Our reporters gained access to
three of the world’s “special economic zones”—and found paradises for
corporations and wastelands for workers’ rights.
AUGUST ISSUE | July 25, 2016
Under Cambodian law, the right
to organize is supposed to be ironclad. No employer, government agent or
citizen may impede union activity. Inside the walls of Cambodia’s largest
special economic zones (SEZs), however, In These Times’ reporters saw a system
designed to tightly control the workforce by keeping workers fenced in and
unions out. More than a dozen workers and labor activists confirmed that, while
it's not easy to independently organize anywhere in Cambodia, the law is
flagrantly violated in SEZs. The result is seething discontent.
Over the past 50 years, more
than half of the world’s countries have carved out pieces of their territories
to hand over to foreign investors as SEZs. The International Labor Organization
(ILO) estimates that more than 66 million people—most of them young migrant
women—work in the world’s more than 3,000 SEZs.
After World War II, countries
from Ireland to South Korea set up these zones in bids to attract foreign
capital and create jobs. In the 1980s and 1990s, states in every region of the
world followed suit. Today this model is experiencing a fresh surge in
popularity, with countries from Burma to Cuba racing to open new zones.
“Any country that didn’t have
[an SEZ] 10 years ago either does now or seems to be planning one,” the World
Bank’s Thomas Farole told The Economist in 2015. But while the success of such
zones is often gauged by how much foreign money they attract, or how much
economic growth they generate, the voices of the millions of workers that power
these spaces are seldom heard. This is the story of SEZs from workers’
perspectives.
Typically, the carrots offered
investors are special tax and tariff breaks, as well as cheap land, water and
electricity. In some countries, such as Pakistan and Namibia, these enclaves
also confer exemptions to national labor laws. But even when this is not the
case, these zones have become hotspots for workers’ rights violations.
In Shenzhen, China, one of the
world’s oldest and largest SEZs, In These Times witnessed the second chapter of
the SEZ story. SEZs offer the tacit—if not explicit—promise of a steady supply
of cheap, biddable labor. Once an SEZ’s workforce mobilizes and begins to make
demands, companies can simply move on to a new frontier. The ILO calls SEZs “a
symptom of the race to the bottom in the global economy.” In Shenzhen, factory
closures and redevelopment are leaving migrant workers jobless, homeless and
desperate.
The no-strike zone
Early SEZs, such as those
established in the Philippines in the 1960s and 1970s, were “almost like labor
camps,” says Jonathan Bach, associate professor and chair of the global studies
program at the New School in New York. “They were separate from the cities: You
would bring in the workers, you’d house them in dormitories, you’d sort of use
them up and get rid of them and then get new ones. And then if the cost of
doing business got too expensive, or too problematic—if there were protests or
something—then you would just pack up and move somewhere else.”
This is still the model in many
SEZs today. In some countries, governments have sweetened the pot by giving
investors in these zones formal exemptions from national labor laws. In
Pakistan, workers are forbidden to strike or take other industrial action in
these enclaves. In Togo, government labor inspectors struggle to enter the
zones because of laws restricting their access. The website of the Nigeria
Export Processing Zones Authority declares: “There shall be no strikes or
lock-outs for a period of 10 years following the commencement of operations in
the zone ... and any trade dispute arising within a zone shall be resolved by
the Authority.”
But even where there aren’t
these formal exemptions, local authorities in SEZs are regularly accused of
turning a blind eye to labor rights violations.
Harder in SEZs
On the outskirts of Phnom
Penh, Cambodia’s capital, lies the Phnom Penh Special Economic Zone (PPSEZ). In
a nation whose main development model is to sell itself as a reserve of cheap
labor and low taxation, the PPSEZ exemplifies the new economy the government is
trying to build.
The nine-mile drive from the
capital is a crawl along chaotic roads that stand still for 20 minutes at a
time. When you turn off the dusty street and head through the zone’s imposing
front gate, you enter another world: 1.4 square miles of paved roads with
factories fanning out on either side.
In These Times is the guest of
the public relations firm Brains Communication, which represents PPSEZ to
international investors and journalists. Brains Communication chauffeurs us in
an air-conditioned Mercedes with leather seats, well-insulated from the
104-degree heat.
This reporting was made
possible by a grant from the Leonard C. Goodman Institute for Investigative Reporting.
Victoria Albert contributed research.
In keeping with the ethos of
corporate control, the zone is not administered by the government but
incorporated as a private company. We are going to meet Hiroshi Uematsu, the
zone’s Japanese CEO.
