CHINESE FIRMS AND EMPLOYMENT DYNAMICS IN SUB-SAHARAN AFRICA: A COMPARATIVE ANALYSIS

Lead Research Organisation: School of Oriental & African Studies
Department Name: Development Studies

Abstract

The dramatic upsurge during the 2000s of Chinese investment (both public and private) in sub-Saharan Africa has sparked much discussion and controversy about its development impact. However, despite some recent advances in research, concrete evidence on this impact has remained limited.
This research will focus specifically on gathering concrete information on the employment effects of such investment. But this research will not confine itself to examining just Chinese FDI. It will also investigate the impact of the much broader category of what are called 'Chinese overseas contracted projects'. These initiatives, which include Chinese aid, have grown exponentially in recent years, and have often taken the form of construction projects.
In order to gauge the employment effects of such initiatives, firm-level and worker-focused surveys will be conducted in two sectors, construction and manufacturing, in two countries where such Chinese investment has been substantial, i.e., Angola and Ethiopia. Though Chinese firms have created more employment in construction in both countries, the recent increase in Chinese investment in manufacturing is particularly important because it could portend significant increases in higher-productivity jobs, which are in short supply throughout sub-Saharan Africa.
This research will assess the impact of Chinese investment in three specific areas: the employment, working conditions and skill development of national workers. Worker-level interviews will be important to the project because they will enable researchers to develop a more dynamic picture of the employment conditions of national workers. For example, the workers interviewed will be asked about their previous employment so that comparisons can be drawn with their current conditions in Chinese firms.
Moreover, such worker-level interviews will be utilized to identify workers who have left Chinese firms in order to secure new jobs in national firms or in self-employment. Such workers will subsequently be interviewed in order to determine whether their employment in Chinese firms was a springboard for improved future employment. Of particular concern will be the effect of employment in Chinese firms on training and general skill development.
This research project will also seek to compare employment conditions in Chinese firms in sub-Saharan Africa to the employment conditions of Chinese workers themselves in similar firms in China. This research will be carried out by both researchers in China and researchers in the United Kingdom who are China specialists.
But this aspect of the project's research will not be based on new surveys but on the gathering of all relevant available material on labour conditions in China and especially their recent evolution. Of particular concern will be the effect of recent trends in employment conditions and any changes in the policy of the Chinese government that could have influenced the conduct of Chinese firms investing in sub-Saharan Africa.
The intent of this research project is to have an important impact on the character of the ongoing debate on the development impact of Chinese firms located in sub-Saharan Africa. Particularly important will be the effect of our results on the policy stance of governments and regional development organizations in sub-Saharan Africa. But also one of the project's major objectives is to influence the character of the broader debate within the international development community on the employment effects of development cooperation, particularly within the context of the efforts to frame a new and more effective global post-2015 development agenda.

Planned Impact

This proposed project plans to have a broad impact not only on academic audiences but also on policymakers in national governments, regional organisations and international organisations as well as trade-union and NGO representatives. The focus of the research and related surveys is on employment conditions in Chinese firms in sub-Saharan Africa, specifically Angola and Ethiopia.
Thus, the project will seek to have an impact on national governments in Angola and Ethiopia, and indirectly on other national governments and on regional organisations in sub-Saharan Africa (as explained in the attachment 'Pathways to Impact'). The project also hopes to have an impact on how the Chinese government assesses its investment and development cooperation in sub-Saharan Africa, specifically with regards to employment-related policies.
The project plans to have such a proposed impact through various means and channels. One of the means is the six meetings that it will hold throughout its three-year duration. Two key Scoping and Stakeholder meetings will be held in Luanda and Addis Ababa early in the project in order not only to assess the viability of conducting representative firm-level surveys in these two countries but also to listen to, and take on board, the concerns of key stakeholders in each country.
There will also be three Dissemination meetings during the later stages of the project. These will be held in Luanda, Addis Ababa and Beijing. In these meetings the project hopes to have a significant impact on the thinking of key stakeholders and have some effect on the policymaking of the respective national governments. Lastly, there will be an important International Conference held in London towards the end of the project in order to reach a broad audience of stakeholders, including academics, government representatives, representatives of trade unions and other NGOs and representatives of international and regional development organisations.
In addition, project representatives will undertake trips to Geneva and Addis Ababa specifically in order to disseminate the project's research results and policy messages and interact with representatives of international organisations such as the ILO and with the African Union, the UNECA and other regional development organisations. The project will also attempt, in particular, to hold a meeting at DFID headquarters in London. Hopefully, the findings of the project will help to improve the prospects for trilateral cooperation among developed-country donors, China and African governments.
The project will make a special effort to reach a broad audience of interested academics who do research in areas linked to the focus of the project (as explained in the section on Academic Beneficiaries). The intent is to draw on the publication of at least ten research papers, including on topics related to employment conditions in China itself as well as in Angola and Ethiopia. Additional efforts will be undertaken to publish such research results in a special journal issue and at least one book publication.
For a broader audience interested in development issues, the project will utilize the vehicle of the Centre for Development Policy and Research (CDPR) at SOAS to publish Research Briefs and Discussion Papers. In addition, CDPR will attempt to disseminate Policy Briefs and Development Viewpoints, which are short, easily readable publications that can reach a broad development audience. The Policy Briefs are intended to reach policymakers in national governments, regional organisations and international organisations. Taken together, there will be at least six CDPR publications (across the four kinds of formats).
The legacy of the project will be promoted by setting up a special website, as well as depositing project publications within the CDPR website.

