Ethiopia Becoming Apparel Industry’s Newest China: American Brands Buying from Factories That Pay Workers As Little As 12 Cents Per Hour

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I was in Ethiopia earlier this year and had a great time visiting the country and learning about its history and culture. It’s truly an inspiring story as Ethiopia was the heart of a great civilization and its the only African country that was never colonized by Western powers.

Unfortunately, there’s a less attractive side to Ethiopia when it comes to the country’s political economy, and specifically its ongoing attempted transformation into a growing hub for the international apparel industry.

It’s difficult to report in Ethiopia, where I traveled again a few months ago, and especially about the apparel industry, because reporters are generally barred from factories. But Worker Rights Consortium (WRC), a D.C.-based group, issued a report last year after interviewing garment workers at four export factories producing for leading foreign brands. The factories are mostly run by Asian firms; the buyers are primarily American, including companies like H&M, Walmart, PVH, The Children’s Place, JCPenney, and KiK.

The WRC report found wages as low as 12 cents per hour, which comes to about $25 per month. The average was was 18 cents an hour. “The Ethiopian garment sector’s rapid growth has been fueled by these extraordinarily low labor costs,” the report said. It said wages in Ethiopia were the lowest “by far that the WRC has observed in the global apparel industry in recent years.”

By point of comparison, average monthly wages in apparel factories in China, an original sweatshop destination for Western buyers, have now risen to $326 a month and are about $280 per month in Indonesia, another low wage haven. (Incidentally, Ivanka Trump brands source from both these countries.)

Countries like Cambodia, Vietnam, Bangladesh and Myanmar offer even lower monthly wages — about $180 in the case of the first two, and about $95 in Bangladesh and Myanmar — so Ethiopia really stands out at the bottom. The government’s Investment Commission, which seeks to lure in foreign capital, emphasizes the pitiful pay scale for workers.

“These wages are possible, in part, because Ethiopia is unique among significant apparel exporting countries in the developing world in having no statutory minimum wage for workers in the private sector, including garment workers,” the WRC report said.

Meanwhile, factories from other low-wage countries have started to move to Ethiopia. Ade Sudrajat, chairman of the Indonesian Textile Association, recently confided his concerns about this trend and said some of his group’s members had already made the jump to Ethiopia. Chinese factories are also setting up shop in Ethiopia.

Ethiopia’s apparel sector is still relatively small but it’s growing quickly, and when I was in Addis Ababa in July the government announced new incentives to the private sector. Meanwhile, the government has been opening apparel-dominated industrial zones, in remote locations and generally closed off to reporters. The biggest is the Hawassa Industrial Park, located about 275 kilometers from Addis, which the government claims will one day generate $1 billion annually in exports.

All production from Hawassa, which is billed as the largest industrial park in Africa, is for export and can’t be sold locally. The park’s anchor firm is PVH — its brands include Calvin Klein and Tommy Hilfiger — which loaned $14 to JP Textile Ethiopia Plc., one of the factories operating there. “The park will serve as a prototype for the industrial parks being built in other parts of the country,” the government says. Back in 2018, Bill McRaith, PVH’s global supply chain chief, said that for the company Hawassa “is a chance for us to learn from everything we wish we had done better in the past.”

But early results are not encouraging. The WRC report — which focused on four factories, not just JP Textile and Hawassa — said it had uncovered “numerous labor rights abuses. These include: draconian wage deductions, exacted as punishment for minor disciplinary infractions; degrading verbal abuse of workers by their supervisors; discrimination against pregnant workers; a high incidence of workers collapsing unconscious at their workstations, due to overwork and other factors; and forced overtime; among other violations of law and buyer codes.”

The WRC report was released late last year, with the research conducted over time prior to that. When I was in Addis I spoke to someone who was familiar with more recent conditions at the Hawassa. This person said that things have not gotten any better since the report came out.

Wages remain abysmal — as low as $20 per month for new hires at some factories — and that the government is offering a variety of incentives, legal exemptions and land. “All the government cares about is bringing in foreign currency,” this person said.”That’s why Ethiopians can’t buy the clothes being produced at these factories.” This person said tiny bonuses were offered to workers but not paid on time and working conditions are unbearable, especially the intense heat.

It’s worth noting that until a few years ago Ethiopia was led by a military government and now it’s technically a democracy. Prime Minister Abiy Ahmed (who won the Nobel Prize today) is an improvement over his predecessor, but he’s squeezed by the race to the bottom, and largely embraced it.. “Foreign apparel firms avail themselves of poverty wages wherever they are available,” Scott Nova of the WRC told me earlier this year. “’Whether there’s a democracy or dictatorship doesn’t make any difference for them.”

Nova was talking about Indonesia, where his group is also active, but his words apply to Ethiopia as well.

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