FINANCIAL TIMES
By Farah Halime
Escalating disputes between labour unions and employers in north Africa are threatening to derail economic recovery after the uprisings that ousted long-ruling dictators in the region.
Emboldened by the spirit of political change, thousands of workers in Egypt and Tunisia have staged a series of protests and are now in deadlocked talks with companies over demands for a minimum wage.
While the workers argue they are seeking rights that were denied by the ousted autocrats, businesses and foreign investors say instability because of union-led strikes is endangering the economies of the region.
“The union has reached a level of power in Tunisia [and] is now using that influence to put the necessary pressure on the government,” says Jed Mrabet, managing partner of Mrabet Avocats law firm in Tunis. “No one wants to invest in a country ruled by workers.”
There have been a number of forced closures of factories and companies in Tunisia and Egypt, imperilling their fragile economies after the revolutions that toppled their former regimes early last year.
A draft labour law in Egypt, introduced by Ahmed el-Borai, the former labour minister, allowed unions to organise for the first time beyond the parameters of the government-controlled Egyptian Trade Union Federation. But there have been delays in fully enforcing the law, leaving thousands of workers in legal limbo.
Mr Borai says Arab governments must recognise the rights and freedom of unions. “Even if wages are increased a little, [workers] will still be underpaid compared to any other worker in Europe,” he says.
Investors and businessmen say the north African strikes have detracted from the attractiveness of these countries, where the relatively large cheap labour force and favourable tax climates have historically drawn foreign investors.
Kraft, the US food maker, is one company that has faced clashes with labourers over contract negotiations and demands for higher wages in both Tunisia and Egypt.
Kraft, which did not comment on behalf of the company’s Tunisian operations because it has only a minority stake there, said: “A small number of workers who were instigating the strike [in Alexandria] chose to ignore the normal legal route, which regulates work stoppages,” preventing others from going to work and “causing significant impact and loss to our business.”
Employees had asked for a 15 per cent increase in wages, which Kraft says it “already anticipated and implemented”. The case is being heard before Egypt’s Labour Tribunal, the company said.
“In the current Egyptian context, we understand that other companies, both local and international, are being subject to similar spontaneous behaviour by employees,” Kraft said in an email statement.
Other companies in north Africa have also responded to what they call illegal strikes. DP World, the Dubai-based port operator, was forced to shut down temporarily its Ain al-Sokhna port in Egypt in February because of strikes.
But this month workers at the port staged strikes to demand the reinstatement of colleagues who they believe were sacked unfairly. DP World says: “Labour issues have caused a significant slowdown in operations, impacting both customers and the Egyptian economy.”
In Tunisia, strikes have deepened an economic crisis that has fuelled a swell in unemployment to 18 per cent as the economy, once a darling of frontier-market investors, has been hit badly by the European financial crisis.
Hatem Kchouk, the founder and former chairman of Arab Tunisia Bank, says the effect from strikes is “huge”.
“The trade balance deficit is partly due to [labour strikes], and industrial production is affected as well as services,” Mr Kchouk said. In addition to the strikes, he points to a lack of qualified workers in various sectors and high number of unemployed people.
Repeated strikes across sectors including healthcare, security and retail have taken the shine off the country’s business appeal, which even under the former regime of Zein al-Abidine Ben Ali was well regarded by foreign investors for its large, well-educated middle-class and liberal social system.
Neighbouring Morocco has become a more appealing frontier market, with investors turning their focus there.
The growing influence of Tunisia’s biggest union, the Tunisian General Labour Union, is also creating tension among the business community.
Mr Mrabet, the lawyer, said that although workers were among the important groups that toppled the regime last year, they had become a dangerously powerful force with continuous demands for higher wages and repeated strikes being potentially “catastrophic for the economy”.
International labour organisations say governments are partly to blame for closing off dialogue with unions.
“Governments have shown very little willingness to encourage democratic trade unions, instead keeping the status quo,” says Ben Moxham, of the UK Trade Unions Congress international relations department. He advises governments to take measures to appease workers through “shared wins”, including more job security with longer-term contracts, health and safety assurances and wage increases.
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