Publications

10 25 50
 
Description This project aimed to generate new evidence on employment dynamics and working conditions in Chinese firms in key emerging non-primary sectors, namely manufacturing and infrastructure construction. We tried to assess the extent to which Chinese firms were contributing to job creation in Africa as well as how working conditions compared to other leading firms in Ethiopia and Angola, two of the most relevant countries to understand the impact of Chinese firms on employment. Overall, the study shows that context, both national and sector contexts, as well as the circumstances of the economies and countries when surveys were conducted, are more important determinants of labour outcomes and labour relations than the origin of a firm.

Key findings, based on 3 years of fieldwork-intensive research and large scale surveys of over 1,500 Ethiopian and Angolan workers, show that:

1. The proportion of national (Ethiopian and Angolan) workers in the labour force are substantially higher than assumed in media perceptions. our survey suggests that workforce localization rates are much higher than assumed. In Ethiopia about 90% of workers in Chinese firms were, in fact, Ethiopians. In Angola, where localization is more severely constrained by binding skill shortages, our estimated rates were close to 75%. We also found that localization had grown significantly in the previous 10 years as Chinese firms settled in the Angolan market, a trend that is shared by most other African countries, and that Chinese firms contributed to a large proportion of new jobs especially in construction.

2. Wages in Chinese firms broadly similar to other top firms in the same sectors. One factor that contributes to wage variation is that in both countries there is significant labour force segmentation, especially in Angola, where Chinese firms tend to operate a 'migrant dormitory regime, which includes food and accommodation in addition to cash wages, thereby attracting many young workers from the poorest provinces of the country. Our statistical analysis suggests that other key determinants of wages are the skill level of workers, job tenure in company (+); education (+); work experience (+); socio-economic status (+) and location effects, Once we take all these factors into account the origin of a firm does not impact on wages on average. In other words, wages in sampled Chinese firms were broadly similar to other top firms in the same sectors, once other worker and company characteristics are taken into account.

3. Chinese firms contribute to training and skill development at least as much as other firms in the same sector, especially in the export-oriented manufacturing sector where organizational demands and skill requirements are more significant. Most of the training takes the form of on-site on the job practical training across a range of technical and 'soft' skills.

We also found that new investors in manufacturing sectors in Ethiopia have created many jobs that are critical for the country's employment challenge but, overall, working conditions could be improved in order to secure a more stable and committed industrial labour force. Better infrastructure around industrial parks as well as higher wages and suitable accommodation appear as key policy challenges to sustain the current process of industrialization in Ethiopia. In Angola, the government could emphasis labour outcomes more, especially in relation to skill development and localisation of the labour force, given that Chinese and other companies can adapt to a more demanding environment in terms of labour standards.
Exploitation Route The research findings have generated a lot of interest in media, public opinion and policy circles.
The findings have been reported by the Financial Times Africa editor, David Pilling on 3 July2019. https://www.ft.com/content/6326dc9a-9cb8-11e9-9c06-a4640c9feebb
The study was also cited by a White Paper published by the Chinese State Council in September 2019, titled "China and the World in the New Era" and attracted media interest in China too, via TV interview at World Insight programme in CGTN at https://m.youtube.com/watch?v=ExTwzcby0U4&list=PLt-M8o1W_GdQ3OMoqak-V6k1ED3eOjEEy?dex=2&t=0s
We expect media engagement to continue, and to continue to engage policy makers in both Ethiopia and Angola. We also expect strong academic debate focusing not only on our findings but also on the methodology we adopted to produce such findings, particularly the survey design for workers in construction sites and factories.
Sectors Construction,Government, Democracy and Justice,Manufacturing, including Industrial Biotechology

