Category: "Manufacturing"

Low wages draw international textile companies to Ethiopia - DW

December 10th, 2015

Low wages draw international textile companies to Ethiopia

Source: DW

Low wages draw international textile companies to Ethiopia - DW

Low wages, cheap power and a stable political situation have prompted foreign textile companies like H&M to start sourcing from Ethiopia. The country has a huge workforce and would like to become the next international textile hub. But the workers themselves are struggling to make ends meet.

Sewing machines rattle away in the huge GG Super Garment factory in Debre Zeyit, some 45 kilometers (28 miles) southeast of the Ethiopian capital, Addis Ababa. Hundreds of women and a few men are sewing singlets and T-shirts, destined for the Swedish company H&M.

As a result of rising salaries and growing labor unrest in Asia, an increasing number of foreign companies have started moving their production to Ethiopia. According to factory manager Joseph Elisso, the conditions in the East African country are far more favorable.

"Ethiopia is stable and peaceful, electrical power is cheap and labor costs are very low," he explains.

Entry-level salaries for workers in Ethiopia's textile industry range from $35 to $40 (32 to 37 euros) per month - lower than Bangladesh's minimum wage of $68 per month and far below the average wage of $500 in the Chinese textile sector. Ethiopia doesn't have a minimum wage, and due to high unemployment, workers are often forced to accept whatever wage they are offered.

Not enough to live on

Although Ethiopian workers are generally happy that increasing foreign investment is bringing jobs, many are battling to make ends meet. "I only get 850 Ethiopian birr (about 38 euro) per month and struggle to cover all my expenses," Tigist Teshome says. The 23-year-old factory worker, dressed in a checkered pinafore, is living with friends to share the costs. "I would like to live on my own, but rent alone is already 600 birr. How will I manage to pay food and clothing?" she asks.

In Duken, about a half hour drive from the Debre Zeyit garment plant, there's a big shoe factory run by Chinese company Huajian. Around 3,800 Ethiopian men and women are busy hammering soles on shoes, sewing pieces of leather together, operating machines and checking the final products.

Low wages draw international textile companies to Ethiopia - DW
Shoes for Guess and Toms are produced by the nearly 4,000 workers at Huajian's factory in Ethiopia

"Former Ethiopian Prime Minister Meles Zenawi invited us to set up a factory in Ethiopia because the employment rate is very low so they need labor intensive industry," Song Yiping, a manager with Huajian, says.

The company plans to produce 2 million pairs of shoes this year, mostly for American and European customers like Guess, Naturalizer and Toms. Ethiopia has one of the largest heads of cattle in Africa and leather is widely available in the country. The company is planning to expand production, boosting the number of workers to 50,000 in 10 years.

Although Huajian has created many news jobs, the company's employees complain their wages are too low . "My basic salary is just 600 birr (26 euros) and only when I work 10 instead of eight hours a day I get 750 birr (32 euros) a month, which still isn't enough. My rent alone is already 400 birr," says 24-year-old leather cutter Abu Ibrahim. "Also, our Chinese bosses shout at us in Chinese all the time and sometimes we aren't even allowed to go to the toilet," he adds.

Manager Song, however, says the low pay reflects the low productivity and quality of work. "The workers' lack of skill has impacted quality. Many shoes were rejected by our customers and we had to pay 4.5 million euros as compensation in the first two years," Song states.

Low wages draw international textile companies to Ethiopia - DW
Clothing giant H&M is one of the companies producing its garments in Ethiopia

Military drills for more discipline

The Huajian company, which was founded in China in the 1980s by former military officer Zhang Huarong, has also adopted a rather unusual method to motivate its staff. Every day, all the workers have to line up in the parking lot in front of the factory to perform a military drill, including marching, shouting, saluting and singing. "In the military they do marching to become disciplined and obey orders. We want to create the same effect," says human resources manager Zeng Lizhuo.

Not all workers appreciate this activity, though. "I have to walk long distances to fetch water at home, so I don't like to do even more physical exercise at work," 25-year-old worker Abebeye Makonen, dressed in a red T-shirt and skirt, says. She also hates the "Huajian song" that the workers are obliged to sing in Mandarin during the daily drill.

According to Zeng, the song is to unite the workers. "They sing that they make Huajian better and better to move forward and forward," he says.

Workers too scared to start a union

Although Ethiopia's constitution guarantees workers the right to associate, most factories, including Huajian, do not have trade unions. At Huajian, workers who tried to start a union were fired, according to Abu Ibrahim. "There were a couple of employees who tried to start a labor union, but when they were collecting money for this, Huajian dismissed them. Now everybody is too scared to start a union," the leather cutter says.

The way workers are treated at the Huajian factory is not unusual. About 75 percent of all Ethiopian companies still refuse to permit trade unions, says Angesom Yohannes from the Industrial Federation of Ethiopian Textile Trade Unions. "Most owners, especially the Chinese, don't want a trade union because they know that the next step will be collective bargaining, and certain benefits will be taken away from the owner or the factory," Yohannes adds.

He and his colleagues from the union nevertheless negotiate with individual factories in an attempt to secure better wages for the workers. After negotiating for three years, the union achieved a 25-percent wage increase in a collective bargaining agreement with the Turkish factory Ayka, which employs 7,000 Ethiopians. "We achieved this salary increase following pressure from Ayka's German client Tchibo," Yohannes says.
Ethiopian workers in a textile Company Picture: Jeroen van Loon

Workers say the entry-level salary of less than $40 (37 euros) per month are not enough to cover basic living costs

Low wages draw international textile companies to Ethiopia - DW

More pressure from outside

However, the union only has five full-time staff members and lacks the manpower and political weight to lobby for all factories. But Yohannes says pressure from customers abroad, like in the case of Tchibo, can have a big impact on strengthening workers' rights. He hopes H&M will also put pressure on GG Super Garment to raise salaries.

