by Dheeraj Tagra
11-May-2019 | 8 mins read
Whenever anyone talks about emerging apparel sourcing destination, Ethiopia’s name comes first. Currently, apparel manufacturers from across the globe are having their units in Ethiopia, making garments for brands like PVH, H&M, Gap and many more.
The country today has an annual apparel production of nearly US $ 145 million and are targeting US $ 30 billion by 2025. However, on the ground level all is not well there. There are major issues like low minimum wage, less productivity, labour unrest, poor working conditions, local militancy… “Made in Ethiopia: Challenges in the Garment Industry’s New Frontier” a report by Paul M. Barrett and Dorothée Baumann-Pauly (Center for Business and Human Rights) had a close look at the flagship Hawassa Industrial Park, a vast and still only partly filled facility that currently employs 25,000 workers about 140 miles south of the capital of Addis Ababa. The report has some eye-opening points. Given below are selected excerpts from the report that shows the dark but real side of Ethiopia.
Lowest minimum wage and living conditions
While brands are talking a lot about living wage, Ethiopia has the lowest wage across the 15 major apparel manufacturing countries, which is a paltry 750 birr, equivalent of US $ 26 a month or US $ 312 per annum – 40 per cent of the average per capita income of US $ 783 in Ethiopia. The workers expect at least 4 times more than the existing wage. As per the industry insiders, in the case of experience or high productivity, a worker can earn maximum up to 1,500 birr (US $ 52).
Though garment manufacturers provide bonuses for attendance and allowances for food and transportation, most workers struggle to get by, let alone saving any money or sending cash home to their families in the countryside. The country has no legally mandated minimum wage for the private sector. Besides, it is a common sight to see four women workers living in a single room, without indoor plumbing, a kitchen, or a place to keep their meagre belongings.
“Working for Guess, Levi’s and Wrangler, China-based Indochine Apparel occupies six factory sheds at Hawassa. As of December 2018, it had an efficiency percentage in the high 60s, one of the best in the park. These accomplishments may trace to its diverse range of worker incentives. A whiteboard placed prominently in one Indochine factory shed indicated that moderately productive employees can qualify for bonuses and allowances equal to their monthly base pay, for a total of 1,529 birr (US $ 53). At Indochine, a highly productive employee can receive as much as 2,180 birr (US $ 76), but even Bangladesh and Myanmar do have minimum wage of US $ 95 per month,” The report reads.
Low productivity, high absenteeism and attrition
Productivity in the Hawassa factories typically is low, while worker disillusionment and attrition are high, for example Best Corporation, one of the well-known Indian apparel manufacturing companies, has been working in Ethiopia on a long-term contract to make Hanes T-shirts. Being a basic garment, this kind of T-shirt is relatively easy to sew together and provides simple tasks suitable for inexperienced employees. But the factory is achieving an efficiency rate of only 47 per cent, which is nearly 20 per cent less compared to Bangladesh which is also known for such kind of basic apparels. The company has more than 900 workers in its company. Overall, this low efficiency is a widespread and a serious problem in this park. Workers often do not keep up with the swift tempo of the belt-and-rail system, snarling the process and causing production lines to shut down temporarily, which eventually leads to missed deadlines and delayed delivery of products. Managers have been fired for failing to solve the problem.
Along with less productivity, absenteeism and attrition still remain major issues. Though factories have made good progress in this direction, even now attrition at Hawassa factories runs from 5 per cent to 10 per cent every month; it means more than complete worker turnover in just one year.
“In Ethiopia, the potential is big, but the difficulties are also big… The government’s goal of a US $ 30 billion apparel industry isn’t realistic.” Anas Tazi, Country Director, Decathlon Ethiopia. The company is sourcing from four suppliers at Hawassa.
No doubt, Ethiopian Government is supporting overseas investors in a big way but bureaucratic red tape is still a bottleneck especially on the Hawassa park campus, where it remains very much in evidence. It is being said that dealing with obstinate custom officials to get raw materials in and finished clothes out remains as tortuous as ever. For example, exporters aren’t allowed to consolidate smaller orders into one shipping container, resulting in the shipment of money-wasting partly full containers.
The report claims that Ethiopian politics is unexpectedly disrupting factory operations – a claim which gets further strengthened by incidents like that in Hawassa, where the local ethnic militancy has become entwined with labour issues, resulting in short strikes at individual factories and occasional park-wide closings.
In March 2019, Hawassa Industrial Park was largely closed by a city-wide protest organised by local militants. Untangling this complicated situation, requires a brief digression on Ethiopian ethnic politics and how it has disrupted work at Hawassa. Many Sidama view the industrial park as an unwelcome imposition by the federal government. At the same time, however, a militant group of Sidama youth called Ejeto has insisted that only Sidama be employed at the park.
It is pertinent to mention here that before Prime Minister Abiy assumed office in April 2018, Ethiopian security forces used harsh measures to suppress ethnic rivalries. When Abiy eased repressive policies and freed political prisoners, he also removed restrictions that had kept ethnic-group animosities in check. One such group, the Sidama, who number about 3.5 million people, live in the ethnically diverse Southern Nations, Nationalities, and Peoples Region, one of the nine regional states in Ethiopia’s federal system. The danger is not that all work at the park will suddenly grind to a halt. Rather, it’s that episodic labour and political unrest will undermine productivity and hence wage increases. Besides, it could also discourage additional suppliers from opening factories in Ethiopia and eventually cause some or all of the companies already operating at the Hawassa park leave.
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