URL https://www.soas.ac.uk/idcea/publications/reports
 
Description The research findings have generated a lot of interest in media, public opinion and policy circles, and contributed to shaping the narratives about employment practices by Chinese companies in Africa. The findings have been specifically reported by the Financial Times Africa editor, David Pilling on 3 July2019. https://www.ft.com/content/6326dc9a-9cb8-11e9-9c06-a4640c9feebb which generated a lot of debate and attracted media interest in China too, via TV interview at World Insight programme in CGTN at https://m.youtube.com/watch?v=ExTwzcby0U4&list=PLt-M8o1W_GdQ3OMoqak-V6k1ED3eOjEEy?dex=2&t=0s and also via another official Chinese news outlet https://mp.weixin.qq.com/s/q2PmnEPSBzjKIw_uiF1kig More recently two significant media engagements have taken place with our research being cited in the following two outlets 1. Financial Times editorial 2020 https://www.ft.com/content/7e5fe13e-549e-11ea-90ad-25e377c0ee1f 2. Foreign Policy https://foreignpolicy.com/2020/01/29/boris-johnsons-new-scramble-for-africa/# In Africa media also paid attention, via the China-Africa Project e.g. https://chinaafricaproject.com/podcasts/chinese-investment-and-labor-practices-in-ethiopia/ And in Angola's top financial newspaper Angola Expansao http://expansao.co.ao/artigo/113361/trabalhadores-angolanos-nas-empresas-chinesas-subiram-em-10-anos?seccao=5 and others such as Angola Valor Economico http://www.valoreconomico.co.ao/economia-politica/item/5455-chineses-pagam-menos-e-empregam-os-mais-pobres The prestigious Centre for Global Development wrote a blog https://www.cgdev.org/blog/myth-chinese-exceptionalism-africa More significantly, the study was also cited by a White Paper published by the Chinese State Council in September 2019, titled "China and the World in the New Era" and also by the China Council for the Promotion of International Trade, which featured an item on 10/7/2019 https://mp.weixin.qq.com/s/SUOlBsA7eI22mpOWzmKl4g Conversations with high level policy makers in Ethiopia suggest our findings have been noted in relation to the government's efforts to boost employment and improve workling conditions in industrial parks. More media appearances are expected as well as engagement with policy makers , especially in Ethiopia. The Overseas Development Institute (ODI) and its programme DEGRP used the findings of this research to publish an influential report titled "Africa's economic transformation: the role of Chinese investment" which has been presented to research and policy making audiences in 2020. It is referred in https://www.gov.uk/research-for-development-outputs/africas-economic-transformation-the-role-of-chinese-investment UNDP-China contacted me to collaborate on upcoming projects and advisory work around the Belt Road Initiative and China's overseas cooperation with a focus on economic transformation and industrial labour. Focal point: Lufei Yang, Leader of the Belt and Road for Sustainable Development Team and Senior Advisor for Development Finance and Investment, the United Nations Development Programme (UNDP) Depending on follow-up of these policy documents and engagements workers in these sectors may be impacted through concrete policy measures, such as minimum wages or collective bargaining arrangements.
First Year Of Impact 2019
Impact Types Policy & public services

 
Title Field supervisor guide for Ethiopia surveys 
Description This is a manual designed to train and guide field supervisors for a survey of workers in construction and industrial sectors in Ethiopia. The drop-down menu of options above is only relevant to natural sciences fields. 
Type Of Material Improvements to research infrastructure 
Provided To Others? No  
Impact This guide will be of great use to other researchers exploring labour conditions in Angola and elsewhere 
 
Title Field supervisor guide used in Angola 
Description This is a manual designed to train and guide field supervisors for a survey of workers in construction and industrial sectors in Angola. The drop-down menu of options above is only relevant to natural sciences fields. 
Type Of Material Improvements to research infrastructure 
Provided To Others? No  
Impact This guide will be of great use to other researchers exploring labour conditions in Angola and elsewhere 
 
Description Institutional Partnerships for project ESRC-DFID ES/M004228/1 
Organisation Agostinho Neto University
Department Faculty of Economics
Country Angola 
Sector Academic/University 
PI Contribution The EEA-EEPRI in Ethiopia and the FEC-UAN in Angola work with SOAS in the implementation of surveys and qualitative research for the above-mentioned project. The Forum for Social Studies in Ethiopia contributed with assistance in the implementation of large-scale quantitative surveys of workers.
Collaborator Contribution EEA-EEPRI and FEC-UAN will primarily contribute with background research on target sector as well as with support to implement surveys and conduct qualitative research (scoping and follow up). The Forum for Social Studies in Ethiopia contributed with assistance in the implementation of large-scale quantitative surveys of workers.
Impact No outputs thus far, until reports and surveys are completed
Start Year 2015
 
