25 May 2019

Ethiopia: Human Face of FDI

Netsanet Birhanu, like the thousands of other employees at Hawassa Industrial Park, is the lowest paid textile worker in the world, according to a new report from the STERN Centre of New York University. Renting a house for 800 Br with a friend, she gets paid a gross basic salary of 750 Br working for a garment factory, a matter that has cast negative shadows on the working conditions of the nation's flagship industrial zone.

Following strikes by protesting employees, the Ethiopian Investment Commission and employers at the park implemented an incentive program to increase worker compensation. The quoted salary scale in the report does not factor in the incentives undertaken to address low wages, according to federal authorities. Employees earn more than basic salary when food and transportation allowances are added, as well as have the potential to earn more when attendance incentives and performance-based bonuses are included. Netsanet claims that she was able to earn 2,500 Br last month, more than three times the salary quoted in the report.

Employees and the authorities agree though that this is not enough in a country where the cost of living is escalating. The government admits that there needs to be a balance between the ambitions of attracting foreign direct investment through cheap labour and the living conditions of workers.

In the labour proclamation currently under amendment at the Ministry of Labor & Social Affairs, a national minimum wage may be included, according to sources close to the case. Abebe Abebayehu, the commissioner of the Ethiopian Investment Commission, also indicates that it is time the government settles on a minimum wage to protect the interests of workers.

Employers are skeptical about a blanket raise of the basic salary scale. Considering lower educational levels, a relatively cheaper cost of living, higher logistics costs and weak infrastructure, they find higher wages hard to justify.


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