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Global watch: MINT Economies

Over the last 18 months or so there has been a great deal of interest in four key economies: Mexico, Indonesia, Nigeria and Turkey - rather fetchingly named the MINT economies. It’s true to say that as 2014 has progressed it is clear that all that glistens is not necessarily golden. Turkey in particular has faced a turbulent political period. However it is interesting to see how this unofficial group of countries, adopting disparate labour relations models, are organising themselves to develop and sustain growth.

1. Mexico

2. Indonesia

3. Nigeria

4. Turkey

 

1.    Mexico

Mexico has been a member of the North Atlantic Free Trade Association for over 20 years now and was seen by the then President Salinas de Gartari as an opportunity to establish Mexico as a leading free market economy. Things have not always gone as smoothly as planned but suffice to state that Mexico is again attracting interest as an emerging economy with opportunities for foreign investors.

In late 2013 two autonomous agencies were set up to tackle anti-trust provisions in the telecommunications industry (the Federal Institute of Telecommunications) and for other industries namely the Federal Economic Competition Commission. New powers have also been given to the Mexican Federal Constitutional Court to deal with competition regulation and this has led to a proposal that in the television sector alone, some 246 channels are now up for tender.

The labour market regime however remains rigid and quite archaic in places. It will be interesting to see whether there is a move towards greater labour market flexibility to sustain growth or whether vested interests will continue to hold sway.

2. Indonesia

Early to mid-2013 was a difficult time for the Indonesian economy. This led to the country becoming tagged with the unfortunate moniker of a member of the “fragile five” of the developing world.

However, late 2013 and early 2014 has been a more positive period. In December 2013, Indonesia recorded its largest monthly trade surplus for nearly two years and exports rose by approximately 10.3% year on year (The Economist).

An element of protectionism by the government has assisted this process and there are directed attempts to protect local producers from foreign competition. Given that 2014 is election year it is expected that such steps will continue to be taken to ensure economic stability.

Last year also saw a wave of strikes organised by worker representatives and trade unions. Demands were made for a fair minimum wage and greater protection for workers, given concerns that outsourcing was being used to create distance between employer and employee and therefore undermining worker rights.

The concern amongst trade unions is that as Indonesia attempts to ensure further economic growth that there will be a diminution in workers’ rights. There will come a period of time when the protectionist model currently in operation will no longer be suitable going forward as Indonesia tries to integrate more fully into the global economy. It remains to be seen what ramifications this will have on labour market reform and how much opposition there will be from the trade unions.

3.    Nigeria

It is fair to say that due to geo-political issues the labour market in Africa is non-uniform and in many ways in a state of flux. Certainly, the region has an abundance of cheap labour, land mass and minerals to be exploited but how to harness the labour market and ensure that it is structured and capable of sustained growth is the puzzling question.

The agricultural, aviation and banking sector in Nigeria has flourished and there is potential growth in new technologies, however, the labour market may still need some fine tuning in relation to the employment laws in operation to generate sustained growth.

Nigerian labour does have the right to have freedom of association but collective bargaining is largely unregulated. There is no general duty to inform and consult employees, bar in regard to redundancies. There is also a great deal of flexibility regarding termination options for employers. The majority of claims are in relation to non-payment of notice or discrimination claims but otherwise employers have latitude to dismiss.

Although there are health and safety regulations, there are no statutory normal working hours, maximum working hours and no real regulation regarding part time working or specific protection regarding fixed term working. Finally, there is no automatic transfer of employment between companies in the same way as one would see under the TUPE regulations. It remains to be seen whether this flexible labour relations model will be able to sustain growth. Some lessons may need to be learnt from its fellow MINT stable mates to ensure that development is not just a flash in the pan.

4.   Turkey

The economy in Turkey has had some recent problems and there is speculation as to the stability of its economic long term progress. There is also speculation as to the strength of the power base of Prime Minster Erdogan, who has tried to develop a careful line between integration with Western economies and also preserving the Islamic integrity of the nation state.

State/employer relationships with the trade unions have always been difficult. Indeed, recent reports from the International Trades Union Congress (ITUC) suggest that the situation in Turkey can be fraught at times.

The ITUC is particularly concerned that there are:

  • Barriers to the establishment of trade union organisation
  • Restrictions on workers' rights to form and join organisations of their own choosing
  • Restrictions regarding the recognition of collective bargaining agents.

It remains to be seen whether Turkey will eventually join the EU. This would have a potentially profound impact on how the Turkish economy organises and structures its relationships with social partners. The trade unions will be particularly keen given the fact that they would see membership as leverage to extend their role.

There has been a great deal of media interest in the recently translated work of the economist Thomas Pikkety. In his work "Capital in the 21st Century", Pikkety looks at the dangers of social-economic inequality within nation states. Labour market models can be seen as a contributor to this development. His solutions are outside the ambit of consideration within this blog but the dangers he highlights are certainly ones that the four economies would do well to ponder.

 

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.