Madagascar - LaborMadagascar - Labor

Madagascar has a significant pool of available labor, though the availability of skilled labor of any type is much more limited. Foreign workers often are brought in to fill skills gaps, particularly in the mining industry. Nevertheless, the quality of Madagascar's unskilled labor is high and is frequently touted by private investors as a primary attraction for the country, particularly in the apparel sector.

The World Bank estimated the level of unemployment in 2015 at 3.6 percent, while underemployment was estimated at 10.2 percent by the Ministry of Labor. According to the International Labor Organization (ILO), three quarters of the unemployed are under thirty years of age. Eighty percent of the work force is engaged in the informal sector, mainly in the commercial and agricultural trades, according to the government statistics agency, INSTAT.

The government does not mandate hiring of local nationals, except in the mining sector, in which companies qualifying for the special regime for large mining investments are required to give preference to nationals given equal skills and qualifications. Government officials admit that this provision is more aspirational than practical, given the dearth of available skilled labor in that industry.

The Labor Law (2003-044) differentiates between firings and lay-offs, and allows employers to adjust employment in light of fluctuating market conditions with the payment of a severance. In general, these payments are calculated at ten days of salary per full year of employment, and are capped at six months of salary. There is no unemployment insurance or other such safety net for workers laid off for economic reasons, aside from the mandated severance pay. The requirements are different in case of firing for cause, and foreign investors have noted that they frequently lose cases in the Labor Courts for failure to adhere to these procedures strictly to the letter.

Labor protections under the Free Zone regime are slightly relaxed from the general labor code, as labor contracts may differ in terms of duration, restrictions on the employment of women during night shifts, and the amount of overtime permitted. These provisions have given rise to allegations of widespread labor violations in the Free Zone enterprises.

The law provides that public and private sector workers may establish and join labor unions of their choice without prior authorization or excessive requirements. Civil servants and maritime workers, however, have separate labor codes, while essential workers, including police, military, and firefighters, may not form unions. The law provides that unions operate independently from government and political parties, and this is generally respected.

The law provides workers in the private sector, except for seafarers, the right to bargain collectively. According to union representatives, collective bargaining rights are more readily exercised and respected in larger international firms, such as in the telecommunications and banking sectors, while being more difficult to exercise in Free Zone enterprises and smaller local companies, where employees are reluctant to make demands due to fear of reprisal.

The labor law establishes labor dispute mechanisms, which proceed progressively from internal negotiation to outside mediation from the Ministry of Labor to arbitration or legal settlement through the competent court.

The last major strike that posed an investment risk occurred at a Chinese managed sugar factory in the southwestern city of Morondava in December 2014, ultimately leading to clashes with security forces and the looting and burning of the facility. Employees of the state-owned monopoly electric and water utility also went on strike briefly in July 2015 in protest over what they perceived as the takeover of state assets by a foreign entity (a foreign investor had recently signed a contract to rehabilitate and operate one of the utility’s power plants). The government negotiated with the unions and arrived at an understanding within weeks.

International labor rights are recognized in domestic labor law (Law 2003-044), with provisions to ensure freedom of association; the prohibition of forced labor, child labor, employment discrimination; and the establishment of minimum wages, as well as weekly work hours.

The government is also charged with setting occupational safety and health standards for workers and workplaces, but penalties for noncompliance are not defined in the labor code, which only requires an inspection before a company can open. The Ministry of Labor is responsible for enforcing the minimum wage and working conditions, but a lack of personnel and resources limits this enforcement. The National Fund for Social Welfare, the country’s social security agency, also conducts inspections and publishes reports on workplace conditions, occupational health hazards, and workplace accident trends, though these inspections are also limited by a lack of resources.

There is no enforcement in the large informal sector, and violations of wage, overtime, or occupational safety and health standards are common in the informal sector and in domestic work. The ILO has identified the prevalence of child labor in a number of sectors, including vanilla, mining, tourism and domestic work.

In March of 2015, the monthly minimum wage increased to approximately USD 49 for non-agricultural workers and to approximately USD 50 for agricultural workers.