News: Study finds median wage in Ethiopia at 3,000 birr; ILO pushes for minimum wage reform

A recent study by ILO indicates 48% of Ethiopian employees in foreign-owned apparel companies reportedly departed their positions due to unsatisfactory compensation (Photo: FBC)

Addis Abeba – Ethiopia’s discourse on the minimum wage received a fresh push with a study presented by the International Labour Organization (ILO) last week.

The study revealed that the median monthly wage in Ethiopia stands at 3,000 birr (approximately $51.96), alongside a concerning trend: low wages are driving worker dissatisfaction.

According to the study, nearly half (48%) of Ethiopian workers in foreign-owned apparel firms reportedly left their jobs due to poor compensation.

Guillaume Delautre, an ILO Wage Specialist, emphasized that low wages contribute significantly to Ethiopia’s high worker turnover rates, forcing companies to incur substantial expenses in recruiting and training new employees.

He recommended introducing minimum wage legislation as a necessary intervention.

The revised labor proclamation, approved by parliament in 2019, paved the way for the establishment of a board responsible for determining and revising the minimum wage.

Subsequently, draft regulations defining the powers and responsibilities of the board were prepared and submitted to the Council of Ministers.

However, the Confederation of Ethiopian Trade Unions (CETU) notes that no significant progress has been achieved since then.

In an interview with Addis Standard, Kasahun Follo, President of CETU, emphasizes that they have received no response from the government.

“The Council of Ministers has not yet ratified the regulation,” he revealed.

An article published last year by Addis Standard highlighted the troubling reality faced by workers: alarmingly low wages that perpetuate poverty and social inequalities.

In an interview with Addis Standard, an industrial worker with a degree in industrial engineering and three years of experience stated that he earns a monthly gross salary of 3,000 birr at one of the textile companies in Hawassa Industrial Park.

Despite his wife’s additional income of 2,000 birr per month, their combined earnings are insufficient to meet their family’s needs. “With two children, including one already attending school, our monthly expenses, which include rent and education costs, leave little room for groceries, transportation, and medical bills,” he explained.

Another industrial worker employed at a company operating in Addis Ababa ICT Park echoed concerns regarding inadequate wages.

Earning a monthly salary of 2,040 birr, he not only emphasized the financial hardship but also the physical toll associated with the work.

“The job necessitates extended periods of standing, leading to unbearable back pain for many. This, coupled with the low salaries, contributes to a high employee turnover rate,” he revealed.

The study by ILO highlighted the various dimensions of wage policy, particularly the pros and cons of improving workers’ conditions amid soaring inflation, high turnover rates, low labor productivity, and macroeconomic challenges.

In November 2023, a delegation led by Negeri Lencho (PhD), chairman of the Standing Committee for Human Resources and Technology Affairs at the House of’ Peoples’ Representatives, along with representatives from the ILO and workers’ and employers’ associations, visited Vietnam for a south-south learning exchange.

The UN agency indicated that the experiences gained were shared with stakeholders during minimum wage discussions held in Addis Ababa after the visit.

According to the ILO, Vietnam’s successful transformation due to its minimum wage law was highlighted during these discussions, emphasizing the importance of a two-tier structure: a National Wage Council and a technical board comprising various stakeholders responsible for updating wages.

Stakeholders in Ethiopia stressed that the government has been reluctant to introduce a minimum wage rate, fearing unintended consequences such as discouraging investors and business owners, particularly in sectors with lower profit margins.

In order to enhance the well-being of workers while mitigating any potential negative impact on the financial capacity of enterprises, ILO’s study advocated for a phased introduction of minimum wage legislation implemented through a formal legal framework. AS

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