Dereje Feyissa Dori, research professor at the International Law and Policy Institute in Addis Ababa, believes that Ethiopia won't become a second Bangladesh, with dangerous working conditions. Factories aren't housed in shacky flats like in Asia, but in large production halls. Dori believes that Ethiopia's relaxed attitude towards foreign investors regarding labor rights won't last. "The government is so desperate to attract foreign investment. It doesn't want to scare or chase investors away by putting too many conditions, but it will become more strict in a couple of years," Dori says.

Ethiopian factory workers aren't optimistic about the future, according to Ibrahim. He says working conditions at Huajian are becoming worse. "In the beginning they allowed us two breaks per day, but now only one, while we have to work 10 hours a day," the leather cutter says, adding that he's not holding out for the government to take action. "Politicians don't help us either. Because they are happy with all the investments, they will always choose to side with the foreign companies."

Ethiopian Beer on Rise, With British Help

November 17th, 2015
Ethiopian Beer on Rise, With British Help
Beer bottles are pictured at the processing line of the newly inaugurated Dashen brewery plant in Debre Birhan town northeast of Ethiopia's capital Addis Ababa Nov. 15, 2015.

Ethiopian Beer on Rise, With British Help

Source: VOA News

An Ethiopian beer company has partnered with two British firms to open a new brewery to expand its production and take advantage of a growing market in the east African nation.

Ethiopia's Dashen Brewery has launched the new facility in Debre Birhan, as part of a partnership with Britain-based companies Vasari Global and Duet Group, and the Ethiopian TIRET Group. Dashen is one of the largest brewing companies in Ethiopia.

Ethiopian Prime Minister Hailemariam Desalegn presided at the opening ceremony, saying the brewery is an example of his country's international economic development capabilities.

"Duet, Vasari, and Tiret have shown that companies from the United Kingdom and Ethiopia can jointly venture for mutual prosperity and this best practice has to be scaled up," Desalegn said.

The brewing partners say Ethiopians’ demand for beer shows there a growing middle class in the country and a good sign of Ethiopia's economic health.

They believe there is rapidly growing demand for beer in the country as well a healthy export market. The owners expect the new brewery will employ several hundred people.

Combined with Dashen's existing brewery in Gonder in northwest Ethiopia, the new plant means Dashen's beer production in Ethiopia will have tripled since 2012.

Ethiopia has rapidly opened up its beverage sector to international investment, but has moved more cautiously in other industries. Telecoms remain in state hands while banks and retail businesses are off limits to foreigners.

Ethiopia receives World Bank loan to create jobs

May 21st, 2014

Manufacturing: Ethiopia receives World Bank loan to create jobs

Ethiopia on Tuesday received a $250 million dollar loan from the World Bank to finance the implementation of a competitiveness and job creation project in the country.

The agreement intends to support Ethiopia's efforts of creating new jobs and increase competitiveness in the light of a growing manufacturing sector through the development of industrial zones in Addis Ababa and enhancing linkages with the local economy.

State Minister of Finance and Economic Development, Ahmed Shide said the establishment of industrial zones will spur both foreign direct and domestic investment to Ethiopia.

Read more

Ethiopia, China establish textile industrial zone in Addis Ababa

May 21st, 2014

Ethiopia, China establish textile industrial zone in Addis Ababa

The Ethiopian government is collaborating with a Chinese company, Zhejiang Jinda Flax Llc, to establish a textile industrial zone in Addis Ababa.

The Ethiopian Ministry of Industry and the Chinese textile company had signed a Memorandum of Understanding (MoU) for the industrial zone, designated for textile factories in the Bole District in Addis Ababa.

Available data shows that Ethiopia is home to over 230 textile and garment industries with 20 training institutes, employing about 37 per cent of the country’s public sector work force.

According to a copy of the MoU in Addis Ababa on Wednesday, the ministry would sign a formal Investment Agreement with the Chinese company at the end of July when the land needed for the project would be available.

The two parties had agreed to work jointly for the establishment, development and construction of the coming Kingdom Linen Textile Industrial Zone in Ethiopia.

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UK hand in glove with Ethiopia's booming leather sector

October 23rd, 2013
Pittards plans to substantially increase the size of its Ethiopian workforce

UK hand in glove with Ethiopia's booming leather sector

By James Jeffrey

Addis Ababa, Ethiopia

Amid the rhythmic clicking of rows and rows of sewing machines, hundreds of workers are busy creating a range of leather gloves, bags and jackets.

"I can tell when employees' skills have improved by the noises of the machines speeding up," says Tsedenia Mekbib, a general manager.

We are at a busy factory on the outskirts of the Ethiopian capital, Addis Ababa.

It is one of three such facilities in the city owned by UK leather goods company Pittards, which has a long history of operating in the country.

"Ethiopia has come a very long way over the last 23 years since I first visited, and the last decade in particular has witnessed massive positive changes”

Reg Hankey
Pittards chief executive

While an increasing number of Western firms of all sizes are now looking at doing business in Africa, Pittards has had a 90-year head start.

The company, which is based in Yeovil, Somerset, in the south-west of England, has been trading in Ethiopia since the 1920s. And it is all down to a celebrated type of sheep - the Ethiopian hair sheep.

This breed, which does not grow a thick coat of wool, also has much thinner skin than its European brethren, making it ideal for delicate leather apparel such as ladies' gloves.

Read more from BBC News