PPSEZ’s founding mission was
to attract Japanese investors to Cambodia, Uematsu says. Almost a decade later,
it has succeeded in drawing 44 Japanese firms, as well as 32 companies from 13
other countries. Yamaha operates a factory there, and Coca-Cola is currently
building one. Other factory names—garment manufacturer Kingmaker Footwear,
diamond polisher Laurelton Diamonds—are obscure, but they are listed as
suppliers or subsidiaries of some of the most famous brands in the world:
Timberland, Puma, Apple, Old Navy.
Uematsu is happy in Cambodia.
“I feel safe in this country,” he says. “I sometimes face [sic] directly with
labor union activities … in the Philippines I have to be very careful, with
smoked glass and security.”
Indeed, it’s hard to imagine a
boss feeling unsafe in the pristine zone, where the chaos of the surrounding
city gives way to an incongruous calm. Elsewhere in Cambodia, the landscape is
very different. While we were talking to Uematsu, police clashed with about 100
protesters across town and left two activists with bad head wounds. The crowd
amassed outside Cambodia’s National Assembly as it passed a new trade union law
restricting independent labor organizing. The government of Hun Sen—the prime
minister of Cambodia for the last 31 years, who runs a de facto one-party state
under the Cambodian People’s Party—was spooked by a national strike in 2013 and
moved to restrict this pole of political opposition.
Most of Cambodia’s labor force
is represented by “yellow unions,” which are linked politically to the ruling
party and effectively represent the government and employers, rather than
workers. Cambodia’s bloc of independent unions is relatively small, but it
scares Cambodia’s powerbrokers. Union leaders have been beaten, imprisoned on
trumped-up charges and murdered. On January 22, 2004, Chea Vichea, the founder
and leader of the Free Trade Union of Workers of the Kingdom of Cambodia and a
supporter of the opposition Sam Rainsy Party, was shot in the head and chest
while reading a newspaper in the street.
When we return to the zone two
days after our visit with its CEO, we’re traveling in a tuk-tuk with a
translator from the Coalition of Cambodian Apparel Workers’ Democratic Union—an
independent union group.
This time, we’ve come to meet
five workers who were dismissed from the Evergreen garment factory inside the
zone two years ago. The workers maintain the layoffs were retaliation. “They
dismissed all the two unions’ members,” says one worker, Pich Sophal, 29, a
former button-hole puncher at Evergreen.
While it is hard to organize
anywhere in Cambodia, every independent union member who spoke with In These
Times said it is even harder inside an SEZ.
“If the employer knows that I
work for or am affiliated with the union, it means they will find any means to
dismiss me,” says Sophen Leng, 29, who worked in Evergreen’s packaging
department.
“After I was dismissed from
Evergreen, I applied to work in another factory. The first contract is usually
a short-term contract. They realized that I had union ties and dismissed me
when the contract expired.”
Ou Tepphallin, deputy head of
the Cambodian Food and Service Workers’ Federation, told us that SEZs also pose
a challenge to independent unions simply by walling off workers.
“It’s not easy for a union
leader or activist to go inside,” she says. “To coordinate [with workers], we
need to make an appointment.” Even intercepting them after work is difficult,
she says, because special buses wait outside the SEZ to take them to their
homes.
Firing workers for organizing
is illegal in Cambodia. So is hindering organizing efforts. In These Times
identified eight multinationals whose products are reportedly made in Cambodian
SEZs, including PPSEZ and Manhattan SEZ. Six, including Apple and Puma, have
corporate codes of conduct supporting union rights.
Asked if they were aware of
these apparent legal violations—and, now that they had been made aware, what
they would do—only two responded by deadline. Skechers wrote that it complies
with the factory operation guidelines of the Footwear Distributors and
Retailers of America, which affirm the right to unionize. But it did not
address any specific labor violations, and would neither confirm nor deny
whether it manufactured goods in the Manhattan SEZ, as its profile on the GMAC
website indicates. Levi Strauss denied that it sources products from SEZs,
although a PPSEZ jeans factory lists Dockers, a Levi Strauss subsidiary, as a
buyer.
Union-free by design
According to a source in civil
society consulted by lawmakers in the planning stages of the 2005 SEZ Act, the
Cambodian government was initially trying to carve out exemptions from labor
law. The source, who spoke on condition of anonymity, tells In These Times that
lawyers “were approached by the Ministry of Commerce for technical advice and
one of the things was, well, how can we make the zones union-free?”
