More than ever before, many foreign firms have broadened their geographical boundaries through investments in Africa, and the flow of foreign direct investment (FDI) into the continent has reached a record level in recent years. Although global FDI inflows fell between 2012 and 2013, the same did not apply to developing countries.⁽²⁾ The World Bank reported that in 2013 net FDI inflows in developing countries grew by 16.2% to US$ 43 billion.⁽³⁾ For Sub-Saharan Africa, this translated into a 4.7% increase in gross domestic product (GDP).⁽⁴⁾

It is widely accepted that the ability of FDI to offer access to internationally available technologies as well as management know-how makes it the best form of capital flow in providing a strong stimulus to economic growth for host countries.⁽⁵⁾ In Sub-Saharan Africa, governments need FDI for a source of capital formation, technology transfer, managerial skills transfer, employment creation and access to foreign markets,⁽⁶⁾ among others. In view of the numerous benefits of FDI, attracting investment has been one of the top priorities for African governments, not least because studies indicate a positive correlation between FDI and poverty reduction.⁽⁷⁾ One reason for this is the ability of FDI to create employment.

In the bid to attract FDI, countries compete with each other by offering more favourable conditions to investors. This incentive-based competition has resulted in some countries raising the level of generosity of their incentives in response to those offered elsewhere.⁽⁸⁾ For investors who rely on cheap labour, the incentive is the relaxation of labour laws in the host country, resulting in poor working conditions for employees.⁽⁹⁾ Often the quality of the employment created by investment on the continent is not up to the standard necessary for poverty reduction or enhancing livelihoods of employees, since the jobs created are mostly characterised by poor labour standards such as very low salaries, lack of job security and lack of bargaining power. This is one of the reasons why poverty is still the reality for a large portion of Sub-Saharan Africa’s population despite the high FDI inflows.⁽¹⁰⁾ This goes against the International Labour Organisation (ILO) call for all countries to ensure that economic growth and development go along with the creation of decent work.

This CAI paper argues that harmonisation of labour laws is one way in which the use of poor working conditions by host countries as an incentive for attracting FDI can be eliminated. Generally, harmonisation of laws in Africa has been recognised for its ability to attract FDI ⁽¹¹⁾ because it creates a predictable legal environment for investors. However, this perspective does not explicitly address how employees can fully benefit from FDI. This paper shows that through harmonisation of labour laws, governments will be inclined to uniformly interpret and apply internationally accepted labour standards which are aimed at reducing the great economic power that employers have over employees. If governments view labour law harmonisation and appreciate its benefits as a way to protect employees from exploitation, the benefits of FDI in providing employment will be truly actualised. Legal harmonisation therefore goes beyond just attracting FDI but can also lead to the improvement of the livelihoods of employees and poverty reduction in turn.

Implementation of labour laws in Southern Africa

There is lack of uniformity in the application of labour laws in Africa. Every country interprets and applies its labour laws differently according to their national priorities. While some legal frameworks offer better working conditions others do not, thereby subjecting employees to various forms of labour exploitation. This is the case despite all states being members of the ILO whose aims are to “promote rights at work, encourage decent employment opportunities, enhance social protection and strengthen dialogue on work-related issues.”⁽¹²⁾ In particular, the 1998 Declaration on Fundamental Principles and Rights at Work calls upon all member states of the ILO to respect, promote, and realise the ILO Core Labour Standards (CLS).⁽¹³⁾ These are the customary international law standards that the ILO has set up as the minimum standards for all countries to follow, whether ratified or not. These include: freedom of association and the effective recognition of the right to collective bargaining (Convention No. 87 & No. 98); the elimination of all forms of forced and compulsory labour (Convention No. 29 & No. 105) and the elimination of discrimination in respect of employment and occupation (Convention No. 100 & No. 111).

Many countries in the Southern African Development Community (SADC) have incorporated these conventions into their various national labour legislations. However, in practice, there are several variations in their implementation. A study by Okharedia (2012) ⁽¹⁴⁾ on the implementation of labour laws in some countries in Southern Africa, including Zambia, Zimbabwe, Namibia, Swaziland, Lesotho, Botswana, Tanzania and South Africa, revealed how different the interpretation and application of the ILO standards are across nations. For instance, while powerful trade unions influence freedom of association in South Africa, this is not the case in Botswana and Namibia. The study also found a contrast between Swaziland and Lesotho. In Swaziland, although there is no prohibition on the exercise of the freedom of association, rules and procedures for implementing the right are not strictly followed. In Lesotho, civil servants are prohibited from joining trade unions. In Tanzania, employers in the private sector have established policies that deter freedom of association. On the elimination of discrimination, Okharedia found varying degrees of discrimination in the workplace in South Africa, Botswana, Lesotho, Zambia, Tanzania, Swaziland and Namibia. Furthermore, on the right to collective bargaining, South Africa recognises this right although it is silent on how and what employees should (or can) bargain. In Zambia, the level of implementation differs across sectors. In Botswana, Lesotho and Swaziland, collective bargaining is not fully implemented. In Namibia, although collective bargaining is recognised, it is not widely practiced.

