Increasing competition in capital and product markets obliges governments, enterprises and workers alike to improve performance, specifically to achieve greater speed and quality at lower cost, constantly (SQCC). This requires rapid innovation and adjustment by all three parties, a process which is never easy and often conflictual.
Governments are having to:
These are described in more detail below.
The labour laws of many developing countries are a legacy of the colonial era. They are often cumbersome and heavy on administration. Many governments simply do not have the resources to implement the provisions of the law, and the international trend towards smaller government means that they are not likely to expand their labour administrations in the future. Legislative reforms should, as far as possible, provide for systems which are less administration-intensive, simple, easy-to-use and which can be quickly adapted to take account of changing circumstances.
Many zones have a separate system of labour administration set up in the zone, (often staffed by ex-officials of the Ministry of Labour) with responsibility for monitoring minimum standards, resolving conflicts, and providing labour relations advisory services to employers and workers.
Recent examples of reform of labour and investment laws include -
Many governments have authorized the development of privately owned and managed zones which nonetheless qualify for the same incentives as government ones. In some cases foreign developers have been allowed to establish zones, on their own or in joint ventures with local partners. Bangladesh has approved the development of a new zone by a Korean company, while the Philippines has seen a dramatic growth in local and joint venture private zone developments. There is a trend towards designer-zones such as the high-tech or science parks found in China or that dedicated to the leather industry, with the necessary environmental infrastructure, in Turkey.
A frequent problem encountered by the Action Programme is that while most zones were well planned and constructed the surrounding social infrastructure was not. This means that the many thousands of zone workers often lack adequate housing, transport, health, education and childcare facilities. Investors find that the poor social situation undermines productivity and exacerbates problems such as high labour turnover, absenteeism and latecoming. A number of governments have started to address these problems by improving the social infrastructure around the zones, sometimes by offering incentives to investors who provide housing, transport and childcare.
Given that global competition places a premium on speed and quality as well as cost, and that constant improvement is vital to success, goverments need to upgrade their human resource development and labour relations strategies. Too many countries continue to rely on cheap labour as an incentive to investors, overlooking the fact that this will only attract the lowest quality of investor who is least likely to succeed in global competition. The most effective enterprises are looking for productive labour which can adapt to the frequent changes in technology and the organization of production. Such companies are also concerned to retain their skilled and experienced workforce and to reduce absenteeism, tardiness and other manifestations of labour-management conflict. Zones which can offer high quality human resources, training facilities and labour relations services such as conciliation and mediation are more likely to attract and retain investors of world standard.
Reform measures are never easy to take. Political lobbies and bureaucratic structures distort the policy making process, and corruption is a delicate but major factor which must be confronted. A number of foreign investors that I interviewed told me that they would rather operate in a corruption free environment even if it was more expensive, because there they knew what the costs were and could budget for them and explain them to shareholders, whereas the endemic corruption in some cheaper environments was unpredictable, could escalate sharply, and could not be accounted for.
Investors have had to adapt to greater competition in international product markets which demands-
Trade Unions are at the greatest disadvantage in adapting to the new global environment of investment and trade. In many EPZ-operating countries trade unions are in a complicated or difficult situation for political, economic or cultural reasons. Many lack the information and training necessary to analyse the impact of globalization, and even if they are aware of the implications, they may not have the resources to develop appropriate responses.
Some international trade union federations have taken up the issue -
It is worth noting that there is a trend towards the adoption of codes of conduct. The initiative may come from a variety of quarters including international organizations, national governments, employers associations at national or sectoral level, companies, and trade unions or other NGOs. In the absence of any multilateral agreement or coordination we are likely to see a proliferation of codes, imposed rather than negotiated, with little consistency as regards their content, application or monitoring. It is quite common nowadays to find large subcontractors having to provide different conditions on different production runs depending on the customer or the country of destination. Such a situation is likely to lead to an even less level playing field and suggests the need for some tripartite consensus on the basic principles and procedures for monitoring and arbitrating.