Tripartite Meeting of Export Processing Zones-Operating Countries

International Labour Office
Geneva, 28 September-2 October 1998

Report of the discussion

Presentation of the Office report
General discussion
Point-by-point discussion
Consideration of draft conclusions and guidelines
Adoption of the draft report and conclusions of the Meeting

Conclusions: Priorities and guidelines for improving social and labour conditions in EPZs

General considerations
Policies and strategies
Labour standards
Labour-management relations
Human resource development
Retraining and re-employment
Wages and working conditions
Social infrastructure
Women workers
ILO action


1.The agenda of the Tripartite Meeting of Export Processing Zones-Operating Countries (EPZs), as determined by the Governing Body of the International Labour Office was:

2.The Meeting was held in Geneva from 28 September to 2 October 1998 to examine these items. The Meeting held nine plenary sittings.

3.Mr. Washington González Nina of the Dominican Republic was elected to preside over the Meeting. The spokesperson for the Employers' group and Vice-Chairperson of the Meeting was Ms. Rokia Rahman and the spokesperson for the Workers' group was Mr. J. Lollbeeharry, while the Vice-Chairperson of the Meeting from that group was Ms. Maribel Batista Matos.

Presentation of the Office report

4.In opening the Meeting, the Secretary-General remarked upon the growing importance that export processing zones had assumed in the global market. She reminded the Meeting of the objectives of the ILO's Action Programme on Social and Labour Issues in EPZs, which were: "... the creation of an industrial relations climate conducive to attracting and expanding investment in EPZs; and the operation of these zones in which foreign and domestic investments yield positive results for all those involved directly and indirectly by the activities of EPZs". This Meeting presented an opportunity for discussing the social and labour problems which had been identified, and the means for addressing them. The Secretary-General noted that globalization pressures had forced both zone-operating countries and zone enterprises to find ways of being more competitive, and that human resources played the most important role in this regard. In order to better respond to human resource concerns, sophisticated systems of labour relations would need to be developed, particularly those dealing with the application and enforcement of national labour laws. Special concerns related to women workers were also raised, as they constituted a large portion of zone workers. In addition, she raised the issue of the social environment, which could negatively impact upon workers' well-being and their productivity on the job.

5.The Executive Secretary briefly reviewed the report prepared by the Office, highlighting several of the key findings. It seemed that despite the sustained proliferation of EPZs, their social and economic benefits had not lived up to expectations and global pressures would pose even greater challenges for zones in the future. Among these future challenges were the implications of regional trade pacts such as the North American Free Trade Agreement (NAFTA), which continued to draw investment away from Caribbean countries, and the impending expiration of the Multifibre Arrangement in 2005, which could lead to a shift in investment away from the garment industry. In order to thrive in the future, zones had to be continually revitalized, otherwise they were liable to lose investments and jobs. Human resource development strategies or labour relations systems that promoted stability presented the greatest opportunity for improving the competitiveness of EPZs. As a result, pressure was mounting from all sides to develop better labour relations, including opportunities for expanding collective bargaining, trade union rights, and mediation and arbitration. Attention was also being paid to improving the social and living environment of workers in the zones.

6.The spokesperson for the Workers' group considered that the Office report provided a good basis for discussion on the expanding EPZ phenomenon, although its analysis of the weaknesses and limits of the EPZ model were inadequately addressed. The report was excessively optimistic about the employment and economic benefits provided by EPZs. In addition, the labour and social abuses prevalent in EPZs had not been fully elaborated. He provided a wide array of examples of violations of trade union rights, poor or conflictual labour relations and particular difficulties faced by women workers, then noted that the Office report should have highlighted the ILO's response to these problems. In particular, the ILO Tripartite Declaration on Multinational Enterprises and Social Policy merited specific mention. In addition, the report did not pay sufficient attention to the adverse effects of competition between countries for foreign direct investment (FDI), which resulted in governments banning trade unions and lowering labour standards in order to attract investors. Smaller and weaker economies would be particularly affected by this competition between countries, since they could not match the incentives offered by others. He concluded by calling for a full cost-benefit analysis of EPZ operations to be carried out, and expressed the hope that the labour-relations aspects of the activities in the EPZs would be the subject of further discussion during the Meeting.

7.The spokesperson for the Employers' group considered the report favourably, although perhaps contradictory on certain specific issues to be discussed over the course of the Meeting. The Employers' group considered that in most countries, EPZs provided better working conditions, medical, dormitory and transportation facilities, and benefits for women than other enterprises. The EPZ income provided women in particular with better conditions for themselves and their families, and increased independence. Furthermore, an important distinction needed to be made between EPZs that started years ago and more recent ones, for while the former had experienced an initial problem period, they had overcome it and were now addressing matters such as social benefits.

General discussion

8.Overall, the Meeting reacted positively to the report prepared by the Office; however, differences of opinion emerged concerning the benefits of EPZs. For example, Employer members commented that EPZs had contributed to the quantity and quality of jobs in their countries, while Worker members disputed the claimed impact on job creation and focused on the problems of enforcement of labour laws and trade union rights that EPZs confronted. Various members also raised individual concerns about how their countries were portrayed in the report, raising points of clarification or offering suggestions. A Government member felt that the maquiladora-type production arrangements in his country could not be qualified as EPZs. Other members raised the need to consider the term "EPZ" in a broad sense, to cover the wide variety of experiences in different countries, that included free trade zones, special economic zones, maquiladoras, technology and science ports, free ports, etc. These valuable contributions helped to frame the debate on the ten points of discussion which followed.