The differences in the implementation of the ILO labour standards imply differences in levels of protection of employees against labour exploitation across the region. A unified application of the ILO standards means that countries will respect the rights of employees and offer them decent work capable of enhancing their livelihoods. For instance, through collective bargaining, employees are able to negotiate for better working conditions such as occupational safety, overtime pay, and better wages. Employment will be truly beneficial to employees and economic growth and development will have a true meaning to citizens as much as it has to nations. This makes harmonisation a necessary tool for unifying labour laws in order to provide a legal framework that reflects the objectives of the ILO. On the other hand, lack of a mechanism to strengthen the labour laws will maintain the status quo of exploitation of employees in the work place.

Evidence of labour exploitation

There is some evidence to suggest that the weakness of labour standards in the SADC region has already resulted in the exploitation of local employees by foreign investors. Due to the enormous attention that China’s economic and political influence in Africa has garnered in recent years, much available literature discussing FDI in Africa emanates from the Sino-African trade relationship, with China frequently being accused of maintaining poor working conditions in its dealings in Africa.

Governments are often tempted to lower labour standards believing that this could give them a comparative advantage in international trade.⁽¹⁵⁾ In their report detailing China’s labour practices in the SADC region, a Johannesburg-based advocacy group Southern Africa Resource Watch (SARW) reveals how African governments do not protect their citizens, but rather focus on pleasing Chinese investors.⁽¹⁶⁾ In Zimbabwe, locals working in the growing, increasingly Chinese-owned mines are subjected to extremely harsh conditions such as very low wages, hard labour, long working hours without overtime, no leave, and disregard of occupational safety, among others. The study further revealed that a trade union that was investigating unfair labour practices at a Chinese firm where 60 workers were unfairly dismissed received a “directive from high offices” to drop the case. In one of these firms, Makwiro Platinum Mines, workers are said to have complained that they do not get overtime for extra hours of work. Furthermore, there is no observance of local holidays and protective clothing is always in short supply. Although this is a clear violation of the local labour laws, reports indicate that the Chinese investors enjoy government protection.

In Zambia it was found that small Chinese mining companies particularly are the ones that violate labour laws by forcing their employees to work 12 to 18 hours a day, well exceeding the legally stipulated 8 hours. On 24 July 2006 a protest broke out when employees at the China Non-Ferrous Metal Mining Company, the first copper mine in Zambia to be run by a Chinese entity, were not paid as anticipated. About 40 Zambian employees approached the residential compound of Chinese employers. Following this, a Chinese supervisor fired at the approaching crowd, injuring four employees. The protesting employees subsequently lost their jobs.⁽¹⁷⁾ The Mineworkers Union of Zambia (MUZ) President has said that foreign companies take advantage of the absence of legal protection for casual workers. Workers are not considered employees until after six months of continuous service. It is alleged that within the six month period Chinese firms force the employees to undertake that they are working at their own risk and in case of accidents the companies will not be liable.⁽¹⁸⁾

The International Confederation of Free Trade Unions (ICFTU) 2006 Annual Survey of Violation of Trade Union Rights ⁽¹⁹⁾ noted that Chinese companies in Swaziland had engaged in severe violations of the right to freedom of association. It was reported that Chinese-owned textile companies refused to recognise trade unions. The situation reached a point where employees were banned from gathering in groups during break times as it was feared that this would enable them to collectively voice concerns regarding their employer. When the workers presented their petitions to the employers, police allegedly resorted to violence by beating up the workers and using rubber bullets and tear gas.

