In recent years, Ethiopia has launched a bold economic and social experiment by inviting the global garment industry to set up shop in the East African country. Drawn by newly built industrial parks and a range of financial incentives, manufacturers for some of the world’s best-known brands—among them, H&M and PVH (Calvin Klein, Izod, Tommy Hilfiger)—employ tens of thousands of Ethiopian workers in a nascent sector the government predicts will one day have billions of dollars
This report provides a close look at the flagship Hawassa Industrial Park, a vast and still only partly filled facility which currently employs 25,000 workers about 140 miles south of the capital of Addis Ababa.
For all of its potential, the apparel industry in Ethiopia has already encountered difficulties. The government’s eagerness to attract foreign investment led it to promote the lowest base wage in any garment-producing country—now set at the equivalent of $26 a month. On that amount, workers, most of them young women from poor farming families, cannot afford decent housing, food, and transportation. Even when factory owners provide additional modest payments for regular attendance and meals, workers struggle to get by. It’s common for young women to live four-to-a-room, without indoor plumbing.
Given relatively little training, restive employees have protested by stopping work or quitting altogether. Productivity in the Hawassa factories typically is low, while worker disillusionment and attrition are high.
Ethiopian politics are unexpectedly disrupting factory operations. Prime Minister Dr. Abiy Ahmed, chosen in April 2018 by Ethiopia’s long-time ruling party, has freed political prisoners and made peace with neighboring Eritrea. But the easing of repression has inadvertently unleashed previously bottled-up ethnic animosity. In Hawassa, local militancy has become entwined with labor issues, resulting in short strikes at individual factories and occasional park-wide closings.
Assuming its volatile politics do not chase away foreign investors, Ethiopia faces a choice when it comes to manufacturing clothes for Western consumers: Will it emulate China or countries like Bangladesh, Cambodia, and Honduras? The answer to that question points to a broader one: Under what conditions do manufacturing jobs lead to improved worker welfare and sustained economic development?
China has built a prolific textile and apparel sector that has created jobs, boosted exports, and increased foreign exchange earnings. The Chinese moved on from simple t-shirts and trousers to produce more complicated, higher-value clothing, just as they eventually diversified into manufacturing other goods, ranging from cars to digital devices. China’s economic success has not been matched by respect for human rights or political freedom. But Ethiopia could strive to emulate the Chinese approach to manufacturing while diverging politically to strengthen Ethiopian democratic institutions. A first step would be making sure that its workers are well trained, motivated, and paid enough to afford basic necessities.
Alternatively, Ethiopia could follow Bangladesh’s example. Unable to develop its own supply chain, Bangladesh imports all of the components of the clothing it produces. Its factories generally haven’t progressed beyond cutting and sewing basic items. Bangladesh’s garment industry has created many jobs, but it hasn’t elevated the quality of those jobs for most workers or the value added to exports. At a crossroads, Ethiopia can choose a future following China’s approach to apparel making. This choice would encourage social and economic advancement that would help workers, as well as the broader population.
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