Description Institutional Partnerships for project ESRC-DFID ES/M004228/1 
Organisation Ethiopian Economic Association (EEA)
Country Ethiopia 
Sector Charity/Non Profit 
PI Contribution The EEA-EEPRI in Ethiopia and the FEC-UAN in Angola work with SOAS in the implementation of surveys and qualitative research for the above-mentioned project. The Forum for Social Studies in Ethiopia contributed with assistance in the implementation of large-scale quantitative surveys of workers.
Collaborator Contribution EEA-EEPRI and FEC-UAN will primarily contribute with background research on target sector as well as with support to implement surveys and conduct qualitative research (scoping and follow up). The Forum for Social Studies in Ethiopia contributed with assistance in the implementation of large-scale quantitative surveys of workers.
Impact No outputs thus far, until reports and surveys are completed
Start Year 2015
 
Description Institutional Partnerships for project ESRC-DFID ES/M004228/1 
Organisation Forum for Social Studies
Country Ethiopia 
Sector Charity/Non Profit 
PI Contribution The EEA-EEPRI in Ethiopia and the FEC-UAN in Angola work with SOAS in the implementation of surveys and qualitative research for the above-mentioned project. The Forum for Social Studies in Ethiopia contributed with assistance in the implementation of large-scale quantitative surveys of workers.
Collaborator Contribution EEA-EEPRI and FEC-UAN will primarily contribute with background research on target sector as well as with support to implement surveys and conduct qualitative research (scoping and follow up). The Forum for Social Studies in Ethiopia contributed with assistance in the implementation of large-scale quantitative surveys of workers.
Impact No outputs thus far, until reports and surveys are completed
Start Year 2015
 
Description Institutional partnership with Renmin University in Beijing 
Organisation Renmin University of China
Country China 
Sector Academic/University 
PI Contribution Co-investigators at Renmin University have contributed with qualitative research on labour relations in China and with background research on Chinese FDI and Chinese companies operating in Africa. WE have had several exchanges to discuss (a) analytical frameworks to guide our research process (b) empirical desk review of labour relations and CHinese firms in China and Africa
Collaborator Contribution Co-investigators at Renmin University have contributed with qualitative research on labour relations in China and with background research on Chinese FDI and Chinese companies operating in Africa
Impact Two papers are under review
Start Year 2015
 
Description Bloomsbury data day - Presentation on our survey methods - CAPI in action: Experiences with CAPI and especially Survey Solutions in employment surveys in Africa 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact around 30 people attended this event, which was intended to provide examples of good practice in data collection in a range of settings and for a range of purposes, particularly for impact evaluation purposes. There was considerable interest in our use of Survey Solutions and the advantages it brought for a case of difficult to access populations.
Year(s) Of Engagement Activity 2017
URL http://blogs.lshtm.ac.uk/library/2017/01/13/bloomsbury-data-week-2017/
 
Description ODI-DEGRP Workshop 'Africa's economic transformation: the role of Chinese investment - DEGRP synthesis report launch'. This report drew on the findings of our research projects. Held on 30 June 2020 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact This was a webinar that included some of the top experts in the field of Africa-China relations and those with an interest in issues of industrialization and economic transformation in Africa. There was significant interest in the findings among African policy makers and representatives of international agencies such as FCDO and UNDP.
Year(s) Of Engagement Activity 2020
URL https://www.gov.uk/research-for-development-outputs/africas-economic-transformation-the-role-of-chin...
 
Description Participation in Ethiopian government and industry workshop "Building an Industrial Workforce in Ethiopia" 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Industry/Business
Results and Impact We were invited to a closed workshop titled "Building an Industrial Workforce in Ethiopia". The workshop convened on June 18th 2018 with 95 participants drawn from brands, factories, government, academia, development partners, UN agencies and private sector. Overseen by Dr. Arkebe Oqubay, Rank of Minister, Special Advisor to the Prime Minister's Office (PMO), the discussions covered the current situation and future trajectory of the industrial workforce in Ethiopia. In his opening remarks, Christian Rogg, Head of DFID, Ethiopia noted that the Ethiopian labour market was something of a mystery and that market forces could not be relied upon to ensure that labour supply matched demand.

