Introduction
Firstly, let’s clarify what a special economic zone is and the need for it. A special economic zone is established to generate positive economic growth. It is usually subjected to different and conducive financial regulations compared to other regions in the country with relatively lower tax slabs and tariffs. The regulations intend to attract foreign direct investment (FDI) and facilitate development through the area, which can be local, national, or international. India was one of the first countries in Asia to recognize the effectiveness of an Export Processing Zone (EPZ) to promote exports, with Kandla getting the first EPZ in 1965.
This article delves into exploring the rights of the workers within the SEZs in India and analyzing whether they are being exploited. Further potential concerns regarding the implementation of Indian labour laws within SEZs and workers’ issues shall also be scrutinized, with an overview of policies in other neighbouring nations and an evaluation of whether amendments are required.
Legal Framework Governing Worker’s Rights in SEZs
The Special Economic Zones Act is the legislation that governs the setting up and operationalization of SEZs in India. There are specific problems related to labour laws concerning SEZs, sprouting under the act meant to help an economy grow and attract foreign investment through tax benefits and relaxations in regulatory norms. However, the act does not prescribe any specific labour protection but gives options to the state governments regarding the applicability of the labour laws within these zones. Historically, Indian labour laws such as the Industrial Disputes Act of 1947, the Factories Act of 1948, and the Minimum Wage Act of 1948 governed working conditions, wages, and safety standards. However, very few SEZs are subject to rigid compliance, thus giving room for easy hiring and firing, prolonged working hours, and control over salary structure.
In addition to restrictions on union rights and collective bargaining, even the power of workers in an SEZ to demand decent wages and working conditions is curtailed. Even though the Contract Labour (Regulation and Abolition) Act of 1970 is nominally in place, its execution is usually compromised, leading to the blossoming of jobs on a temporary or contractual basis, thus depriving the workers of facilities given to permanent workers. In about-seeing the working conditions in the SEZs, these governments appoint working commissioners and industrial tribunals to hear complaints. However, enforcement mechanisms fail to play their role; therefore, violations of labour laws are treated very lightly because companies seem to be driven only by the motive of earning profit.
Exploitation of Worker’s In SEZs
Indian Special Economic Zones (SEZs) were conceived primarily to encourage the industrialization-industrialization process, FDI, and avail job opportunities. Sadly, though, workers in SEZs mostly remain victims of exploitation due to lenient labour rules, poor inspection mechanisms, and profit-driven incentives. Some major avenues of exploitation are;
Low Wage Rate and Job Insecurity
In SEZs, contract work becomes the most unavoidable alternative, as it allows firms easy ways out of long-term benefits arrangements. The structure of wages that applies to operators working in SEZs is not meant for those falling under the standard composition. Then again, the internal comparison of techniques would reveal the external nature of contract employment vis-a-vis long-term benefits. Wage rate-setting below that in the Minimum Wages Act of 1948 by the State Government translates into the attraction of hire-and-fire culture due to exemption from office rules and severe labour laws.
Lack of Social Security Benefits
- Many enterprises misclassify workers as contract labourers, which deprives them of benefits under EPF, ESI, gratuity or pension.
- In addition, such informal employment at SEZs eventually leads to an economically insecure retirement.
Bad Working Conditions.
- Working Hours: Workers have to work more than 48 hours a week without sufficient overtime compensation.
- Poor Health and Safety Violations: The SEZ units do not afford sufficient ventilation, sanitation, and safety equipment, which constitute health risks.
- Grievance Redressal: With the dominance of strong trade unions, complaints processes are limited for most employees.
Gender Discrimination and Workplace Harassment.
- Women factory workers in textile and electronics special economic zones (SEZs) suffer from unequal pay and gender bias.
- Sexual harassment cases go unreported owing to the fear of losing jobs and the ineffective enforcement of the Sexual Harassment of Women in the Workplace (Prevention, Prohibition, and Redressal) Act, 2013.
- It is common for maternity discrimination as many companies tend to freehold childbearing women to avoid associated costs regarding maternity benefits.
Some Headlines and Information
- 40 Indian migrant workers reportedly were deceptively brought to Gabon and had their identity documents confiscated by the company, thus preventing them from leaving GSEZ or Gabon. Moreover, it is alleged that the workers have not been provided with a written contract or a valid work visa, have no weekly rest time, are required to do excessive overtime work, and receive irregular wage payments. –UNHROHCR
- 14 Indians rescued from Laos cyber-scam centres; Embassy issues advisory. This brings the total number of Indian youth rescued from cyber-scam centres in Golden Triangle SEZ to 548, according to the Indian Embassy in Laos– Business Standard.
- Indian workers in factories supplying the supermarket chains Marks & Spencer, Tesco and Sainsbury’s, and the fashion brand Ralph Lauren told the BBC they are being subjected to exploitative conditions. “We’re made to work continuously, often through the night, sleeping at 3 am then waking up by 5 am for another full day,” one woman said in an interview. “Our bosses don’t care. They’re only bothered about production,” she said. “They’ve increased our workload. We’re forced to stay late to finish it – or they yell at us and threaten to fire us. We’re scared as we don’t want to lose our jobs.”- BBC.
Protection Mechanism and Judicial Interventions
The SEZ provides excellent economic benefits. However, the Indian legal system endeavours to protect all workers’ rights, which are injunctive in some respects. Non-enforcement is the major drawback of dogma.
