Payoff Courtesy of Fair Wage

Existing on a meagre salary – easier said than done – can be a never-ending trauma. In a country such as Ethiopia, where there is no minimum wage, surviving requires clever and innovative management, not to mention a big heart. When considering anything, income is a vital factor either to move forward or to remain on something.

Fair remuneration is among the economic and social rights often overlooked and decried in Ethiopia. The right to a just salary that ensures the existence worthy of human dignity is one of the fundamental human rights. The International Labour Organisation (ILO), which Ethiopia is a member of identifies the right to an adequate living wage as one of the conditions for universal and lasting harmony, and social justice.

Even though there is no generally accepted amount that defines remuneration, industry experts describe it as a salary from full-time work that allows people to lead a decent life that is considered acceptable by society. This human right principle was formed back in 1919. However, nearly a century later countless workers tussle to make ends meet.

It is a widespread phenomenon that most graduate Ethiopians are forced to live with their parents unable to afford a living. Parents have to continue to support their children even long after adulthood. These economic situations have made some unable to settle down for lack of adequate salary to afford basic needs.

I ones met an elderly man over the weekend at a company that has been making glasses and frames for almost five decades. He earns just 1000 Br, barely supporting his four children and a housewife. Although he is far past his retirement age, he still toils, competing with younger colleagues who make a little more than double that amount. Concurrently, a graduate with a degree nets not far more than this.

The moral imperative of minimum pay is to ensure a livable salary. However, aside from the moral perspective, there are economic influences to guarantee a fitting growth of income. Wages are not just cost of production for employers, but also a source of spending that could have multiple economic benefits.

The mystifying reality of Ethiopia is that even going to school and graduating in any profession is not a sure-fire means of earning a decent living. It is a place where someone with a bachelor’s degree is paid as much as those that have neither academic qualification nor work experience.

A country where public servants are forced to exist on petite salaries, where skill and hard work go unrecognised and uncompensated, the importance of introducing a minimum wage can not only increase productivity but create sustainable economic growth by increasing people’s purchasing power. It allows society not only to survive but to thrive.

The lack of adequate living has made the Ethiopian society to believe that economic growth means development of infrastructure without actually being a beneficiary of it. The transfer of economic benefits to fulfil society’s aspiration to a decent income still feels extravagant.

The country’s international image as a nation where cheap labour that costs employers less has gone into a vicious circle where investors coming here refuse to pay the sort of living wage employees crave.

For most economists, the way out of this is investing in education and health as a way to higher productivity to bring about efficient wages. Nevertheless, the availability of poor workers in the developed countries proves that economic growth by itself cannot solve the problem. Rather, a government intervention that sees a shift from cheap labour towards fair wages can guarantee employees adequate payment as a return for hard work and effort.

Remuneration must increase along with productivity as part of the condition to work. Setting a minimum salary rule taking into account economic factors and the general need of workers will prompt efficiency and better work.

The absence of a minimum wage does not have to mean that the market forces cannot set salaries, where workers are at liberty to choose from available work opportunities with different salary offers and employers can fix the pay packages.

In a free market-oriented economy where there is a presumption that freedom of choice is honoured and fair salary is determined by the voluntary process of competitive bargain, setting a minimum fair wage creates a fair and equitable negotiation floor.

In Ethiopia, the economy is hampered by low salaries that are reducing the motivation and the drive to work, causing low productivity. And without the necessary policy shift to make adequate payment a human right, the vicious cycle where employers receive little productivity and employees get insignificant salaries will continue.

By Eden Sahle
Eden Sahle is founder and CEO of Yada Technology Plc. She has studied Law and International Economic Law. She can be reached at

Published on Feb 10,2018 [ Vol 18 ,No 928]



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