors to conduct inspections inside the country’s SEZs, and trade unions are not active inside Lekki or other zones, since section 18 (5) of the Nigeria Export Processing Zones Act bans strikes and walk-outs for a period of 10 years following the commencement of operations. The prohibition on strikes is highlighted repeatedly in zone promotional materials in Lekki, and the only recognised form of grievance redressal is for workers to bring complaints before the management of the zone. Workers ARE thus unable to seek effective redressal of abuses (Goodburn, Knoerich, Mishra & Calabrese, 2024).

Liaoshen Industrial Park, Uganda:

A wide range of labour problems exist in Uganda’s Liaoshen Industrial Park. Shifts are typically six days a week from 7am–7pm or 7pm–7am, with few breaks, an extremely fast pace of work, and a range of punitive deductions from wages. In some factories, assembly line labourers eat lunch while standing working at the production line, since they are not permitted to leave the machinery. There were also several reports of women workers being dismissed for becoming pregnant, including those who had had relationships with supervisors or managers (Goodburn, Knoerich, Mishra & Calabrese, 2024).

The disciplinary and efficiency-oriented ethos among many Chinese factories has induced stress among workers, and has led to verbal and occasionally physical abuse by managers, including demeaning and derogatory language and, less frequently, slapping, hitting and beating. Incidences of violence have reportedly decreased since 2019 as a result of police mediation and the intervention of local district authorities, who expressed concern at the number of cases of physical abuse (Goodburn, Knoerich, Mishra & Calabrese, 2024).

Occupational health and safety provision in factories is deficient, including absence of personal protective equipment (gloves, face masks, ear defenders, protective clothing and even shoes) for workers using a wide range of machinery. Where gloves are provided for heavy-duty work, workers frequently remove them for fear they would reduce the speed of processing and prevent them from meeting production or packing quotas. Industrial accidents are reportedly common, especially due to the high speed of machine work, and there have been deaths. Factory managers ensure that injured workers are taken to local hospitals where their medical bills are paid, but further support may not be forthcoming (Goodburn, Knoerich, Mishra & Calabrese, 2024).

Because trade unions and other forms of worker organisation are not permitted in the industrial park, there is very limited opportunity for workers to express grievances. There exists no formal mechanism for workers to raise concerns, except through reporting the most heinous instances to the local police. It is difficult for government bodies and (already insufficient) labour inspectors to gain access to the zone to engage in any review of working conditions. In Liaoshen this situation is further complicated by the role of the president’s brother as the zone’s landlord and investor, which means that workers may be afraid to raise concerns over working practices for fear of local reprisals (Wyrod, 2019). Workers are thus almost entirely unable to seek redressal of labour abuses and typically respond to unbearable working conditions simply by quitting.

The case of China:

In China’s own SEZs, a range of incentives and exemptions were offered to international investors. Labour regulations were subject to official or unofficial deviation, and Chinese SEZs of the 1980s were used as experimental areas for a new contract labour system (Wong, 1987). Working conditions were tough, labour standards poor, and the pace of work was usually very fast. Pay was sometimes deducted or withheld. Given a lack of independent trade unionisation generally in China, workers had limited power to enforce their rights.

Since the early 2000s, increasing labour strife and worker activism have led to significant improvements in Chinese labour conditions and wages. These patterns, combined with a growing shortage of skilled workers in Chinese zones and other industrial areas, have put pressure on the Chinese state to develop more effective labour regulation (Chan, 2014). However, China continues to lack independent trade unions, reducing the effectiveness of collective action, and global capital continues to exert influence local labour policies.

China-associated zones overseas

Chinese companies operating in SEZs elsewhere in the world are often described as ‘worse’ than other employers in terms of working conditions, even in the absence of a clear comparator (Oya & Schaefer, 2023). Several third sector reports covering Africa provide evidence on labour abuses including excessively long working hours, lack of written contracts, resistance to unionisation and frequent breaches of labour regulations (Carciotto & Chikohomero, 2022; Sun et al., 2017; Rounds & Huang, 2017). However, other studies have suggested that Chinese firms may start operations with relatively poor working conditions but then adapt to meet demands from worker organisations or from SEZ host country states (Lee, 2017; Tang 2016). Many forms of poor working conditions are not unique to Chinese firms or China-associated SEZs, but can be also found in similar manufacturing facilities owned by host country or other foreign investors. They therefore reflect the broader labour conditions of the host country rather than a feature of specifically Chinese zonal development and investment.

In some cases, though, distinctive forms of labour exploitation appear to have emerged in Chinese factories and zones. This includes an extreme disciplinary and efficiency-orientated ethos, emphasising speed and accuracy of labour to replicate manufacturing processes found in companies within China. This can induce stress among workers and lead to abuse from Chinese managers. Such behaviour may be due to Chinese managers’ lack of experience with local workers new to low-paid, labour-intensive manufacturing (Wyrod & Chang, 2023). Specific and sometimes racialised aspects of abuse may be distinctive to Chinese labour relations in some countries.

Poor working conditions are not consistent across Chinese SEZs. The size of the firms and the management of the SEZ also play key roles. Larger firms, investing in larger zones with state involvement or ownership, are more likely to have corporate social responsibility (CSR) policies in place, and the corporate conduct of state-owned enterprises overseas tends to be monitored by the Chinese government. Smaller firms, and those with less experienced factory managers, are more likely to exercise verbal and even physical abuse towards workers (Goodburn, Knoerich, Mishra & Calabrese, 2024). In these firms, implementation of any CSR standards is dependent on local managers and may not be subject to any form of enforcement (Tan-Mullins & Mohan, 2013). Much research suggests that the Chinese state policy of non-intervention in partner country politics results in deferring to the host country’s practices for labour relations, rather than employing international standards (Chen & Landry, 2018; Yankson et al., 2018; Chen, 2021). Chinese firms in Egypt, for example, largely comply with existing Egyptian minimum standards, but do not go beyond these, instead taking advantage of the weak regulations governing labour conditions to extract more profit from labour-intensive manufacturing (Springer et al., 2023). In the case of SEZs, the issue is compounded by the exemptions from various forms of labour regulation that typically accompany the establishment of zones and function as inducements to Chinese and other investors. Local enforcement of labour standards by the host country state is also often deficient, especially where there are competing incentives in terms of the desire to attract further Chinese and other investment.

Types of ZSR