9.Some Government members spoke of the benefits of EPZs in their countries, most notably in attracting foreign investment, boosting the export industry, creating employment and helping to absorb surplus labour. At the same time, they also stressed the importance of protecting workers' interests in the zones, recounting provisions in their respective national laws which granted zone workers such benefits as social security, minimum wages and skill training. On the other hand, some Government members recognized that problems persisted in the zones, including excessive working hours, low wages, lack of trade union association and inadequate protection for women workers. The importance of tripartite dialogue in resolving these problems was stressed. Government members also recognized that offering investors prolonged incentives in the EPZs might undermine the capacity for providing quality services in the community. On balance, however, Government members felt that EPZs were a driving force in renewing the economies of their countries.

10.Several members questioned the extent to which national and international labour standards were extended to cover EPZs. Some members supported adherence to the ILO Tripartite Declaration on Multinational Enterprises and Social Policy as a means of making EPZs more socially responsible. An observer from a non-governmental organization (NGO) observed that women working in the zones were typically young and unskilled, and had little experience with unions, so they, in particular, needed support from labour standards, expressly the Protection of Workers' Claims (Employer's Insolvency) Convention, 1992 (No. 173), the Termination of Employment Convention, 1982 (No. 158), and the Workers with Family Responsibilities Convention, 1981 (No. 156). It was also suggested that the ILO formulate a new Convention related to working hours in EPZs.

11.A number of members debated whether such issues as low wages, long working hours, safety and health concerns, inadequate support services and lack of trade union representation were specific to EPZs, or whether they were endemic throughout the national economy. Moreover, a number of Employer members in particular argued that working conditions were often better in the EPZs than in the local economy, even in cases where they were without trade union rights. It was also emphasized that EPZs did not create problems such as inadequate childcare services or discrimination against women workers; these were chronic problems that existed throughout the labour market. The Worker members responded that evidence demonstrated that the social and labour problems faced by the predominately young female workforce in EPZs constituted a special problem that warranted immediate corrective action at the zone level.

12.Worker members commented that even where labour laws and protections were extended to workers within the zones, it was often difficult to enforce them. For example, restricted access to plants made trade union organizing efforts nearly impossible, even if legally permitted. Worker members recalled cases where workers who had attempted to establish unions within zones were dismissed and later blacklisted by other employers in the community. Similar problems were recounted in labour administration, where abuses in working time, safety and health, and discrimination persisted despite the applicability of national labour laws to the zones. Worker members also pointed to the contradiction that EPZs were expected to produce world class products in order to survive, while paying what they considered very low wages -- even if these were sometimes higher than other sectors of the economy. A Government member addressed this point by emphasizing the need to shift from low-skilled to high-skilled jobs within zones, as a fundamental way for promoting labour rights.

Point-by-point discussion

13.After the general discussion, the Meeting turned to the ten points identified at the end of the Office report. Points 1 and 2, which dealt with evaluation, were addressed together. They read as follows:

14.There was a broad consensus between Employers and Governments that EPZs constituted a dynamic force for the promotion of investment and employment, although the Worker members contested the extent to which EPZs could be considered the engines of broader social and economic development. An important clarification was introduced by the representative of an NGO, who pointed out that EPZs had achieved their objectives as defined at their inception -- namely that of creating employment -- but over time those objectives had been broadened to include a range of social factors, which needed to be further addressed. Many members stressed that several problematic yet critical distinctions needed to be made, first concerning the relationship between EPZs and industry generally, and second, the relationship between EPZs and the broader national context.

15.In the light of these distinctions, the Meeting generally agreed that EPZs created a large number of jobs, but attempted to assess the employment and social impact in different national and zone contexts. In particular, some members provided statistical data to show that EPZs were the main determinant of social and economic development, while others argued that EPZs could not be considered the only or even the most important generators of employment.

16.On the quality of the employment, some members expressed satisfaction with the shift away from the informal and agricultural sector toward manufacturing provided by EPZs. While several members stressed their concern that the jobs created were nonetheless precarious and poorly remunerated, others acknowledged that within most national contexts, EPZ workers earned pay that was higher or at least comparable to workers in local industries, and faced similar problems with working conditions. One key difference, however, was the threat of EPZ relocation, which in many countries loomed large. This affected the perceived precariousness of the employment and the willingness or ability of workers to organize to defend their interests. Members from all three groups pointed to the importance of international labour standards and the Tripartite Declaration on Multinational Enterprises and Social Policy as frameworks within which the quality of employment could be improved.

