Assessment of the Impact of Foreign Direct Investment on Tanzanian Labor Market:ACase of Hotel Industry

Abstract

The main objective of the study was to assess the impact of FDI on
Tanzanian labor market using a case of hotel industry. The specific
objectives are to determine the trend in employment, assess the extent
of salary discrimination between foreign and local employees and find
out the labour market challenges in the sector. The study which was
conducted in Dar es Salaam, was both longitudinal and cross sectional
in nature. It involved both primary and secondary data. Secondary
data were collected on trend in employment and salary discrepancy,
while data on challenges in the sector were collected from focus group
discussion targeting the hotel top executives. Data on employment trend
and salary difference were analyzed using regression and Theil models
respectively. The findings show that for the entire period covered by
FDI flow, employment has been rising. At the same time, salaries of
foreign employees were higher than those of locally employed workers.
In addition, the former are more educated, and have more skills than
the latter. The challenges facing this sector include lack enough
government support and constantly changing government regulations
and tax systems. It is recommended that the hotel sector has to build
capacity of local employees by in house and formal training in order
to reduce salary inequality between foreign and local employees and
also the government should support the sector in terms of transparent
regulations and tax systems.