The coalition’s foreign aid policy, in keeping with its policies across government, is all about the private sector. In October last year Andrew Mitchell, the former investment banker now International Development Secretary, announced that the Department for International Development (DFID) will, “step-up and intensify its work with business and enterprise ... heralding a new era of private sector-led development work” and that he intended to, “recast DFID as a government department that understands the private sector.”

As part of this recasting, the DFID is giving £13.5 million to the World Bank's Bangladesh Private Sector Development Support Project, through which the bank is lending the Government of Bangladesh $120 million to develop more Special Economic Zones (SEZs) across the country to help it “successfully compete as an investment destination.” The SEZs, also known as Export Processing Zones (EPZs), follow the same logic as similar zones around the world, including the “Free Enterprise Zones” the UK government wants to establish in the UK: countries “successfully compete” with each other to attract companies from around the world by exempting them from as many financial and labour regulations as possible.

The majority of companies operating in SEZs in Bangladesh, which have been present in the country since the first one opened in Chittagong in 1983, are garment manufacturers making products for brands such as Nike, Reebok, H & M, Gap, Walmart, Mothercare, Adidas and Tesco. While these companies benefit from tax holidays and looser regulations, the country, the argument goes, benefits from increased investment and jobs. However, while the investment into the country is rarely as great as promised, as the companies have to pay so little tax, there have been a series of protests by the workers in the zones, mostly women, against pay levels and working conditions.*

Aware of these concerns, the DFID says its new project will square the circle and satisfy both companies and workers. A spokesperson told Corporate Watch:

“Protecting and promoting workers' rights is essential if we are to improve their health and well-being. In Bangladesh, the British Government is helping to ensure companies comply with local labour laws, arbitrate disputes and help the poorest workers to negotiate fairer contracts, wages and holidays. We have also worked closely with the Government of Bangladesh to implement a minimum wage across Bangladesh.”

They still have work to do: only last December there were mass strikes and violent repression in the Chittagong SEZ, as companies in the zone failed to pay their workers the recently agreed national minimum wage, which the government had promised would be mandatory from the beginning of December. At least three workers were killed after the police used batons and tear gas before opening fired on them. Action by workers is increasingly common and, while the World Bank and DFID's project documents say that labour conditions are, “generally better inside the [SEZs] than outside”, this doesn't inspire a huge amount of confidence given in the next sentence it notes, “low skill [garment] workers in [SEZs] receive among the lowest wages worldwide.” Even if the minimum wage is implemented across the SEZs, workers will still be paid significantly less than the living wage that unions continue to campaign for. Though the minimum wage has been set at 3,000 taka (£25) a month, after strikes and protests across the country, the National Garment Workers' Federation, among others, continues to argue that 5,000 taka (£45) a month would constitute an acceptable living wage.

It is true that child labour is more stringently regulated in factories in the zones compared to those outside, and that factories and facilities are more modern, as both suppliers and commercial brands stay wary of international media exposure, but Mehedi Hassan, of the Worker Rights Consortium, which monitors labour rights in Bangladesh says, “In terms of abuse and harassment, and the child labour issue, a few good changes have been made by the government but in general the working conditions inside the [SEZ] areas are not satisfactory … foreign investment is the only subject which is secured and assured by the government.” He, and other labour rights activists argue that this is compounded by the restrictions placed on attempts by workers to join or form trade unions in their workplaces and collectively bargain with their management so they do not have to rely on their companies to “help them negotiate.”

According to the project documents, “the degree of collective representation is greater inside [SEZs] than in firms outside”, with “approximately 60 percent of the workforce in [SEZs] on average associated with labour organisations.” However, these “labour organisations” are not trade unions but “Workers Welfare Associations”. The DFID says these associations have the same rights and representational benefits as trade unions, but this is strongly challenged by labour rights activists working in the zones. Mehedi Hassan told Corporate Watch:

“I have never heard of an SEZ area factory that conducted a fair election ... Most of the factories in the SEZ area have Workers Welfare Associations that are management sponsored and have to follow the management's mandate. Those committee members who have a relationship with the trade unions or NGOs are fired or they lose their job. Scores of the leaders of the associations have lost their jobs, which has effectively killed the expected functioning of the WWAs”

And although the DFID says it is helping to ensure companies “comply with local labour laws”, those in the SEZs continue to operate under different laws to the rest of the country. The new zones that will be developed through the DFID and World Bank project will come under the Economic Zones Act, enacted in 2010, which will give the SEZs a new over-seeing organisation, the board of which will be chaired by the Prime Minister and will have the power to have resolutions “as significant as a Cabinet decision.” Many question why the zones need such autonomy. Khorshed Alam, from the Alternative Movement for Resources and Freedom Society, that works closely with garment sector unions, asks:

"Why can't they consign themselves to the normal procedures and the basic labour laws? ... Our labour law is not the best one, but it is not the worst one as well. We are a signatory of the ILO convention ... The state cannot prohibit workers to organise union outside SEZs. The [companies'] advertisements and the DFID convince their consumer base but they are lying. All the evidence says they do not pay the living wage for the worker, they allow working hours completely against the local labour laws. They don't pay overtime wages and they do not comply with the local level legislation.”

The Economic Zones Act encourages the private sector in another way. According to the World Bank and the DFID's project documents it “provides the legal coverage for attracting and leveraging private investment in the development of zones as zone developers or operators, and in the provision of tailored infrastructure services, such as private provision of power ... selected and contracted on a Public-Private Partnership (PPP) basis”. So the private sector is not only given incentives to manufacture its products in the zones, it will make money out of running them also.

All this is presumably exactly the kind of “understanding” of the private sector that Mitchell wants to encourage in the DFID but while he has been keen to stress the new dynamism his policy will bring, it is not quite as new as he likes to suggest: the previous Labour government was always alert to opportunities for companies to profit from their development policy. Indeed, the Economic Zones Act was enacted in 2010 after three years of work by the Government of Bangladesh, the International Finance Corporation, the European Union and ... the DFID!

* This is in addition to people resisting displacement from their lands to make way for the zones, for example in the Indian state of Orissa. See the news in brief.