We presented on "Building an industrial workforce in Ethiopia: historical lessons and current dynamics", based on project outputs, especially our qualitative research and desk review.
Year(s) Of Engagement Activity 2018
URL http://enterprisepartners.org/building-industrial-workforce-ethiopia/
 
Description Participation in meeting titled "New directions in Chinese and UK aid: Collaborating for a more Prosperous, Secure and Inclusive World", organised by DFID and CIDRN 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact This event included a number of panels on different aspects of Chinese and UK aid and the potential for synergies. It took place at RUSI on 13 June 2018, RUSI Library, 61 Whitehall.

I talked at the panel that focused on UK-China cooperation specifically in Africa, focusing on the different Chinese and UK approaches to aid, trade and investment.
• Trends, country and sector interest in Chinese and UK aid, trade and investment
in Africa
• Different roles of various stakeholders in development cooperation in Africa
• Social, economic, political and environmental impact of Chinese and UK
investment in Africa
• Global health issues and China and UK responses in Africa
Year(s) Of Engagement Activity 2018
 
Description Presentation made at the 5th Conference of the "Chinese in Africa/Africans in China Research Network, entitled "CHINA-AFRICA" IN GLOBAL COMPARATIVE PERSPECTIVE" to take place at Université Libre de Bruxelles (ULB), Brussels 28-30 June 2018. 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Study participants or study members
Results and Impact Presentation made at the 5th Conference of the "Chinese in Africa/Africans in China Research Network, entitled "CHINA-AFRICA" IN GLOBAL COMPARATIVE PERSPECTIVE" to take place at Université Libre de Bruxelles (ULB), Brussels 28-30 June 2018.

The presentation was of a methodological character and titled "Researching Chinese firms in Africa - methodological lessons from a large-scale survey in Ethiopia and Angola"
Year(s) Of Engagement Activity 2018
 
Description Researching Chinese Firms in Africa: Insights and Lessons from Fieldwork 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Third sector organisations
Results and Impact On 21 September 2017 SOAS researchers collaborated with the DFID-ESRC Growth Research Programme (DGRP) at the Overseas Development Institute in sponsoring presentations and discussions on the initial findings from recent extensive fieldwork on the controversial issue of the development impact of Chinese firms in Africa. The presenters have been active members or supporters of the DGRP China-Africa research programme, which started in mid-2015. We convened this workshop for three main reasons. First, we wanted to share our early results with a group of participants with relevant experience and gauge responses from a general audience. Second, we wanted to engage in a discussion of methodological lessons for research on Chinese firms in Africa (and generally overseas). Third, our aim d was to network with a group of researchers working in closely related fields.
For practical purposes, the event was split into two parts: 1) a morning session designed for active discussions among representatives of four of the DGRP-funded research projects in Africa and 2) a much larger afternoon public event in which a panel of three prominent researchers with extensive fieldwork experience in Africa made major presentations and actively interacted with the sizeable audience
The afternoon session was a well-attended event, with over 50 guests from academia, government institutions and CSOs. The event was stremaed online and hundreds of participants logged in to event streaming. The panel included well-informed and engaging presentations by Carlos Oya of SOAS, Xiaoyang Tang of Tsinghua University and Barry Sautman, Professor at the Hong Kong University of Science and Technology. The session was chaired by Chris Alden, Professor in International Relations at the London School of Economics and Political Science. The session was also enlivened by the insightful feedback from Linda Calabrese, a Senior Research Officer at ODI and a leading organiser of the DFID-ESRC Growth Research Programme. There was substantial debate and netowrking at the end of the workshop, with several requests for further information and future engagement, including from DFID, McKinsey and other interested stakeholders.
Year(s) Of Engagement Activity 2017
URL https://www.eventbrite.co.uk/e/researching-chinese-firms-and-employment-in-africa-insights-and-lesso...
 
Description Riding the Dragon: Africa engages with China Workshop - SOAS 12-13 November 2015 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Study participants or study members
Results and Impact This workshop brought together leading scholars currently working on field-based research about engagement of Chinese companies and state actors in Africa. The workshop was an opportunity to present our project and plans as well as the key research questions and methodological options
Year(s) Of Engagement Activity 2015
 
Description Workshop on methods and access to company workers in Angola - University Agostinho Neto 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Postgraduate students
Results and Impact This was a one-day workshop organised for University staff, external practitioners and government officials, on how our research was conducted in Angola, survey methods deployed and technology use. It served purposes of capacity building in context where there is no experience with this kind of research.
Year(s) Of Engagement Activity 2017