Ethiopia’s cheap labour attracts foreign firms

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There are two things about his job at a Chinese leather tannery, located just outside the Ethiopian town of Sululta, that Girma Getachew, 25, doesn’t like. The first is his low pay rate; the second is the smell. “Its not nice to work there,” he says. “It smells bad and feels very unhealthy.”

For three years, Girma has worked on environmental safety at the China-Africa Overseas Leather Products factory.

He works six days a week and earns 25 Ethiopian birr (US$1.25) a day.

“Leather prices are always going up and down; that’s why we can’t earn more money,” he says, though he adds that the company provides opportunities for advancement, compensates for sick days and pays for employees’ medical care when necessary.

Foreign-owned factories are important to Ethiopia; officials hope to turn this Horn of Africa nation into a major manufacturing hub.

In a country of over 90 million people, where more than 80 per cent of the population works in agriculture, the government recognises that sustainable growth can only happen if Ethiopians gravitate toward higher-productivity jobs, which would attract foreign investment and add value to what is currently a commodity-based export market.

But protecting workers’ rights is difficult when foreign companies set out to make the most of cheap labour, says Berhanu Deriba Birru, the General Secretary of the Confederation of Ethiopian Trade Unions, an umbrella organisation covering half a million workers in 819 unions.

“With foreign companies, we face serious problems,” he says.

“They want to exploit workers, so they resist unions, because if workers are organised they will begin collective bargaining.”

Several Chinese, Turkish and Indian firms have put down roots in Ethiopia, despite bureaucratic inefficiencies and cumbersome trade logistics.

Lately, Western companies have also begun to test the waters. Swedish garment giant H&M is sourcing from three Ethiopian factories, and the Anglo-Dutch consumer goods behemoth Unilever plans to open up its own factory near the capital city of Addis Ababa in the coming months.

One British company is well ahead of the game. Pittards, a leather products manufacturer, has been trading with Ethiopia for about a century; it acquired the Ethiopian Tannery Share Company in the town of Modjo in 2009 and opened up a factory in Addis Ababa in 2011.

Today, about 700 employees at the site are churning out 100,000 pairs of working gloves each month, in addition to fashion gloves, handbags and jackets.

The Pittards factory lost money in Ethiopia during its first year of operations, says CEO Reg Hankey, but things eventually levelled out and the operation is now making a sliver of profit. The company pays its employees a bit more than average, but for the time being cannot afford much more than that.

Tingurt Sheferaw, a 32-year-old mother of two, has been working at the Pittards factory for two years and spends her day sewing the thumbs of working gloves.

Her base salary is 550 birr ($27.50) per month, but she says extras like performance bonuses and travel expenses can increase her gross pay up to 1,150 birr ($57.60). “It’s good for me to work here because my family has to eat,” she says.

Across the room is Habtan Mandefro, 26, who has been working at the factory for eight months. She is cutting fleece to line women’s gloves, and her base pay is also 550 birr. “It’s not enough; if I wanted to rent a room I wouldn’t be able to pay for it,” she says. “But working here is better than sitting at home!”

Wages are lower in Ethiopia than in the United Kingdom, says Hankey, but when it comes to workers’ rights, the standards are the same.

“What’s very good about Ethiopia is that their labour laws are well-developed,” he says, “Not like some of the countries in the Far East where you’re very reliant on the company.”

He adds that the Modjo tannery now includes a canteen and a healthcare clinic, and the company has rented land to build similar facilities near the Addis Ababa factory.

Pittards also makes efforts to hire disabled workers, allow opportunities for advancement and ensure that all employees have avenues to issue grievances.

In most cases, Ethiopian laws compel employers to limit normal working time to 48 hours a week, allow for sick leave, refuse child labour, comply with safety regulations and avoid gender discrimination.

But it is no secret that dirt-cheap labour is one of the main draws for foreign firms; without that incentive, Ethiopia would struggle to grow its still-nascent manufacturing sector.

And while many workers complain of low wages, they also recognise – sometimes begrudgingly – that any job creation is a good thing.

“It’s not enough money,” says Getachew of his job at the Chinese leather tannery. “But how could I survive without it? There aren’t many other options, so I’ll keep working there.”