Tola Moeun, executive director
of the Center for Alliance of Labor and Human Rights, also in Phnom Penh,
confirms the government was planning to exempt the zones from labor law: “No
freedom of association, no freedom for collective bargaining and so on. No
right to strike. But after the reaction from the unions, from the development
partners, from the import countries—like Europe and the U.S. and so on—then the
government stepped back their plan.”
Instead, with strict control
of who can enter an SEZ and impunity for organizer layoffs, it seems Cambodia
simply made them de facto union-free.
81 cents an hour
The obstacles to organizing
have not stopped the rise of worker militancy in Cambodia. The main complaint
is not working conditions—though some unions have demanded things like fans and
clean water—but rather, low wages.
At the end of 2013, thousands
of workers joined a national strike to demand a minimum wage increase from $85
to $160 a month. The government eventually increased the wage to $140 to
staunch the uprising.
One of the main foes of a
higher minimum wage is the Garment Manufacturers Association in Cambodia
(GMAC). In GMAC’s Phnom Penh offices, In These Times met with its famously
irascible Secretary General Ken Loo, who believes the new minimum wage of $140
a month (which, for a 40-hour work week, works out to about 81 cents an hour)
has already blunted foreign investment. The numbers indicate otherwise:
According to World Bank data, foreign direct investment in Cambodia dipped
slightly in 2013, then rose back to previous levels. The figures are not yet
out for 2016, the year the wage hike went into effect.
“I don’t believe in a minimum
wage; I believe in market forces,” says Loo. “Hardworking workers … could be
earning a lot more, but … they have to subsidize the lazy bums.” He declined to
say how much he is paid.
The so-called lazy bums tell a
different story. “$140 a month is not enough for us, but we still do [it],”
says Sokha Khan, a 36-year-old garment worker who supports her husband and
children. Other workers tell In These Times that $140 a month is enough to
cover one person’s living expenses, but not a family’s.
“If there was a union inside
the factory, it would be good because we could demand something,” Sokha says.
It’s no accident that women
are 95 percent of Cambodia’s SEZ workers. The Asian Development Bank, which
promotes SEZs in the region, made explicit the logic of hiring women in a 2015
report: “It is said that females possess the nimble fingers and patience with
routine tasks required by the labor-intensive processes generally occurring in
the zones and that they are also less likely than males to strike or disrupt
production in other ways.”
That logic does not always
hold.
Unorganized labor, wildcat
strikes
A four-hour drive east from
Phnom Penh and across the Mekong River, on Cambodia’s eastern border with
Vietnam, sits the region of Bavet. This area was the among the most bombarded
in Operation Menu, the secret 1969-1970 campaign in which the United States
dropped a greater tonnage of bombs than it had on Japan during the whole of
World War II.
Now Bavet’s lush fields and
wide roads are home to three huge SEZs. The Manhattan SEZ opened in 2006 and
has been at the epicenter of worker actions—violent and nonviolent—ever since.
There are no independent unions inside its gates, and without any organized
channel for worker unrest, the place is a powder keg. We get through the gates
by mentioning the name of the managing director of the SEZ whom we had emailed.
He’s not there, but it’s enough.
Inside, workers walk down a
long thoroughfare that cuts through the SEZ, some to take their lunch break
outside, others on their way home. Everyone we stop is reluctant to speak—about
their work, unions or the recent militant actions.
This conversation with Daly
Cayva, a 34-year-old garment worker, was a typical one:
“Where do you work?”
“A garment factory.”
“How much do you get paid a
month?”
“Between $140 and $150, based
on the section I work in.”
“Is that enough to live on?”
“We can say it is affordable.”
“Are you a member of a union?”
“No.”
“Why?”
“I don’t know about the
union.”
“Wouldn’t a union make it
better for you—you could get more money?”
“I don’t know about the union
here.”
“Is it dangerous to join a
union here?”
“I don’t know about that.”
“Is it dangerous for you to
talk?”
“It is hot and I have to go
home.”
Ath Thorn, president of the
Cambodian Labor Confederation, is not surprised that no one wants to talk about
unions. In February 2012, three women were shot at a protest for higher wages
in the Manhattan SEZ. The incident happened in front of the Taiwanese-owned
Kaoway Sports factory, whose clients include Puma. Since then, Thorn says,
“They are really strict. Now they do not allow our union to organize over
there.”
But making independent
organizing impossible has had unintended results. “From time to time, this zone
is very interesting,” says Thorn. “If they want to increase their salary, they
mobilize without a leader and join together. If they want to do something now,
they will strike in the whole zone. But when we are not allowed easy access
inside, it’s not managed there, so violence happens during every protest.”