17.On the quantity of investment, Employer and Government members generally accepted that EPZs promoted growth, and provided statistical information to support their statements. However, Worker and other Government members questioned the cost at which this investment had been obtained. In particular, diverging opinions and national experiences were presented on whether local tax-paying enterprises and workers subsidized EPZs. Some members urged the Meeting to assess the changes in EPZ investment over time. It was noted that while initially, some governments provided considerable financial incentives to MNEs to encourage them to locate in particular zones, over time they had been able to decrease the fiscal and other incentives accorded to established MNEs. An Employer member mentioned that supportive infrastructure for local economic actors outside of the zones, such as investment bank financing for small and medium-sized enterprises, built the capacity of local producers and enabled them to interact with EPZ enterprises.

18.On the quality of investment, Employer and Government members considered that EPZs often contributed technological advances and foreign currency earnings. A Worker member expressed the concern, however, that two-speed economies risked being established. In the first, EPZs would receive modernized infrastructure, preferential banking rates and streamlined administrative procedures. In the second, local enterprises would face a high tax burden, a lack of foreign currency, and heavy government bureaucracy. Concern was expressed that the investments might change once broader factors such as access to preferential treatment ceased to be available. Support for local enterprises might provide longer lasting investment.

19.Throughout the discussion of points 1 and 2, particular attention was turned to the employment and social situation of women in EPZs. On the one hand, the Meeting generally accepted that EPZs provided labour market entry points for women. On the other hand, women deserved more than precarious working conditions, low pay and limited social security. Moreover, women often faced double burdens linked to their demanding work in the zones and their traditional family responsibilities at home. Although some members expressed concern that women's employment had led to broader social problems for children and the elderly, other members considered these responsibilities to rest on all members of society. Employer members underscored that these broader social concerns relating to the employment of women were prevalent not only in EPZs, but throughout many societies.

20.The Meeting turned next to discussion of point 3, which read as follows: "What can government agencies and social partners do to attract more and better investment to EPZs?" (With reference to the term "social partners" used here and at other times in the discussion, a Worker member noted that it should be taken to signify the three main parties in labour matters, i.e. governments, employers and workers' organizations.)

21.Members enumerated the kinds of incentives that would be necessary to attract quality investments in EPZs, particularly those that would be sustainable and help build the local economy over time. There was considerable consensus among Government, Worker and Employer members on the factors needed to promote a favourable environment for investment. Several members echoed the need for the following: human resource development, including training and skill development; quality education; good governance, including transparency in governmental operations; political and financial stability; infrastructure development; environmental protection; the promoting of harmonious labour-management relations; conflict resolution mechanisms; and above all, tripartism. Although it was noted that these were areas in which government played the primary role, there was also room for the social partners to become actively involved as well, particularly through the use of social dialogue and tripartism, which would reinforce good governance and social and economic stability.

22.Several members touched upon the issue of the quality of investments which the zones should attract. The distinction was made between enclave-type investment which had no real impact on the economy outside the zones, and those which involved greater interaction between the zone investors and the local economy and also provided an opportunity for the country to portray its capacity to the outside world and expand and develop new technologies. In the latter case, foreign investors were more likely to expand their operations within the same country, rather than move elsewhere.

23.The matter of sustainability of investments was also raised. Some members complained that investors would come and go, closing factories and laying off workers on short notice, with no regard for the well-being of the labour force or the community. To contend with this problem, a few members suggested setting up a specialized government agency to help establish backward and forward linkages in the zones. Such an agency would ensure that zone investments have a deeper impact on the local economy, helping to benefit workers and the community in the years ahead. One member reiterated the need for generating long-term, high-quality investments, noting the use of technology-driven science and industrial parks as a means for encouraging investors to stay and invest in the country over the long term.

24.The importance of good labour relations was also stressed, as investors would be more attracted to a climate of stable labour-management relations rather than one which was characterized by frequent strikes and other forms of labour unrest. It was noted that the development of sound labour relations was compatible with economic development, while government corruption, abusive management, and irresponsible trade union leadership would be incompatible with attracting investment.

25.To rectify a translation error in the Spanish version, the Chairperson incorporated the following addition into the wording of point 4: "How can governments and the social partners ensure that adequate national and international labour standards are applicable and applied in practice in EPZs?"

26.The discussion on this point was the basis of broad consensus. First, the cardinal role of fundamental international labour standards in EPZs was reaffirmed. Members considered that the recent Declaration on the Fundamental Principles and Rights at Work and its Follow-up, as well as the Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, could provide the bases for ensuring that adequate standards applied to EPZs. Special attention was given by several Worker members to cases in which trade union rights were not respected. The Workers' spokesperson expressed the hope that the guidelines would include a recommendation that governments should cease to advertise that zones would be trade union or strike free. While the Employers' spokesperson asserted that the freedom of association included the freedom not to associate, the Government members requested ILO assistance in applying international labour standards, particularly in areas where member States had experienced difficulties in applying them in EPZs.

27.Second, there were differences of opinion about the extent to which national labour laws were usually applicable to EPZs. However even in those cases in which legislation did cover EPZs, members expressed concern to ensure that the laws were in fact applied. While particular national situations were mentioned, a problem-solving approach was adopted, and several suggestions to promote the effective application of labour standards were widely endorsed:

  1. foster regular tripartite consultation on investment, to ensure that employers and workers had a voice at all critical stages of EPZ strategies;
  2. ensure cooperation between different government ministries, departments or agencies, as well as EPZ authorities, on investment, labour and trade policies to provide a coordinated and consistent strategy that was beneficial to workers and the society at large;
  3. promote and strengthen the role of labour inspectorates, which were primarily responsible for enforcing labour standards, by providing adequate resources and additional training to them;
  4. provide briefing to investors about the labour standards that apply to them; and
  5. pursue policies, including management and worker training, to foster a culture of respect for labour standards and a progressive willingness and ability on the part of the social partners to enforce these standards themselves.

