$26 a month: Ethiopians are being paid world’s lowest wages to make your Calvin Kleins
Ethiopia is trying to become the new Bangladesh of garment factory labour by promising the lowest wages in the world, but the workers themselves report they’re struggling to survive on US$26 a month while stitching clothes for Calvin Klein, H&M and other brands.
A study from New York University’s Stern Center for Business and Human Rights, released this week, tells an old story: the hidden cost of the fashion industry.
It’s also a classic story of neoliberal economic development, one that’s been played out countless times since the 1990s: An impoverished country seeks foreign investment by declaring itself ‘open for business’, and offers up a vast and willing labour force.
Global capital, forever scouring the world for a competitive advantage, sets up shop: Factories are built, and young uneducated women are recruited from agricultural villages.
In 2015-16, Ethiopia built the state-owned Hawassa Industrial Park, located 140 miles south of the capital of Addis Ababa. The park currently has 25,000 employees producing garments for global brands also including Levi’s, Guess, and Tommy Hilfiger.
An Ethiopian government brochure for potential foreign investors advertised: “Cheap and skilled labor: 1/7 of China and 1/2 of Bangladesh.”
In fact, the labour would be even cheaper: Workers are being paid $26 a month, almost a quarter of the $95 a month minimum wage in Bangladesh.
The government based this figure, which was then factored into business plans, on the amount it paid its own floor sweepers – as the report points out, this is an unfair and arbitrary comparison for sewing-machine operators employed by foreign manufacturers.
Some workers told the authors of the report the government-employed job screeners sent to small towns and villages promised considerably more than $26 a month.
“I thought the salary would be much higher,” one worker said.
“I was not told the truth.”
Meanwhile, the influx of workers has driven up the cost of accommodation. A single bare room within a few kilometres of the park costs about $52 a month.
The report states: “One young woman showed us the concrete ground-floor room she and three fellow workers rent from a homeowner. There is no toilet, only an open-air latrine nearby. The woman said she and her roommates work different shifts, and she’d had some of her belongings stolen. Sometimes, she added, there is no food left for her when she returns from the factory. All four women sleep on thin mattresses on the floor, and when it rains, water seeps into the living space. We heard from others at the park that some employers hand out plastic sheets, which employees place between their mattresses and the concrete floor in an attempt to stay dry.”
An October 2017 survey told of workers fainting from hunger, as well as “being too tired from walking three hours a day to come to work and to go back home [and] the lack of energy and fainting due to the workers not eating properly because they cannot afford to eat two meals per day.”
‘It’s okay to be a little bit late to work’
Workers coming from family farms struggled to adjust to an economic system within which they were considered units of labour, and which was geared towards efficiency and production: “Unfamiliar with industrial custom, they don’t understand why they would be disciplined for lateness, absenteeism, or chatting with workstation neighbors at the expense of completing their sewing tasks – all behaviors that might be acceptable in a family-agricultural setting.”
“A significant percentage of workers said they did not believe there would be problems for the factory if they missed working days and also said that they believe it is okay to be a little bit late to work.”
“Frustration over their pay, combined with homesickness and other unfavorable aspects of factory life, has led to a sense of alienation and lack of commitment to working productively.”
And so they quit.
During its first year of operation in 2017-2018, overall attrition hovered around 100 per cent, meaning that, on average, factories were replacing all of their workers every 12 months.
Some factories have been running at 15 per cent efficiency.
The Stern Center study does not accuse the brands of using sweatshop labour: “Ceilings are high, lights bright, and ventilation more than adequate.”
Indeed, Ethiopia hoped to shift manufacturing away from Bangladesh with its lax building safety standards: “The Rana Plaza disaster, a factory collapse that killed more than 1,100 people in Bangladesh in April 2013, reinforced PVH’s determination to start anew in Africa,” the study says.
PVH was among the first to move. The US-based company is one of the world’s largest apparel chains, with labels such as Calvin Klein, Izod and Tommy Hilfiger, and operates more than 2,000 factories in more than 40 countries. It has an annual revenue of $9.7 billion.
Instead of sweatshops, the story of the Ethiopian garment industry is more mundane and perhaps disconcerting: It’s the logical result of a system that rewards enormously wealthy companies to seek out the cheapest source of manufacturing.
Staggeringly low wages was the reason brands came to Ethiopia, but the global investment has not translated into prosperity for the employees.
‘Generational sacrifice’ to build industrial base
Backers of the industrial park say some degree of “generational sacrifice” needs to take place in Ethiopia as the country develops economically.
They say today’s workers likely will have to endure exceptionally low wages while they accumulate industrial skills and achieve productivity levels that in the future will bring them, and their children, higher pay and better circumstances.
This has happened in China, which started with t-shirts in the 1990s, and has now built a prolific apparel sector. The country eventually diversified into manufacturing other goods, like mobile phones. Its success is one reason companies are going elsewhere for cheap labour.
But there’s another scenario: Ethiopia could become a permanent pool of cheap labour; in Bangladesh, workers’ wages have not greatly increased in three decades.
Dr Arkebe Oqubay, special economic adviser to the prime minister and architect of the Hawassa Industrial Park strategy, estimated that it would take 15 to 30 years for the country’s workforce to acclimate itself fully to the global garment industry.
“Pace is critical,” he told the authors of the study.
“We need to improve before [foreign] firms become frustrated.”
Author James Purtill