International Labour Organization (ILO) experts have recommended the gradual implementation of minimum wage legislation in Ethiopia to improve workers' living standards without significantly impacting businesses.
In a presentation recently, ILO Wage Specialist Guillaume Delautre highlighted that low wages are a major cause of Ethiopia's high employee turnover rates, forcing companies to spend heavily on recruiting and training replacement staff. To address this issue, the expert advocated for intervening through minimum wage laws.
An ILO study found Ethiopian workers earn a median monthly wage of just 3,000 Birr. It also revealed that 48 percent of employees in foreign-owned garment factories quit due to inadequate pay.
To find an effective solution, the ILO recommends a step-by-step minimum wage implementation supported by legislation.
Delautre further emphasized the importance of collective bargaining to strengthen minimum wage policies in Ethiopia. In November 2023, an Ethiopian government delegation visited Vietnam to learn about its minimum wage framework involving social dialogue between all stakeholders.
These learnings from Vietnam's experience were hoped to help guide Ethiopia's reform process.
While Ethiopia's amended labour law in 2019 paved the way for implementing minimum wage through a wage board, the policy is yet to come into effect.
The law allows for establishing a wage board to determine minimum pay rates. However, much work remains to translate the legal framework into a functioning minimum wage system.