The ILO's role in assisting member States in the implementation of these suggestions was underscored.

28.Point 5 was: "What can governments and the social partners do to promote sound labour-management relations in EPZs?"

29.A Government member observed that points 4 and 5 were closely linked in that respect for national and international labour standards promoted sound labour-management relations in EPZs. The Meeting reaffirmed that government held a key role in establishing an enabling environment for healthy labour-management relations, which were integral to a successful, productive enterprise.

30.As to the institutional framework, the Meeting expressed strong convergence on the need to provide a combination of tripartite and bipartite mechanisms, and noted examples of how this might occur in practice. For example, the Worker members suggested the formation of labour-management committees to resolve disputes quickly, and the Employers argued that it was best to resolve disputes as close as possible to the level where they occurred. Another example, provided by a Government member, was that of a high-level board of commissioners that administered the zone authority and that included the participation of employers' and workers' representatives. Members of all groups expressed their strong interest in expeditious, fair and transparent dispute resolution mechanisms that applied to EPZs, and asked for Office assistance to reinforce them.

31.The Meeting strongly endorsed reliance upon collective bargaining principles. In this light, the Workers' spokesperson called attention to the question of some local affiliates of overseas multinational enterprises which apparently were not granted the authority to negotiate with workers in EPZs. While the Worker members noted that corporate codes of conduct could provide important assistance in this regard, such measures needed to be accompanied by independent, objective and adequate monitoring, and special sensitivity for the labour law and labour relations context. They called upon the Office to explore issues related to collective bargaining in any further research activities related to EPZs.

32.The Meeting also clearly reaffirmed the importance of tripartite dialogue. Indeed, certain Government members indicated that despite their inability to apply fully the national labour laws and labour relations framework to EPZs, they were willing to discuss these matters further through national tripartite consultations.

33.Point 6 read as follows: "What can government zone investors and workers' organizations do to improve (a) the skills; (b) the wages; and (c) the working conditions of zone workers?"

34. The Meeting recognized the need to draw inspiration from international labour standards to improve skills, wages and working conditions of zone workers. On the issue of skills, the Employer members said that job-related skills training could be provided and administered by employers, or employers and workers, but that basic education was the responsibility of government. Upgrading linked to technological advances was considered to be particularly important. Special attention to the upgrading of women workers' skills was necessary, to ensure that they were not crowded out when technological advances were introduced into EPZs.

35.Two key proposals were raised for funding skills training. The Worker members proposed a levy on EPZ employers, drawing from an example from national practice; a further example was proffered by a Government member. The Employer members suggested the use of incentives such as tax deductions; again, another Government member provided a practical example of such a scheme, while noting that it was underutilized. Both proposals underscored the centrality of the State with respect to ensuring the financing of training. The Worker members also considered that workers should be granted leave with pay to avail themselves of any skills training.

36.With respect to wages, the Meeting agreed that countries that fixed statutory minimum wages should extend them to the EPZs. In some cases, the minimum wages were sectoral; in others, they were uniform national wages. In most cases, they were set through tripartite boards. Moreover, the minimum wage-setting machinery was usually complemented by collective bargaining. Employers and Governments affirmed that rarely, however, were different, inferior minimum wages set for EPZ workers than for other workers; indeed, members pointed out that wages within the EPZs were generally higher than those earned outside of the zones. The Employer members added that fringe benefits like employer-provided transportation and meal allowances, where these were provided, should be factored into the evaluation of EPZ workers' remuneration. They stressed that the best way to improve workers' wages was to develop a tight labour market and ensure the profitability, productivity and viability of enterprises; they therefore encouraged the social partners to support growth-oriented policies.

37.Several suggestions emerged from the discussion on how to address problems associated with piece-rates and performance pay more generally, where such methods applied. The Worker members emphasized in particular that workers should be involved in the measurement of performance, and called for transparency and consistency in performance pay.

38.The Meeting identified a considerable range of working conditions that warranted improvement. Particular concern was expressed by the Worker members about four broad themes: (a) hours of work and overtime; (b) paid leave; (c) food and night transport; and (d) the working environment.

39.Hours of work and overtime were generally acknowledged to have been high in EPZs. Moreover, they were recognized to be critical to all parties. Employers were also concerned about the costs and deleterious effects on employees of excessive hours of work and overtime. An Employer member explained that consumer demands and just-in-time production strategies were responsible for particularly demanding production time frames. These exigencies often led EPZ employers to demand overtime and lengthy work-hours from their workers, which added to their labour costs. A potential solution proffered by the Worker members was for EPZ operators to hire more workers. In addition, they called for government enforcement of hours of work and overtime restrictions, including restrictions on the length of any given shift.