In addition to the CLS, the right to a living wage is another important internationally recognised labour right. The ILO defines a living wage as “wages and benefits paid for a standard working week which should meet at least legal or industry minimum wage standards and always be sufficient to meet basic needs of workers and their families and to provide discretionary income.”⁽²⁰⁾ While some countries have a minimum living wage, others do not. For those that have a minimum wage, it often falls far short of meeting the basic needs of the workers and their families, making workers unable to survive on their income. Employers often take advantage of the low minimum wages in Africa. In Zambia for instance, miners working in Chinese firms have complained about how they are unable to earn a living despite going to work, citing how low the wages are compared to those offered at Zambia’s largest Konkola copper mine.⁽²¹⁾ It is reported that while the latter pays its miners US$ 420 per month, Chinese firms pay US$ 100.⁽²²⁾ A salesman working in a Chinese grocery complained that he is paid a mere US$ 40 per month.⁽²³⁾

It has been argued that lack of harmonisation of laws in Africa is a reason investors flout national laws as illustrated by the examples above. In one legal analysis of disputes arising from the trade between Chinese firms and African states, the author concludes that the allegations levelled against China in matters relating to working conditions could have been prevented if African countries had uniform application and interpretation of their labour laws.⁽²⁴⁾ This motivates the need to harmonise labour laws in African states.

Legal harmonisation in Africa

There is no standard definition for the term legal harmonisation. This paper uses MoniQa’s definition of legal harmonisation as it captures important elements that this paper advances. Harmonisation is defined as “actions or processes that through matching and blending bring about agreement, reconciliation or standardisation.”⁽²⁵⁾ This process brings about mutuality of views among parties involved. From this definition, legal harmonisation can therefore be seen as the process of creating common legal standards in order to bring uniformity of legal interpretation and application across a region bearing mutual interests.

Harmonisation thus aligns with the principal objective of SADC which is to foster closer economic ties among its member states and lay the foundation for the establishment of an economic community.⁽²⁶⁾ Furthermore, the SADC Treaty establishes the importance of cooperation among its member states, the community’s institutions as well as the processes for achieving its goals. The SADC Treaty calls for its members to cooperate in areas that are necessary to promote regional development and integration. For instance, member states are required to coordinate, rationalise and harmonise their overall macro-economic strategies and policies. This is an indication that labour law harmonisation would be a welcome development within SADC.

In other parts of Africa, efforts to harmonise laws have already been made. The Organisation pour l'Harmonisation en Afrique du Droit des Affaires (OHADA, Organisation for the Harmonisation of Business Law in Africa), is a system of business laws and implementing institutions ⁽²⁷⁾ created two decades ago, on 17 October 1993 in Port Louis, Mauritius that has been adopted by 17 West and Central African countries. Its principle objective, as the name suggests, is to harmonise business laws in Africa. Similarly, SADC is in the process of devising a framework for the harmonisation of migration and labour laws in the region,⁽²⁸⁾ and it is crucial that during this process member states consider the protection of employees from the greater economic power of employers as one of its principal objectives.

Drawing from the OHADA experience, all member states will be required to comply with a uniform set of laws. For this uniform law to have local effect, existing labour laws need to be amended. In the absence of any relevant law, it must be enacted. Processes and procedures of implementing the labour laws in nations will have to be followed in accordance with the uniform law. Incorporation of international law into national systems is provided for under Article 6 of the SADC Treaty. Members are required to refrain from unilateral actions that have the likelihood of obstructing the accomplishment of the community’s objectives. Furthermore, it is the obligation of member states to take all necessary measures to enact laws necessary for the implementation of the Treaty’s provision. To ensure accountability, a supranational institution will regulate and oversee the activities of its member states, reducing the autonomy of national governments in the implementation of their labour laws. A supranational court can be created to guarantee uniformity and consistency in legal interpretations and application of labour laws across member countries.

Conclusion

This paper has expressed that although FDI has brought economic growth to Africa, in some areas this has not fully translated into the improvement of the lives of employees. One of the noted reasons for this is that employers have greater economic power over employees because of the discrepancy in the application and enforcement of labour laws across Southern African countries, often because governments lower labour standards to give them an advantage in international trade. This lack of consistency makes it easier for employers to exploit workers and create working conditions that hinder, rather than facilitate, poverty reduction.

Work is part of everyone's daily life and is crucial to a person's dignity, well-being and development. Labour should therefore not be treated solely as a commodity or an inanimate product capable of being negotiated in order to pay the lowest price and maximise profits. Economic development should not be undertaken for its own sake, but to improve the lives of citizens. Economic development through FDI must therefore include the creation of gainful employment and working conditions in which people can work in freedom, safety and dignity.