As worker grievances have
fewer avenues of expression, and government crackdowns get harsher, many
predict more explosions of frustration. Warehousing workers within walls only
works for so long.
The poster child for SEZs
Although China didn’t open its
first SEZ until 1980, its zones are among the most famous. Today, China
contains as many as 40 million—almost two-thirds—of the world’s SEZ workers.
The Shenzhen SEZ, in southern
China along the border with Hong Kong, was the country’s first. It was opened
in 1980 by the leader of the Communist Party, Deng Xiaoping, as the leading
edge of his sweeping economic reforms. Jonathan Bach notes that Shenzhen always
had different ambitions than most SEZs: It was “more about importing particular
ideas about the market and labor and capital, and using those ideas to
influence the rest of the country.”
At the time, Shenzhen was a
relatively small tract of land carved out of an otherwise rural area devoted to
farming and fishing. Shenzhen has since expanded to cover almost 800 square
miles. The megacity’s total economic output is equivalent to or greater than
that of Ireland or Vietnam. Its tens of thousands of factories have produced
millions of iPhones, handbags, jeans and more for export around the world.
In 2010, Shenzhen celebrated
its 30th birthday with fanfare and fireworks. China’s President Hu Jintao
traveled to the city and hailed it as “a miracle.” Many of the policies
pioneered there, like short-term labor contracts and performance-based wages, have
since been rolled out nationwide. The SEZ model has been credited with driving
China’s industrialization and explosive, manufacturing-based economic growth.
To entice foreign investors
into Shenzhen, the central government gave the zone the power to set its own
tax and other business incentives. But Shenzhen had something else to offer
foreign firms looking for cheap places to make their products: a labor force of
millions of migrants from rural China.
China’s hukou system of
household registration, introduced in the late 1950s to curb urbanization,
severely curtails these migrants’ rights. Hukou ties access to services, such
as subsidized healthcare and education, to place of permanent residency.
Migrant workers can rarely get that place altered.
To supply factories with a
constant stream of labor, migrant workers were issued temporary resident
permits—but only if they had a job. With their legal residency tied to their
employer, losing their job meant exile—or a risky, undocumented existence.
Anita Chan, a researcher at Australian National University, likens Shenzhen
under the hukou system of the 1990s to apartheid in South Africa under the pass
system.
Some factory bosses devised
strategies to tighten the screws, requiring workers to pay “security deposits,”
or seizing their identity documents. Many workers lived in housing tied
directly to employment, in what Pun Ngai, a professor at Hong Kong Polytechnic
University, has called a “dormitory labor regime.”
In the 1990s and early 2000s,
Shenzhen became almost synonymous with sweatshop globalization, with reports of
workers toiling incredibly long hours in unsafe factories to make things like
Mickey Mouse books, Teletubbies and Reeboks. Wages were not necessarily lower
inside the SEZ, but conditions were often dire. Mandatory and unpaid overtime
were commonplace.
Workplace injuries have also
scarred many of the migrants who powered Shenzhen’s boom. Huang Ming (a
pseudonym), a 60-year-old migrant worker from western Guangzhou who came to
Shenzhen in 1997, says that two years after his arrival, he was injured at
work. “I was soldering tables and chairs and a spark went into my eye,” he
says. “I have an official certificate, but … the company said, ‘If you want
compensation, you have to resign.’”
The hukou system made it hard
for workers in Shenzhen’s factories to fight back and secure better conditions,
Chan says. But she doubts this was ever explicitly advertised to investors as a
bonus for setting up shop. “They knew, they didn’t have to advertise. It
doesn’t sound good. They were supposed to be socialists, you know.”
Since the 1990s, working
conditions have improved across China, albeit slowly and unevenly. Hukou was
“relaxed” in 2004 after the death in custody of a university graduate in the
northern Chinese city of Handan who had been arrested for not having the proper
papers. But the reforms only went so far, notes Chan. The arrests stopped, but
“it doesn’t mean [migrants] can enjoy the same rights as the local residents.”
Wages increased, however, in
part because the “one child” policy slowed population growth and reduced the
surplus labor that powered the country’s manufacturing boom. Workers also
became better organized and better educated about their rights, thanks largely
to the tireless efforts of independent labor activists.
But migrant workers in
Shenzhen face new challenges as the city pursues an aggressive agenda of
“upgrading” into tech and finance. As wages increase, so does the cost of
living in this increasingly flashy metropolis. Industrial areas are being
transformed into office blocks. Whole neighborhoods where migrant workers have
lived for decades are being demolished.
