Introducing Statutory Minimum Wage into the Ethiopian Private Sector: A Contradiction between Labour Rights and Promoting Investment?

Gebreamlak Yaebeyo* 

(Labour Relations Law in Ethiopia

EDITOR Mehari Redae (PhD) 

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Abstract 

This manuscript is principally aimed at scrutinizing the desirability of having a statutory minimum wage in the Ethiopian private sector along with its impacts on labour rights and attracting FDI. It also investigated the extent of complementarities between investment and labour policies in Ethiopia. To this end, it reviewed and analyzed qualitative secondary and primary sources of information and data coupled with three benchmarked African countries' experiences - South Africa, Kenya and Malawi - on the subject. Ethiopia has been concluding webs of reciprocal bilateral investment agreements to allegedly cater for investment.

 

However, it has been critiqued for over privileging investors by subjecting workers to the manipulation of abusive investors. There was no legislatively fixed minimum wage in the private sector either. This has, in turn, provoked different debates in favour and against its introduction. The study reveals that countries with better labour and/or overall human rights protection attract more FDI than those with controlled, abusive and unregulated minimum wages. Besides, prior empirical works from elsewhere indicate that FDI is driven by a broad variety of perceptions, variables and goals of the host State and Ethiopia cannot be an exception to this. The study also shows that Ethiopian investment and labour policies and the institutional frameworks do not provide a clear sense of direction for reconciling investment and labour disputes. 

Thus, this article suggests the need for revisiting the labour and investment regimes to strike the balance between protecting labour rights and the need for investment promotion. This can be done by designing more nuanced and unifying provisions in the labour and/ or investment regimes. At the same time, as the current labour legislation of Ethiopia empowers the Council of Ministers to set up a’ Wage Board’, it is imperative to introduce what the country is set to achieve through the instrumentality of this Board. 

 

*  LL.B (University of Gondar), LL.M (Addis Ababa University); Currently affiliated to Mekelle University, School of Law. The author can be reached through yaebeyog12@gmail.com