Role of the Judiciary in Protecting Workers’ Rights
There are a few essential judgements which emphasize the need for fair labour standards in SEZs.
- Industrial incentives should not compromise workers’ fundamental rights: ONGC vs. Collector of Central Excise (1992).
- The Supreme Court stressed the importance of providing minimum pay and acceptable working conditions also for contract employees in Salal Hydro Project vs. State of J&K (1983).
- People’s Union for Democratic Rights vs. Union of India (1982): There is a failure of enforcement of labour rules, which it said such non-enforcement violates fundamental rights.
Government initiatives and policies.
- This Act SEZ Act of 2005 has been laid down to invite investors in SEZs and to provide a framework for labour laws within SEZs, but the implementation is often inconsistent.
- The four new labour codes of 2020, while aimed to simplify and harmonize the existing rules, are claimed by critics to have weakened the rights of workers by widening the freedom for hiring and firing.
- The Contract Labour (Regulation and Abolition) Act 1970 applies in SEZs, but it is poorly implemented, which gives scope for rampant contract labour exploitation.
- The role of trade unions and Non-Governmental Organizations: – All unions are restricted in SEZs. Because of this, there is no collective bargaining. Some of the NGOs working in this area, such as CWM, People’s Union for Civil Liberties, etc., heavily condemn labour rights violations in these enclaves.
The Resolution Mechanisms for Conflicts Require Improved State
- Strengthening Legal Oversight through Labour Commissioners and SEZ Monitoring Committees.
- Legislation on Worker Representation in SEZ Governance, among others, to Ensure Efficient Grievance Redress.
- Corporate Accountability Towards Increased Worker Welfare Through CSR Initiatives.
The Way Forward: Balancing Economic Growth and Worker’s Rights
In the case of India, special economic zones (SEZs) are essential to attracting foreign investments and speeding up the industrialization process. In the given case, the issues raised through the exploitive international workers working in these zones are accompanied by a lot of debate about labour rights. India has to scale up the enforcement of labour laws, increase collective bargaining, create fair dispute resolution systems, stimulate CSR, and implement effective policy intervention to augment the protection of workers in the long-term industrial growth of the country. Lessons from the successful labour policies of other countries may furnish valuable insights for India’s SEZ set-up.
Strengthening Labor Law Enforcement in SEZs
Many countries like Bangladesh have strong compliance monitoring mechanisms to protect the rights of workers. The Bangladesh Export Processing Zones Authority (BEPZA) constitutes a Central Monitoring Cell to carry out surprise audits and checks on compliance with labour laws. India can take a similar course and establish an independent SEZ labour compliance authority that can perform scheduled and surprise inspections at workplaces. Besides, the factory inspection laws of Vietnam require yearly labour audits before the renewal of factory licenses. These types of laws can be adopted in the special economic zones of India, which could go a long way to ensuring serious enforcement of labour laws and eliminating workplace evils.
Promoting Collective Bargaining and Union Rights
One such model worth looking at is China’s enterprise-level union, which mandates enterprises to form in-house unions affiliated with the All-China Federation of Trade Unions (ACFTU). Although independent trade unions are still banned in China, this route helps workers express grievances within a controlled legal environment. In the same vein, the European Union (EU) mandates collective bargaining rights, under which workers and employers negotiate employment conditions in a structured manner. India could also consider introducing sectoral collective bargaining agreements in SEZs whereby all enterprises engaged in a specific industry would be compelled to follow standardized pay and circumstances of work negotiated by representatives of workers and employers. This would create a more equitable labour market while minimizing disruption to industrial output.
Ensuring a Fair Dispute Resolution Mechanism for Workers
Countries with intense workplace mediation and arbitration processes, like Germany and the Netherlands, may offer lessons for India. In Germany, any company with a certain number of employees is required to establish a workers’ council, which acts as a liaison between employees and management. These councils avert problems before they escalate into major confrontations. India could then do something similar and legislate that Worker Grievance Committees be established in Special Economic Zones. These committees, which include company and employee representatives, can facilitate grievance resolution and guarantee that workers receive swift and fair answers to their complaints. Also, the mandatory labour mediation process in the Philippines (where mediation is required before a labour case is taken to court) can serve as a case study to hasten dispute resolution in Indian SEZs.
The Role of Corporate Social Responsibility (CSR) in Safeguarding Labor Rights
Japan is the paragon of CSR combined with employee well-being. CSR, to many Japanese firms, entails contributions to safety, mental well-being, and fair salary programs for employees. Such a policy can be idealized in India by offering tax exemptions to SEZ firms undertaking worker-friendly CSR practices such as improved workplace safety, employee insurance, and training programs that ensure job security.
Conclusion
To be competitive internationally with workers’ rights, India’s SEZs have to find a middle ground. Law enforcement in labour, strengthening union rights, an imbalance in dispute resolution, using Corporate Social Responsibility for the welfare of workers, and modifying regulations under SEZ would all provide industrial ecosystem sustainability for corporates and workers alike. By looking up to countries such as Bangladesh, Vietnam, China, Germany, the Netherlands, the Philippines, etc., India can put together its SEZ structure better so that it promotes economic growth while respecting workers’ dignity and rights. Policy-makers need to understand that social responsibility has to accompany industrial success so that India’s SEZs have the potential to be a global standard of ethical and sustainable labour practices.
