Serbian economic policy for the last fifteen years has persistently and primarily relied on foreign investments as the best, and often the only solution to widespread unemployment. This policy is also responsible for the establishment of the “free zones”: territories of some Serbian municipalities where corporations have been granted special privileges for starting production and opening new jobs. In that way, companies have been allowed to operate without paying full costs of production – whose expenses are being transferred, to a considerable extent, to the state or society as a whole.
The precursor of the concept of “free zones” is widely known and notorious investing of multinational companies in the “banana republics”, which offered land, cheap labor and infrastructure for agricultural production destined for export. In world today, there are more than 5 thousand “free” or duty-free zones. 43 million workers, most of them Chinese, work there.
“Free zones” in Serbia did not even remotely achieve the goals for the sake of which they were established and profusely promoted by the political elite. Very small number of workers is employed there, and some of them are abolished since they could not find a single company ready to start working. Although in Serbia there are 13 “free zones” (with a total of 262 firms-users), whereby several of them exist already more than ten years, no more than around 19 thousand workers are employed there (in its time, “Zastava” alone did employ 36 thousand workers). In Serbian “free zones” salaries are usually low, and working conditions far from being at a satisfactory level.
Some of the methods of suppressing workers resistance, which are popular in “free zones” all around the world, are: creating non-collegial atmosphere permeated by fear and distrust, forming private workers’ organizations that imitate trade unions for the sake of signing collective agreements in the interest of employer (it even happened that presidents of those organizations were managers for human resources), immediate firing of all employees who discuss formation of real trade union with their colleagues, signing fixed-term contracts which is sufficient just not to renew to get rid of inconvenient workers, etc. (1)
Officially, the purpose of these “zones” is to attract foreign investments, but some analysts believe they are just providing tax reliefs to companies already determined to invest anyway. In Serbia, available documentation clearly testifies that in certain cases tax reliefs were subsequently granted to companies that started working long ago. Not just did they seized the privileges of doing business in the “free zones”, but they also became majority owners of companies governing those zones – which demonstrates only that they are true creators of their own private “free zones”.
In favor of “free zones” it is claimed that they contribute to the transfer of new technologies and to technological improvement of the industry – but production of companies operating in them is carried out in isolation from the rest of economy, the most part of production materials is being imported, and technology they are using is and remains in the company’s private property. Besides, the most common types of production that are drawn to “free zones” are simple manufacturing operations demanding torturous and exhausting work of employees with light and easily portable production machines. That kind of production does not lead to adoption of new technologies or to improvement of technological level of the industry.
“Free zones” exist at our neighbors’ too, which contributes to regional competition in attracting foreign investments. Corporative threat of relocation of production and considering “more favorable conditions” in neighboring countries are regular methods for extorting greater privileges. In that way corporations get bigger and bigger privileges, while standards of protection of labor rights get lower and lower every day.
Everyone who crossed Macedonian border in the last few years received the greeting telephone message of the local telephone company, which reads: “Welcome to the cradle of the civilization”. Since recently, CNN is showing Macedonian “free zones” promotional spot, inviting foreign companies to invest because in the first ten years they would be completely tax-free, while between the lines goes bragging with cheap labor – just like in the earlier spot of the Serbian Government. Just as civilization in its antique cradle was founded on contemporary slavery system, in comparison to today’s exploitation of workers it seems that the same civilization did not make a single step forward in the past more than two thousand years.
Originally published in Serbian Daily Politika
Decembar 15th 2015
- Export Processing Zones or Free Zones – the experience seen from a trade union point of view – Jesper Nielsen, International advisor of the United Federation of Danish Workers.