This paper has proposed harmonisation of labour laws as one way of improving the livelihoods of employees. The ILO recognises that international labour standards are mainly about developing people by ensuring that economic development remains focused on improving human life and dignity. Implementing the ILO’s international labour standards uniformly across SADC member countries will ensure that economic growth and development are accompanied by the creation of decent work by imposing basic minimum social standards agreed upon by all players in the global economy. The extension of freedom of association, social protection, occupational safety and health, vocational training and other measures required by international labour standards will in turn aid in reducing poverty.⁽²⁹⁾ Furthermore, international labour standards call for the creation of institutions and mechanisms to enforce labour rights. Harmonisation of labour laws in SADC not only corresponds with and compliments the community’s goals for integration but applying and promoting international labour standards across countries is in everyone's interest. Defined rights and standards and functioning legal institutions can create a climate of trust and order which will attract investors without the need for lowering labour standards as incentives, and which is essential for economic growth and development.

Written by Rosena Nhlabatsi ⁽¹⁾

NOTES:

(1) Rosena Nhlabatsi is a Research Associate at CAI with an interest in international economic law. Contact Rosena through Consultancy Africa Intelligence's Africa Watch unit ( africa.watch@consultancyafrica.com). Edited by Nicky Berg.
(2) ‘World investment report’, UNCTAD, 2013, http://unctad.org.
(3) ‘Global economic prospects’, The World Bank, 2014, http://www.worldbank.org.
(4) Ibid.
(5) Nunnenkamp, P., 2002. Foreign direct investment in developing countries: What economists don’t know and what policymakers should not do. Centre for International Trade, Economics & Environment: Jaipur.
(6) Mwilima, N., ‘Foreign Direct Investment in Africa’, Labour Resource and Research Unit, September 2003, http://www.sarpn.org.
(7) Fauzel, S. and Vinesh, S., ‘Analysing the impact of Foreign Direct Investment on poverty reduction in Sub Saharan Africa,’ ICTI 2013, http://sites.uom.ac.mu.
(8) Christiansen, H., ‘Incentives-based competition for FDI in developing countries’, OECD, May 2003, http://www.oecd.org.
(9) Ibid.
(10 Alexander, R., ‘Dollar benchmark: The rise of the $1-a-day statistic’, BBC News, 9 March 2012, http://www.bbc.com.
(11) Angelo, J. and Faria, E., ‘Future directions of legal harmonisation and law reform: Stormy seas or prosperous voyage?’, UNIDROIT, 2009, http://www.unidroit.org.
(12) ‘Mission and objectives of the ILO’, ILO website, http://www.ilo.org.
(13) ‘The ILO Declaration on Fundamental Principles and Rights at Work’, ILO, http://www.ilo.org.
(14) Okharedia, A., 2012. The legal implications of harmonizing labour laws in the Southern African Development Community (SADC) Region. Unpublished doctoral dissertation. University of South Africa, South Africa, http://uir.unisa.ac.za.
(15) ‘The benefits of International Labour Standards’, International Labour Organization, http://www.ilo.org.
(16) Howe, M., ‘South African report highlights Chinese labor abuses in the Sub-Sahara’, Mining.com, November 2012, http://www.mining.com.
(17) Ibid.
(18) ‘Zambians wary of “exploitative” Chinese employers’, IRIN, 23 November 2006, http://www.irinnews.org.
(19) ‘Annual survey of the violation of trade union rights’, International Confederation of Free Trade Unions (ICFTU), 2006, http://www.newunionism.net.
(20) 'Protection of Wages Convention (C 95)’, 1949, Geneva: ILO 32nd ILC session; ‘Minimum Wage Fixing Convention (C131)’ and ‘Recommendations 131 and 135’, 1970, Geneva: ILO 54th ILC session; ‘Universal Declaration of Human Rights (article 23)’, 1948, New York: UN General Assembly.
(21) ‘Annual survey of the violation of trade union rights’, International Confederation of Free Trade Unions (ICFTU), 2006, http://www.newunionism.net.
(22) Ibid.
(23) ‘Zambians wary of “exploitative” Chinese employers’, IRIN, 23 November 2006, http://www.irinnews.org.
(24) Zhu, W., 2012. A brief analysis of the disputes arising from China-African civil and commercial transactions. Journal of Cambridge Studies, 7(3), pp. 74-84.
(25) MoniQa is a European Commission initiative for monitoring and quality assurance in the food supply chain. The definition of Harmonisation by MoniQa can be found at https://www.moniqa.eu.
(26) ‘Treaty of the Southern African Development Community’, 1992, Windhoek: SADC, http://www.sadc.int.
(27) ‘OHADA: Organization for the Harmonization of African Business Law’, 1993, Port Louis, http://www.ohadalegis.com.
(28) Matambanadzo, P., ‘Southern Africa: SADC works on harmonising migration labour laws’, allAfrica.com, 5 September 2013, http://allafrica.com.
(29) ‘The benefits of International Labour Standards’, International Labour Organization, http://www.ilo.org.