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Industrial Park in Ethiopia creating jobs. But at what labor cost?

Made in Ethiopia

This is what lies behind the label you may soon see announcing that your clothes were “Made in Ethiopia.” There’s great potential in the social and economic experiment unfolding in East Africa, but it will be fulfilled only if workers are rewarded with higher labor costs and decent living conditions.

The creation of manufacturing hubs such as Hawassa has brought other problems, too. Some government-employed job recruiters sent to villages have exaggerated what workers can earn at the park, leading to disillusionment when reality hits. “I thought the salary would be much higher. I was not told the truth,” one female worker told us.

Cultural clashes between foreign middle managers and Ethiopian line workers are also common. By all accounts, many foreign supervisors tend to shout at employees. But Ethiopians consider shouting deeply insulting and grounds for quitting. Annual attrition levels in the Hawassa factories have improved but still run from 60 percent to 120 percent (the latter meaning there’s more than the complete turnover in just one year).

To be sure, some employers have begun to offer small bonuses for attendance and productivity, as well as allowances for food and transportation. Government officials told us they are considering a minimum wage that would lift the compensation floor for garment workers and other private-sector employees. In addition, the government is preparing a plan under which it would provide free land if foreign manufacturers finance affordable dormitories near the factories.

But Ethiopia’s gamble on garment-making is by no means a sure bet. On top of the other challenges, protests related to the country’s volatile ethnic-identity politics have shut down the Hawassa Park three times in the past year and contributed to strikes at individual factories.

Arkebe Oqubay, a senior government economic adviser and architect of the industrial park strategy, told us his country may not have very long to acclimate itself to the global garment industry. “Pace is critical,” he added. “We need to improve before [foreign] firms become frustrated” and give up on Ethiopia.

One hopes this fear is overblown and that the clothing firms will make a long-term commitment not only to cheaply sourced goods but also to supporting a strong Ethiopian economy in which workers are protected. For that to happen, companies will need to see beyond the short-term lure of the world’s lowest wages. Together with the government, they will have to invest time, talent and resources in addressing the ethnic tension in places such as Hawassa, establish a livable minimum wage that ensures decent living conditions for workers, provide more extensive training for workers and expand worker representation.

“Made in Ethiopia” doesn’t have to be a black mark on Western brands’ human rights records. It’s up to them to take the necessary steps to ensure that it doesn’t become one.