Editor’s Note: May 13, 2019
Manufacturing is easier said than done
Garment workers in Ethiopia are the world’s lowest paid according to a report from the NYU Stern School of Business released last week, earning around $26 a month.
It’s a lamentable state of affairs, but on paper this should be good news. Ethiopia is part of the race to capture manufacturing jobs being relocated from China, with cheap labour being a major selling point.
The idea is to establish itself as Africa’s leading manufacturing hub.
The strategy has helped to attract international brands like H&M and Tommy Hilfiger, yet low wages are, ironically, hindering the process.
Workers are being priced out of the industrial parks being set up to drive manufacturing. Attrition at the flagship Hawassa industrial park stood at 100% in its first year of operation, with workers unable to afford housing and basic needs.
The obvious thing to do is increase wages, but this risks scaring off manufacturers, who generallyprefer Southeast Asia to Africa. Even at current rates the Hawassa park is only partially filled.
Like much of Africa Ethiopia faces additional hurdles to attracting investment like underdeveloped infrastructure and skills shortages.
Manufacturing is rightly viewed as key to driving Africa’s development, and Ethiopia is not alone in trying to kick start the sector, but getting it right is easier said than done.
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