40.The Worker members stressed that it was crucial for governments to regulate and enforce leave time in EPZs in a manner consistent with international labour standards. In particular, they urged governments to remove restrictions, where these existed, on the number of times that women workers could take maternity leave.

41.Access to adequate food and night transport were identified as considerations that took on special relevance in EPZs, given the predominantly female population. Members acknowledged the lengthy distances often travelled by EPZ workers, which exposed them to physical and sexual abuse. There was an apparent consensus about the utility of employer-provided transportation, and employer-provided meals or cafeterias established at the workplace.

42.The working environment was considered to be of particular concern in EPZs. Governments were asked to regulate, and employers were called upon to avoid, occupational safety and health hazards linked to chemical use, noise, heat, crowding, sanitary conditions and the stressful pace of work in EPZs. The Worker members and several Governments considered that special attention was needed to the sexual harassment and abuse of women workers in EPZs.

43.The next item for discussion was point 7, which read as follows: "How can governments and the social partners promote more effective human resource utilization?"

44.The issue of training, which had been covered under point 6(a) concerning workers' skills, was raised again in the context of promoting more effective human resource utilization. The Worker members made a distinction between sweatshop-type jobs and those that encouraged people to work smarter, rather than harder. To use human resources effectively, they argued that there should be movement away from repetitive tasks, sweatshop jobs to ones in which workers experienced great job satisfaction. They acknowledged the difficulties in making this shift, particularly since employers tended to focus more on short-term profits rather than on long-term benefits. The establishment of a wage floor and labour standards were mentioned as means for supporting the movement towards better, more satisfying jobs. Another was the establishment of career plans for workers, to facilitate the movement to higher level positions within the enterprise.

45.An Employer member also spoke of the benefits of teamwork and multi-skilling as means of facilitating the shift to better jobs. He cited an example in the textile industry where workers in teams produced an entire garment instead of a single portion. This teamwork approach enabled workers to replace one another in the case of absences, reduced the amount of repetitive work, thereby cutting down on incidences of occupational disease, minimized the need for supervision, and helped foster a more positive working atmosphere. Both workers and employers tended to benefit from such teamwork experience.

46.The Meeting continued with discussion of point 8, which read: "How can the retraining and re-employment of ex-zone workers be facilitated?"

47.Employer members noted that they had elected to deal with points 7 and 8 simultaneously, as retraining and lifelong learning were important components of effective human resource development strategies. Not only was training considered essential, but the accurate forecasting of labour force needs was deemed important as well, particularly in light of technological changes which quickly rendered skills obsolete. In this environment of rapid change, workers needed to enhance their skills in order to promote lifetime employability. This followed the point that employment security did not equal job security. To ensure that there was an ample supply of employable workers, governments had to have quality national educational systems which were capable of providing retraining as more skill-intensive, higher wage industries moved into the zones, and low-wage, labour-intensive industries began moving out of zones due to rising wage levels. The point was also raised that retraining was not just a problem for the zones; it was global.

48.The Worker members called attention to the distinction between workers who lost their jobs due to a plant closure and those who had been laid off due to technological change. The latter were more likely to be in need of retraining in order to be absorbed into the active labour market. This retraining itself would have to be continually evaluated to ensure that it evolved along with changes in technology, rendering workers capable of moving into growth sectors more readily. Retraining was also considered important for workers suffering from occupational injuries such as carpel tunnel syndrome, as they were no longer able to perform the kinds of repetitive tasks their jobs required.

49.Several members recounted the need for a labour market information system, such as a government employment office, which would provide information and guidance on the availability of jobs. Such a system would match workers with jobs and job openings with qualified candidates, provided that employers informed the office about their vacancies. A Worker member also suggested the creation of a databank of employees who had lost their jobs, listing their skills, experience, and length of service, which would then be made available to new employers entering the zones.

50.The next item for consideration was point 9, which read: "How can governments and the social partners improve the social infrastructure to provide a better quality of life to zone workers?"

51.The discussion began with a description of the kinds of social infrastructure needed in the zones, and followed with a debate over who should be responsible for financing these services. In terms of the social infrastructure called for, members suggested the following: child-care facilities to accommodate the needs of a largely female workforce; schools for workers and their children; canteens to provide nutritionally balanced, affordable meals; safe, reliable transportation services for those travelling long distances to work, particularly at night; proper outdoor lighting to minimize security risks; recreational facilities to forestall social problems such as alcoholism, violence and prostitution; adequate housing with ample sanitary facilities and clean drinking water to promote good health and hygiene; medical facilities to attend to workers' health and well-being; and legal aid services to educate workers of their rights on the job. Worker members pointed out that the absence of these social supports contributed to a high level of worker burnout, as young workers were likely to leave zone employment after just four or five years. Such high turnover ran contrary to long-term employment development, an express goal of the zones.

52.More specific points related to improving the social infrastructure for zone workers were also raised. For instance, a number of members advised that workers' needs had to be considered within a family context; thus, social provisions had to be made for spouses and children as well. It was also pointed out that problems of an underdeveloped social infrastructure were particularly acute in rural areas because they were likely to have only minimal facilities available. Members also evoked social insurance for zone workers, including the establishment of pension schemes, social security, unemployment insurance and maternity insurance.

