The move to legislate a minimum wage in Ethiopia has gained recognition among the Human Rights Commission in Ethiopia. The commission has urged the government to establish a Wage Board immediately. The Human Rights Commission has conducted research to estimate the average income for workers in Ethiopia in 2021. Currently, that income is not enough to sustain a decent life. In other words, the minimum wage in Ethiopia has yet to increase to the level necessary to ensure workers’ basic needs are met.
In Ethiopia, the living wage for workers is less than a third of the cost of their daily expenses. Because of this, Ethiopian workers have reduced their living standards and are now barely surviving on one or two meals per day. It has become a vicious cycle in which employers refuse to pay a living wage and investors fail to invest in the country. Yet, the Ethiopian government is trying to increase the minimum wage by raising the minimum wage.
Some issues have delayed the process, including lack of information, non-attendance at meetings, and legal procedural challenges. Moreover, the Ethiopian minimum wage board is tripartite, with the government as one of its three members. However, the board has final decision-making authority. This decision has been controversial, causing many challenges. Despite its complexity, Ethiopia’s Human Rights Commission acknowledges the need to legislate a minimum wage.
Ethiopia’s minimum wage conventions should be ratified. These treaties have become a guide for drafting a national minimum wage policy. These policies should be the basis of legislation and comprehensive monitoring. The Ethiopian government should ratify minimum wage conventions if it wishes to improve the living standards of its workers. But in the interim, Ethiopian workers must work to draft a strong national minimum wage policy.
As the new minimum wage board has been established, the Ethiopian minimum wage system is far from perfect. The new law has many shortcomings that require revision. The minimum wage board is unable to address all of the concerns of workers. Ethiopia is a poor example of minimum wage policies and needs to work harder to address them. The minimum wage in Ethiopia is far below the world’s average. If the minimum wage in Ethiopia is implemented in full, it will improve the quality of life for many Ethiopians.
The implementation of the minimum wage is one of the key policies for ensuring that workers and their families are able to afford basic needs. Ethiopia has ratified various international human rights treaties, including the International Labour Organization (ILO) conventions, and its constitution recognizes the right to work, to just working conditions, to form organisations, and to equal pay for equal work. The constitution also mandates the government to promote equality and equitable wealth distribution among all citizens. In Ethiopia, the minimum wage board is tripartite, which means that the government is a key player in the process.
In Ethiopia, the minimum wage is not regulated in the labour code, but the National Employment Policy and Strategy does set a favourable framework for establishing a minimum wage. However, there are still challenges to the minimum wage in the country. There are many factors that influence the decision-making process, including political instability and a lack of transparency. While Ethiopians are aware of the challenges that the minimum wage poses to employment and the economy, the minimum wage system has largely remained untouched.
A low wage in Ethiopia negatively affects employment and foreign direct investment. It is a detriment to the social security system and employment income tax in the country. It also has a negative impact on retirement gratuity. Ethiopian workers’ wages are low compared to other countries, and the government needs to completely overhaul its wage structure to align it with international labour standards. In Ethiopia, teachers should be paid a comparable salary to other workers in the country.
The low wage in Ethiopia has had negative impacts on foreign direct investment and the retention of foreign workers. According to a study by Innovations for Poverty Action, 77% of factory workers quit their jobs within a year due to low wages. The low wages meant that they were forced to cut back on their living standards or eat once or twice a day, thus severely hampering the country’s economy. Further, the workers who did quit never considered seeking alternative employment.
The minimum wage fixing machinery in Ethiopia is tripartite. It requires an institutional arrangement that includes government representatives and private-sector employees. It can be difficult to establish the minimum wage and then enforce it. It is also problematic to define and enforce minimum wage regulations in the absence of adequate information. Nonetheless, the minimum wage board has the power to set the wage rate. Its members are tasked with ensuring that employees have a fair wage.
Though the minimum wage in Ethiopia is defined in the public sector, the minimum wage in the private sector is not yet legally enforced. Workers in industrial parks earn an average of $26 per month. Furthermore, non-wage benefits are dependent on the goodwill of employers and often subject to punitive deductions. However, Ethiopian government officials have recognized the need to raise the minimum wage and are taking steps to raise it.
However, there are also many negative aspects of the minimum wage in Ethiopia. For one thing, Ethiopia’s labour code does not recognize a minimum wage. In contrast to countries such as Vietnam, Cambodia, and Tanzania, minimum wage regulations in Ethiopia do not include any provisions for overtime pay, vacation, or sick leave. Despite these drawbacks, the minimum wage in Ethiopia is still a vital intervention tool in Ethiopia’s labour market. In addition to ensuring that workers have a decent standard of living, minimum wages improve productivity and employment.
Impact on employment
The impact of minimum wages on employment can be measured by looking at changes in job growth and the level of employment. These indicators should be able to identify variations in the minimum wage arising from inflation or from the rise of wages in other states. The broader question is how to measure minimum wage effects on employment. This article outlines several methods for measuring the employment effects of minimum wage increases. This article uses four of them:
The first method uses the assumption that higher wages lead to fewer job openings. It assumes that employers will substitute less-skilled workers for higher-paid workers. In other words, an increase in the minimum wage will cause employers to dispense with the least-skilled workers. However, this assumption ignores the role of skills in determining employment. In fact, minimum wages are designed to support the lowest-skilled workers.
Another method uses a hybrid approach and incorporates the structural variation in minimum wages among states. These researchers estimate the effects of minimum wage increases on employment, using a structural model based on minimum wage levels. In their analysis, they also include political ideology. The authors find that higher minimum wages result in less employment, particularly among teenagers. The negative effects of minimum wages are slow to manifest themselves in data because they take time to manifest themselves.
The second method uses employment elasticity, which measures the impact of minimum wages on employment. This metric measures the amount of change in employment in proportion to the increase in the minimum wage. For example, if the elasticity of employment is -0.1, then an increase of a minimum wage of ten per cent will reduce employment by 1%. However, when the elasticity of employment is -0.3 or higher, a minimum wage increase of one per cent will only affect about 10% of employment.
Impact on gender pay gap
The gender pay gap is a topic of much debate around the world. Despite equal education, men and women in Ethiopia earn less than each other for the same positions. The gender wage gap varies from region to region, but it is still a significant problem, especially in developing countries. In Ethiopia, women earn on average 63 cents for every birr a man earns. This discrepancy exacerbates women’s already steep disadvantages in equal employment opportunities.
The effect of increasing the minimum wage is heterogeneous, with different effects for women and men based on their level of education and the firm’s position in the wage distribution. Women with secondary education benefited the most, while those with only primary education lost ground in the upper half. However, the minimum wage increases in Ethiopia were not associated with a reduction in the gender pay gap for those with the highest education levels.
The Ethiopian labour force survey shows that women make up only 10% of the working population. The highest share of the country’s registered labour force is made up of unpaid family workers and self-employed people. This disparity makes women’s employment prospects in Ethiopia difficult. As a result, women in Ethiopia tend to remain in low-paying jobs despite being more educated and more experienced than men.
While the new minimum wage board has been established to improve the situation, there is still a gender pay gap in Ethiopia. However, these problems have not been addressed by this board, which is an institution established by a new labour proclamation. In the long run, the minimum wage board must be reformed to ensure the fairness of the minimum wage for women in Ethiopia. If this does not happen, it will be impossible for women to receive adequate wages.