Booming business and underpaid workers

Booming business and underpaid workers Ethiopia: Booming business, underpaid workers

Addis Ababa, Ethiopia - Lunch break is over at the Huajian shoe factory and workers assemble in perfectly aligned two-row formations, march, salute, and return back to their work stations.

"Our factory is a bit like a military organisation. The labour here is not highly educated so we have to use a very simple way to communicate and organise them," said Nara Zhou, Huajian's spokeswoman, as she walks through the aisles of the large factory hall.

Red banners with writing in Chinese, Amharic and English hang from the ceiling, bearing lofty slogans such as "China-Africa friendly and harmonious enterprise, to win honour for the country", and "High level of democracy".

They are excerpts of speeches given by the company's president, Zhang Hua Rong, a former military officer who established Huajian's operation in Ethiopia in 2012, Zhou explained.

Within a few years, foreign companies such as Huajian have helped build up Ethiopia's nascent footwear industry from scratch.

Today, the company employs about 3,000 workers in Ethiopia and generates $20m worth of exports by producing shoes for international brands such as Guess, Naturalizer and Toms destined for US and European markets.

With a growing number of brands such as H&M starting to source from Ethiopia and existing companies ramping up production capacity, the three percent of Ethiopia's exports that came from textiles and leather in 2013 may well double in the next couple of years, according to government estimates.

Cheaper than Asia

Rising production costs in Asia are the key drivers prompting manufacturers such as Huajian to look for alternative production sites. Ethiopia seems to be ticking many of the boxes for investors: abundant cheap labour, no tariffs, and a stable political environment.

Entry-level salaries in Ethiopia range from $35 to $40 per month, significantly below average Chinese manufacturing wages of $629 per month, a figure reported to have tripled between 2000 and 2010.

In Bangladesh, textile workers are required to earn at least $68 per month, which represents an increase in minimum wages following the deadly collapse of a factory building in April, and criticism of working conditions there.

Ethiopia, however, has no minimum wage except for public servants.

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Latest news, Ethiopian News, Economy, Booming business, Underpaid employees