53.Although there was a general consensus on the social infrastructure needed to improve the quality of life for zone workers, there was less agreement on how these services should be financed. Worker members believed that governments, local authorities and zone investors held primary financial responsibility, and suggested that these three parties enter into a cost-sharing agreement to improve the social infrastructure. Employer members, on the other hand, felt that worker organizations should also shoulder a share of the responsibility, both financially and in terms of coming up with constructive proposals for action. The Worker members welcomed this invitation for greater trade union involvement in shaping such policy and indicated that Government and Employer opposition to the establishment of trade unions within zones was the only factor preventing implementation of this proposal. Employers also mentioned the positive role that joint public-private sector initiatives could play in improving infrastructure development, through such projects as building private housing on state-owned land or using public buses to establish private routes for workers.

54.A Government member described the operations of a national tripartite EPZ labour welfare fund established and functioning for ten years to promote the well-being of zone workers. The government, employers and workers not only jointly managed the fund, but each contributed to it financially, with the bulk of the contributions coming from government and employers. The objectives of the fund matched many of the points already raised by the Meeting, including: improved quality of life; health and safety education and awareness; provisions for family socialization; access to nutritious food; and availability of child-care facilities. Worker members pointed to this example as an effective means of achieving tripartite cooperation in improving social conditions in the zones.

55.Several Government members expressed concern that governments should be expected to bear the entire financial burden of improving the social infrastructure of the zones. The social partners had a responsibility to contribute as well. To highlight this point, one Government member mentioned a housing programme where costs were borne by both the employers and the workers in the zone, and another described an initiative where the government awarded a social progress prize to encourage zone employers to improve social services.

56.The last point for discussion was point 10, which read as follows: "What special measures need to be taken so that the special situation of women workers is addressed?"

57.The Meeting affirmed the centrality of non-discrimination and equality of treatment in employment and occupation of women, in keeping with the Equal Remuneration Convention, 1951 (No. 100), and the Discrimination (Employment and Occupation) Convention, 1958 (No. 111). In order to promote these goals, special measures were needed. While governments were to play a crucial role in providing solutions, the social partners could also respond quickly and effectively at the EPZ level. All could provide a supportive environment that enabled women workers to organize to improve their working conditions, upgrade their skills, and advance in their employment. In particular, the Worker members called for trade union access to the zones, to enable them to interact with and assist EPZ workers. They considered that, along with NGOs on certain issues, trade unions should have the opportunity to assist women in EPZs. Members also asked the ILO first to consider what special programmes it could establish, and second to promote the ratification of the Workers with Family Responsibilities Convention, 1981 (No. 156). In addition to comments made throughout the Meeting and noted throughout this report, a number of specific situations faced by women workers, and potential solutions, were addressed.

58.First, the Meeting identified sexual harassment, which could be the result of an employer or supervisor threatening adverse employment action in exchange for sexual favours or the creation of a hostile work environment, as a grave problem in EPZs. While the Employer members argued that sexual harassment was not unique in EPZs, the Worker members added that the high concentration of young, rural, migrant women, supervised by men and working in often self-contained EPZ communities far from home, exacerbated its incidence in these areas. Fear of retaliation and the social stigma already attached in some countries to women working in EPZs often prevented women from reporting the harassment. The Worker members called for legislative action to redress the problem, and provided examples from national practice. They specified that remedial legislation should provide specific protections against retaliatory measures. An Employer member also specified that to make laws on sexual harassment effective, clear definitions would be helpful, and proper procedures should be provided, especially as to the conduct of internal enterprise procedures. In addition, appropriate penalties should be set, taking into account potential overlap with criminal legislation on sexual abuse. He suggested further that legal assistance should be made available to advise and represent workers.

59.Second, the Worker members expressed concern that the long distances often travelled at night by EPZ workers to get home exposed them to violence. The Meeting reaffirmed the need for employer-provided transportation. Some members further considered that night work, where compulsory, was disruptive to health and family life, and should be minimized. A Government member explained that in her country, an independent governmental body had recently commissioned a study, in consultation with employers, trade unions and women's NGOs, to explore the links between promotion of equality for women, worker protection, and night work.

60.Third, the Worker members were concerned that women were prevented from getting pregnant or were victimized and terminated when they became pregnant. Worker members recommended that special measures to prevent these abuses should be enforced. They also called for maternity benefits, including maternity leave and feeding breaks, to be extended and enforced in EPZs. They also supported measures to assist men and women workers combine work and family responsibilities such as parental leave.

61.Fourth, the Meeting consensus was that pay inequities in EPZs should be eliminated. While Employer members considered that women generally received equal opportunities in pay and promotions in EPZs, Worker members countered with examples of pay inequities between women and men, as well as gender-specific occupational stratification. Worker members called for the implementation of programmes to promote women to technical and managerial positions in EPZs. The Meeting generally agreed that special legislation applicable in this respect elsewhere should be extended to the zones.

Consideration of draft conclusions and guidelines

62.The Meeting considered a set of draft conclusions and guidelines, that had been drafted on the basis of its preceding discussions.

