Foreign Direct Investment vis-à-vis Labour Law in Ethiopia: Is Race-to-the-Bottom an Existing, Impending or Illusory Menace?

Bereket Alemayehu Hagos* 

(Labour Relations Law in Ethiopia

EDITOR Mehari Redae (PhD) 

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Abstract 

In line with the global trend, Ethiopia has been involved in the competition with other countries to attract and retain foreign direct investment (FDI). For this purpose, the Ethiopian government has been taking various measures, which include providing different incentives to foreign investors. This article finds some evidence, focusing on foreign investments in the Ethiopian industrial parks, that the government has been engaged in a race-to-the-bottom with respect to labour standards, a phenomenon that harms the rights and interests of workers.

 

Thus, the problem of race-to-the-bottom on labour standards exists in Ethiopia. The race-to-the-bottom has been manifested through the government’s reluctance to enforce the labour standards provided in the Ethiopian labour law (particularly the core labour standards) in order not to “discourage” foreign investors. 

Since such approach to promoting foreign investment is contrary to the grand goal of sustainable development, the article provides some thoughts on how the Ethiopian government can balance its interests of promoting foreign investment with the protection of the rights of workers. These include promoting FDI through fiscal and financial incentives instead of the reluctance to enforce labour standards, while ensuring that foreign investors comply with the labour law so as to protect the rights of workers. Key Terms: Investment, foreign direct investment, FDI, investment law, labour law, labour standards, core labour standards, race-to-the-bottom, sustainable development. 

 

* LL.M. Candidate in Comparative Law, Economics and Finance (University of Turin and International University College of Turin), LL.M. in International Business Law (Central European University), LL.B. (Addis Ababa University).The author can be reached at alemayehu.bereket@yahoo.com. He thanks the anonymous reviewers for providing constructive comments on the draft of the article and Dr. Mehari Redae for providing his insightful comments on the draft of the article and for editing it.