ILO study advocates minimum wage laws in Ethiopia

In a continued effort to enhance the discussion on minimum wage in Ethiopia, experts from the International Labour Organization (ILO) have presented a comprehensive study on the potential implementation of minimum wage laws in the country. The presentation, led by ILO Wage Specialist Guillaume Delautre, highlighted low wages as a significant factor behind Ethiopia's high worker turnover rates, which forces companies to incur substantial expenses in recruiting and training new employees. Delautre recommended the introduction of minimum wage legislation as a necessary intervention.

The primary concern discussed was the multifaceted nature of wage policy, considering the pros and cons of reforming workers' conditions amidst soaring inflation, high turnover rates, low labour productivity, and macroeconomic challenges. An ILO study revealed that the median monthly wage in Ethiopia stands at 3,000 Ethiopian Birr (approximately $51.96). The study also identified low wages as a major source of dissatisfaction among workers, noting that 48 per cent of Ethiopian workers in foreign-owned apparel firms left their jobs due to poor wages.

To improve workers' living standards without significantly undermining businesses' ability to pay, the ILO recommended a gradual implementation of minimum wage laws through proper legislation. Delautre also emphasised the importance of backing minimum wage laws with collective bargaining to ensure their effectiveness in Ethiopia, as per ILO.

In November 2023, a delegation led by Negeri Lencho (PhD), chairman of the standing committee for human resources and technology affairs at the Ethiopian House of Peoples’ Representatives, along with representatives from the ILO, workers' and employers’ associations, the Civil Service Commission, and other stakeholders, visited Vietnam for a south-south learning experience. The experiences gained from this visit were shared with stakeholders in Addis Ababa during the ongoing minimum wage discussions.

Vietnam's successful transformation through its minimum wage law was extensively presented. The key to Vietnam's success was a two-way structure comprising a National Wage Council and a technical board with various stakeholders responsible for updating wages. This structure ensured consistent reform of their wage system. The visit highlighted how Vietnam's introduction of a minimum wage attracted quality investment and contributed to poverty reduction, providing valuable insights for Ethiopia.

Representatives from employers' associations acknowledged the importance of bipartite and tripartite discussions and participatory platforms to address the matter in Ethiopia. Trade union representatives also underscored that setting a minimum wage is crucial and timely for the mutual benefit of employers, workers, and the government. They urged the government to take a central role in advancing the discussion to the next level.

“A robust employer-employee participation process would increase the likelihood of creating a consensual minimum wage law in Ethiopia, improving livelihoods, and attracting quality-oriented investment,” said Kidist Chala, Head of ILO’s apparel and textile programme in Ethiopia.

Fibre2Fashion News Desk (DP)