Adoption of the draft report and conclusions of the Meeting

63.At its ninth sitting, the Meeting adopted its conclusions and guidelines, as well as the present report. The Meeting considered that the consensus achieved and reflected in the conclusions and guidelines was a salutary accomplishment, and thanked the secretariat for the critical role that it played through its helpful preparatory work and for its valuable assistance throughout the Meeting. The Chairperson congratulated all of the participants for their valuable contribution to making discussions on this difficult but crucial topic a major success. The Secretary-General thanked the Meeting for a most informative, educative process that served as an illustration of the potential of tripartism-in-action, and commended it for adopting a constructive, forward-looking approach to labour relations in EPZs. The Government members affirmed this point by emphasizing the importance of labour standards, good labour-management relations and tripartism. Adherence to these principles in EPZs could yield positive spillovers into other areas of the society and the economy. A Government member suggested that the guidelines should be implemented taking into consideration member States' national situation and level of development, and would have liked to see this concern reflected in the guidelines. In this regard, both Employer and Worker members considered that the guidelines provided a helpful, practical resource containing measures to promote the respect of international labour standards and sound labour-management relations in a context of social and economic growth within EPZs. The Worker members added that, in particular, the conclusions reflected the perspective that the promotion of trade union rights was in the long-term interests of EPZs. Through those measures, the living and working conditions of women and men in the zones could be improved, including special attention to ensure gender mainstreaming. The Meeting emphasized that the ILO should continue to provide fundamental guidance on these significant areas of concern.

Conclusions: Priorities and guidelines for improving social and labour conditions in EPZs

Geneva, 2 October 1998. (Signed) Washington González Nina,
Chairperson of the Meeting.

General considerations

1.EPZs have become one of the major features of the labour market in some developing countries. With globalization, the rate at which zones are being formed is accelerating.

2.This offers challenges and opportunities to EPZ-operating countries. The opportunities include access for more workers to formal sector employment. Both zones and enterprises will need to improve their efficiency and competitiveness by upgrading the quality of their products through better technology, organization of work, skills and labour-management relations.

3.EPZs have realized considerable amounts of investment and have been one of the important factors of industrialization but there is a need to continuously improve the linkages into the local economy to maximize their economic benefits.

4.While EPZs have been an important source of employment creation, in particular for women, working conditions, labour relations and human resource development are areas which require further improvement. The legal restrictions on trade union rights in a few EPZ-operating countries, the lack of enforcement of labour legislation, the absence of workers' organizations representation and of effective structures of labour-management relations and the shortage of human resource development programmes in a number of countries undermine the ability of zones to upgrade the skills, improve working conditions and productivity and thereby to become dynamic and internationally competitive platforms.

 Policies and strategies

5.For EPZs to fully achieve their economic and social potential, governments should have a clear and comprehensive industrial and investment strategy, consistent with the need to promote economic development and respect for fundamental workers' and employers' rights as defined in ILO standards. The potential economic and social benefits of such strategies should be carefully considered and regularly evaluated to allow for timely adjustment.

6.Political and social stability based on good governance, transparency, and effective policy-making, the promotion of tripartism, the practice of social dialogue, and respect for national and international labour standards is a major factor in attracting investment that promotes long-term, high-quality growth.

7.A dynamic strategy of investment promotion should include the growth and development of EPZs that respect the principles contained in these guidelines. It should be targeted at specific sectors of industry and categories of enterprise. Technology transfer and skill development should be emphasized in order to enhance the competitiveness of the zone-operating country.

8.In order to improve the sustainability of investment and the contribution of EPZs to the host economy, backward and forward linkages between zone enterprises and local suppliers of goods and services should be developed. A special agency could be established to identify and facilitate such links. Industrial support services should be made available to local providers of goods and services to assist them in meeting the speed, cost, quality and scale requirements of zone enterprises.

9.It is the responsibility of governments to provide a sound policy and legal environment for investment through basic education, lifelong training and appropriate infrastructure.

10.Sound labour-management relations are essential to the success of EPZs. Free, strong and representative workers' organizations have a major role to play in building workplace relations conducive to improvements in working conditions and increases in productivity and competitiveness.

Labour standards

11.Governments, employers' and workers' organizations should respect, promote and realize in good faith and in accordance with the Constitution, the principles contained in the ILO Declaration on Fundamental Principles and Rights at Work, 1998, and in particular those concerning the fundamental rights which are the subject of the Conventions pertaining to freedom of association and the effective recognition of the right to collective bargaining in the EPZs. The principles set out in the Tripartite Declaration concerning Multinational Enterprises and Social Policy, 1977, can also provide useful guidance and could be promoted.

12.National labour legislation should be complied with in EPZs.

13.To this effect the labour inspectorate should be strengthened, through increased resources and better training. Cooperation and joint action between the labour inspectorate and the zone authorities, with the involvement of workers' organizations where appropriate, could provide additional scope for compliance.

14.Better compliance with international and national labour standards can also be promoted through information, education and awareness-raising programmes aimed at investors, managers of enterprises, workers, employers, and their organizations. Issues to be covered could include labour-management relations, freedom of association and collective bargaining, non-discrimination, gender sensitivity and cross-cultural management. Tripartite and bipartite consultation and cooperation should be encouraged to promote a culture of voluntary compliance.