Clothing, toy and shoe
factories, in particular, are moving from China to countries with lower wages,
such as Vietnam and Bangladesh. Others are simply moving to provinces in inland
China with lower minimum wages. In Shenzhen, reports of factories closing and
bosses defaulting on paychecks have become commonplace.
The problem for Shenzhen now,
says Bach, is no longer, “How do you get as many workers into Shenzhen as you
can?” but rather, “How do you get the low-skilled workers demanding higher
wages out?”
“Instead of the workers who
used to do that lower-level work simply being retrained, you have companies
just moving to wherever they can find that low-level work,” he says. “That’s
the whole name of the game in the global economy: to play countries off one
another. And the idea of the special economic zone was sort of to allow
countries to have different jurisdictions, even within their own national
jurisdictions.”
Chan gives the example of the
iPhone manufacturer Foxconn—whose mercilous assembly lines infamously drove 14
workers to suicide—as a company “moving all over China, trying to get a better
deal.” The practice is parallel to the way U.S. states have enticed factories
with development deals and anti-union laws.
But wherever manufacturers
move, they cannot expect workers to stay cheap and compliant forever.
Capital’s panopticon
In the 2000s, Shenzhen became
a testing ground once more—this time, for surveillance technologies. The city
installed 200,000 closed-circuit TV cameras in public spaces as a practice run
for China’s Golden Shield program, a vast database that correlates video feeds
with biometric data from cell phones and mandatory national ID cards.
Along the streets of Shenzhen
today are too many surveillance cameras to count, rotating like roving eyes.
Overhead, the skyscrapers shine at night in flashing, neon colors, bedecked
with logos such as KFC, McDonald’s and 7-11. The effect is that of an eerie
corporate utopia in which capital is wild and free, but people are heavily
controlled.
Officially, the cameras are
aimed at fighting crime. But Naomi Klein reported in Rolling Stone in 2008 that
a Shenzhen-based company had already developed software to let “cameras alert
police when an unusual number of people begin to gather at any given location.”
Clearly, these measures could also be used to tighten control at a time of
growing unrest.
In 2014, the China Labour
Bulletin, an NGO based in Hong Kong, recorded more than 1,300 labor disputes
across China. In 2015, that number rose to over 2,700—including more than one a
day in Shenzhen and neighboring areas in Guangdong province. Many were prompted
by factory closures, with workers accusing bosses of cheating them of full
severance and social insurance payments.
In July 2015, more than 100
workers at a Shenzhen factory supplying the giant fast-fashion brand Uniqlo
traveled to Guangzhou, the capital of Guangdong province, to petition Communist
Party authorities. They said the factory had suddenly announced its closure and
was leaving without paying its debts to workers. Shenzhen police were sent to
retrieve the petitioning workers and bring them back to the SEZ, violently
dragging them onto buses and detaining them for hours.
On May Day, In These Times met
with workers who make eyeglasses for export to Europe and the U.S. at an enormous
factory in Shenzhen’s Longgang district. First opened in the late 1980s, it is
now closing as the area is “redeveloped” into offices and upscale apartments.
Huang Ming, the 60-year-old
migrant worker from western Guangzhou, spoke with In These Times in the small
one-room apartment he shares with his son, who also works at the factory.
“Everybody in this building works there,” Huang says, sitting barefoot on the
edge of the bed that takes up most of the space. Now that the factory is
closing, Huang says he and many of his coworkers are forced into retirement.
If Shenzhen 1.0 was
large-scale sweatshop industrialization, this is Shenzhen 2.0: a finance center
where capital is king and migrant workers, having outlived their utility, are
pushed out.
Later, we walk with Huang’s
son Zai through the streets of Longgang. “It’s hard to get another job,” he
says. “In this area they are not opening new manufacturing plants. Factories
are being replaced by offices.”
Like everywhere else in the
city, surveillance cameras are prominently in view in every direction—on the
street, outside the factory, at the intersection, by the bus stop. We’re quite
sure we’ve been on camera every step of the way.
“I’m not afraid of the
government. I’m fighting for my rights,” Zai says firmly. But he adds that he’s
still planning to leave Shenzhen and return to his home in western Guangzhou,
because life as a migrant worker in the city, without a job, is impossible.
“Many people are leaving.
This reporting was made
possible by a grant from the Leonard C. Goodman Institute for Investigative Reporting.
Victoria Albert contributed research.
Matt Kennard and Claire
Provost are fellows at the Centre for Investigative Journalism in London.
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