Implications of Special Economic Zones Investment Policies on Women Gender-based trade and investment policy for development 25-28 March 2019 Berkeley Hotel, Bangkok Kyoko Kusakabe Asian Institute of Technology

Special Economic Zones (SEZs) “legal, logistical, and tax arrangements intended to assist a developing country in attracting export-oriented manufacturing investment (mainly foreign) that would not otherwise happen” (ADB 2015:1) 1986: 176 zones in 47 countries 2006: 3,500 zones in 130 countries employing 66 million Tax incentives; infrastructure; investment facilitation China – 40 million workers 5.25 mil in Mexico and central America 3.25 mil in Bangladesh

Expected benefits from SEZ. (Warr and Menon 2015) Static benefits Dynamic benefits Foreign exchange earnings Foreign direct investment Employment generation Government revenue Export growth Skills upgrading Testing field for wider economic reform Technology transfer Demonstration effect Export diversification Enhancing trade efficiency of domestic firms Formation of industry clusters Integration into global value chains

Advertised attraction for investment: Benefits for investors Open economy Investment incentives (tax) One stop service Strategic location and infrastructure Preferential trading status Market access Competitive labor force Lower wages, young labor force Labor relations Domestic factors most important to firm decisions (ADB 2015)

Does SEZ benefit women workers? Does it contribute to gender equality?

Employment creation Increase in exports  increased female employment in manufacturing Feminized workforce (60-80%) Increase in trade increased gender wage gaps in manufacturing (eg. Taiwan, S. Korea, India) Women’s total work hours in production and reproduction increased. In some places, stigmatized. Literature shows a strong relation between increased exports and increased female employment in manufacturing in developing countries [e.g., garments]; but as the production becomes more capital-intensive, female intensity declines. Some studies (e.g., Taiwan, S. Korea, India) show that an increase in trade increased gender wage gaps in manufacturing at the expense of wage gains for women, who are segregated into lower-paying, lower-status jobs, may have lower bargaining power

Working condition Better working condition and infrastructure in SEZ? Sexual harassment at work and on the way to work Health improvement program Bangladesh: 3:1 return on investment due to decreasing health-related absenteeism and staff turnover Because of feminized workplace – sexual harassment

Minimum wage and promotion Importance of minimum wage for equal pay “Unskilled” Job Considered as unskilled work and do not get promotion No career prospect No systematic training – upskilling Job hopping to seek for better wages High turnover

Childcare support India: Established creche  Improved productivity and attendance by women workers with children Some countries have laws to obligate companies to establish childcare centers low utilization due to low quality, no staff, etc. Leave children with others  can lead to absenteeism and turnover

Women’s role in supporting the family Remittances Women (are expected to ) remit more to family than men Women (are expected to) go back to visit family more than men Women are expected to take care of parents when they are old more than men. Women are expected to take care of the sick more than men. Women spend longer hours for work (factory+ household work)  women quit work because of family reasons more than men.  State provision of services hampered by low tax income? Tax holidays for investment? With increase in trade, women’s total work hours increased

Access to information Vacancy announcements Qualification to apply Women tend to be less mobile than men Vacancy announcements not available in village Women tend to have less job network than men Qualification to apply Women tend to have lower education than men Women tend to have less training opportunity than men Difficulty in attending training Good practice: In Cambodia, training for women workers are conducted during working hours, and training is linked to promotion. Training during worktime to ensure access to training Vacancy announcement In Thailand and some parts of Cambodia, government supports companies to provide training to workers. However, when training is organized outside working hours (ex. Weekends and at night), it becomes difficult for women to participate, since they need to juggle their household work, and also because of security in travel.

Collective action No trade union No place to bring grievances; no mechanism to understand needs of workers High turnover No mechanism for negotiation Uncontrolled strike

Exclusion and linkages Land for SEZ Displacement Displaced villagers get unemployed Although they are given priority to be employed in SEZ and even though SEZ creates employment for women, because of qualification and because of distance, that is not materialized No re-training opportunities Backward linkages There is little linkages between SEZ companies and domestic economy in most developing countries in Asia. No job created outside SEZ; no support for SMEs. This is even more for women’s SMEs, who are more disadvantaged in terms of information, technology, credit, etc. Land grab Backward linkages retraining

Group discussion Aside from tax incentive and infrastructure development, what other policies/ programs would you introduce to ensure women-friendly investment in SEZ? 20 min discussion 20 min presentation