Labour-management relations

15.Governments should promote tripartite consultations as an effective means of developing sound labour relations policies and practices in EPZs. One means of fostering sound labour-management relations could be the participation of representatives from worker and employer organizations on the boards of investment promotion and zone management bodies. Education and training programmes can also play a valuable role in improving labour-management relations.

16.Enterprises should establish ongoing mechanisms for labour-management consultation using structures such as labour-management councils or workers' councils, taking into account levels of development and the characteristics of each country. Such mechanisms should be in accordance with the principles of Convention No. 135 concerning workers' representatives in the undertaking, 1971.

17.Structures and procedures of collective bargaining should be developed to set terms and conditions of work. This could be made easier by clearly defining the bargaining responsibilities at each level of management and the workers' organization.

18.Effective procedures to avoid and resolve disputes at the lowest level possible should be developed.

Human resource development

19.Human resource development is one of the key elements in improving the social and labour conditions in EPZs. Raising the human capital base through the transfer of technology and development of skills makes a long-term contribution to the host economy and provides workers with the means of improving their lives. Greater investment in education and training will expand the career potential and job satisfaction of workers and lead to improved productivity and stability.

20.Public and private resources should be utilized to ensure good basic education and job-related training and retraining. Skill development could be promoted through a levy fund which compensates government agencies, employers' and workers' organizations which undertake training and retraining initiatives. Lifelong learning, multiskilling and career path systems should be encouraged.

Retraining and re-employment

21.The retraining and re-employment of workers can be achieved through tripartite cooperation. Government training institutions and private enterprise need to work closely on forecasting and providing for future skill requirements in order to avoid mismatches. Enterprises have a leading role to play in retraining workers as new technologies and production methods are introduced. Zone level initiatives to assist in the re-employment of workers can utilize the resources of both private enterprise and public bodies.

Wages and working conditions

22.The establishment of tripartite mechanisms for minimum wage fixing should be encouraged, and where national minimum wages already exist they should be applied to the EPZs.

23.Remuneration packages, including non-wage benefits, should be determined through collective bargaining. Remuneration can be improved by increasing the efficiency and profitability of the enterprise. Successful enterprises are more able to invest in training and capital equipment which enable workers to increase productivity and therefore wages, incentive and bonus payments and non-wage benefits.

24.Government agencies can promote improved working conditions through incentives which reward enterprises which install facilities such as cafeterias, clinics and crèches. Education and training programmes aimed at investors, employers, workers and their organizations, which convey the relevant provisions of the labour legislation and best practices, can also lead to improvements. Where the circumstances so warrant, the establishment or strengthening of a specialized government agency to advise and assist enterprises to improve working conditions can be a useful tool. Labour-management consultations could yield improvements in working conditions and work organization.

25.Legislation regarding hours of work should be respected in EPZs. Excessive hours and overtime should be avoided to reduce the health and safety risks, inefficiency and the negative social consequences. Workers working late, women in particular, face increased risks of harassment and violence and special measures should be taken to ensure adequate transport and security.

Social infrastructure

26.Appropriate social infrastructure is essential if workers and managers are to be able to deliver high performance at work. Adequate and sanitary accommodation, safe and reliable transportation, educational and recreation facilities, health services and child care centres all help workers to lead healthy and well balanced lives and reduce labour turnover. Pension and other social security measures should help to stabilize the zone labour force.

27.Although government bears primary responsibility for the provision of social infrastructure, incentives may be offered to enterprises who provide social services such as housing, transport and child care. Public-private initiatives can combine the strengths of government, employers' and workers' organizations to good effect. Tripartite labour welfare funds based on contributions from government, employers and workers could support initiatives to improve the quality of life of workers.

Women workers

28.EPZs are one of the major sources of formal sector employment for women. However, care should be taken that such employment promote women's advancement and that women are not confined to low-skill, low-paid and low-prospect jobs and have access to training opportunities and better jobs.

29.In view of the high proportion of women employed in EPZs, EPZ enterprises should make special efforts to ensure that:

  1. women workers are not discriminated against and in particular that they receive equal wages for work of equal value;
  2. women workers enjoy maternity protection and benefits. Measures that could be considered include paid and unpaid maternity leave, employment security during pregnancy and maternity leave, and nursing breaks and facilities;
  3. measures exist to help workers combine work and family responsibilities. Measures that could be considered include the limitation of excessive working hours and night work, the provision of child-care facilities and the allocation of hours or days of leave to take care of the children;
  4. education, policies and procedures are in place to prevent sexual harassment and to deal with it;
  5. measures exist to encourage the promotion of women workers to technical and managerial positions.

ILO action

30.The ILO should develop advisory services and technical assistance projects to assist EPZ-operating countries in improving labour and social conditions in EPZs.

31.The ILO should provide all possible assistance to EPZ-operating countries, especially to those that have difficulties in fully respecting the fundamental rights reaffirmed in the Declaration on Fundamental Principles and Rights at Work and its follow-up. The assistance provided by the ILO would be in response to the countries' established and expressed needs.

32.The ILO should expand its research activities on the industrial relations policies and practices of transnational enterprises, in view of the particular relevance of this subject for EPZs.