Global Labour Flexibilization Conditionalities: Implications for Ethiopian Labour Law Regulatory Space

Jetu Edosa* 

(Labour Relations Law in Ethiopia

EDITOR Mehari Redae (PhD) 

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Introduction  

Economic globalization as the increased integration of national economies through various form of capital mobility has brought new opportunities and challenges for workers around the world.1 On the one hand globalization is viewed as a force for economic and social progress explained in terms of new technologies and its resultant efficiency for national economies, corporations and employees. In this way, advocates of globalization contend that the force of economic globalization provides incentives for countries to promote a spirit of entrepreneurship capable of responding to employers’ need to react quickly to changing market conditions, and to employees’ need for personal growth and professional development.2

 

On the other hand, economic globalization is critiqued as a threat that essentially enabled markets rather than people to determine how the world's resources will be used and distributed.3 Specifically, viewed from the impacts on employees’ rights, it is widely criticized that economic globalization creates competitive pressure that leads employers to ignore or fail to comply with labour standards in efforts to cut costs.4  In other words, in order to globally compete with foreign competitors in the international markets, firms or multinational corporations may attempt to cut costs by paying lower wages, hiring child labour, and imposing unsafe working conditions on their workers.5 

Furthermore, economic globalization is also undermining the capacity of nation-states to regulate their own domestic economies because of two major factors. First, global economic institutions such as the World Bank and IMF coerce states through labour conditionalities as a string attached to loan provisions for developing and least developed countries (global south proper).6 On top of the already diminished regulatory capacity of countries due to multilateral trade and investment treaties, the loan conditions enforced by the World Bank and IMF on developing countries prevent governments from regulating wages and enforcing worker rights to mention few.7 Second, developing countries lure for hard currency in the form of foreign direct investment (FDI) is creating a practical limitation on the ability of one nation to regulate its domestic labour affairs in a world where labour and capital move freely across national borders.8 It goes without saying that corporations prefer to establish production facilities in countries with lower wage rates, lower labour standards and fewer labour rights.9 

This means that developing countries are required to compete for global capital ‘runaway shop’ in the form of FDI by creating favourable legal environment that involves reform of old labour laws that constrain employers labour market flexibilities.10  The presence of economic globalization is also long felt in Ethiopia, which championed liberalization in trade and investment by promoting and attracting FDI to invest in industrial development zones with economic and non-economic incentives. More specifically, Ethiopia underwent a series of labour law reforms that culminated in the enactment of a new labour law in 2019. In view of this national trend, the paper attempts to examine the extent to which the imperatives of global labour conditionalities have made inroads in to the domestic labour law and policy regimes. In order to address this main research question, a doctrinal legal research method is employed to analyze data that has been collected from relevant sources such as books, peerreviewed journal articles, World Bank documents and legal and policy documents regulating the labour market in Ethiopia. The data collected from both literature and legal sources were analyzed to show how the dictates of globalization such as the influence of the World Bank and IMF loan conditionalities that force developing countries to ensure flexibility of national labour law in certain areas of labour market regulation. 

The article then systematically identifies and highlights major substantive areas of labour law that is required to undergo reformulation through repeal or amendments within the national labour law and policy regulatory space. It should be noted however from the outset that the argument advanced in this paper is not about assessing whether globalization has negative or positive effect on domestic regulatory space. Rather, the main purpose is to investigate the extent to which the labour law reforms in Ethiopia were influenced by the ‘dictates’ of the forces of economic globalization, while focusing on selected labour flexibilization conditionalities. 

 * LL.B, LL.M, Assistant Professor at Addis Ababa University School of Law. E-mail: jetulaw@gmail.com 

1 Eddy Lee, Globalization and Employment: Is Anxiety Justified, 135 International Labour Review. 485 (1996). 

2 Lance A. Compa, Trade liberalization and labour law. (International Society for Labour & Social Security Law (2006) 2. Available at:  http://digitalcommons.ilr.cornell.edu/conference/6/ 

3 Jackie Smith, Economic Globalization and Labor Rights: Towards Global Solidarity, 20 Notre Dame Journal of Law, Ethics & Public Policy (2006) 874. 

4 Eddy Lee, supra note 1 at 495. See also Olney, William W., A race to the bottom? Employment protection and foreign direct investment, 91(2) Journal of International Economics (2013) 191. See also Berg, J.; Cazes, S. Policymaking Gone Awry: The Labour Market Regulations of the Doing Business Indicators, 29(4) Comparative Labour Law & Policy Journal (2008) 349–382. 

5 Michel Chossudovsky, The Globalisation of Poverty: Impact of IMF and World Bank Reforms (Zed Books, London, 1997) 77. 

6 Robert G. Blanton, Shannon L. Blanton and Dursun Peksen, International Financial Institutions and Labour Rights: Rhetoric versus Reality. 24(1) International Union Rights, World Bank & IMF (2017) 6. 

7 Ibid.  

8 Georg Caspary and Susanne Berghaus, The Changing Nature of Foreign Direct Investment in Developing Countries: Evidence and Implications, 5 Journal of World Investment & Trade 683 (2004) 692. 

9 Mogab, J., Kishan, R., & Vacaflores, D.E., Labor Market Rigidity and Foreign Direct Investment: The Case of Europe. 13(1) Applied Econometrics and International Development (2013) 36.  

10 Christine Breining-Kaufmann (2007) Globalisation and Labour Rights: The Conflict between Core Labour Rights and International Economic Law. (USA: Hart Publishing) 9.