LEARNING TO MANAGE THE FACTORY FLOOR IN ETHIOPIA: SKILLS, WORK CULTURES AND ORGANIZATIONAL CAPABILITIES IN ETHIOPIA'S LIGHT MANUFACTURING

In African countries like Ethiopia, the prospects for industrialization through the development of light manufacturing led by foreign direct investment have substantially improved in the past ten years. Many industrial parks and new foreign investors have been established to meet the ambitious industrialization goals of Ethiopia. This development entails a number of critical requirements in terms of infrastructure, policy incentives and workforce skills. Although Ethiopia is supposed to have a comparative advantage in light manufacturing because of low labour costs and the plentiful availability of labour, the reality in the last few years is that attracting, training and retaining a suitable industrial labour force is not as simple as it would seem. Paradoxically, labour constraints may impair the achievement of the ambitious industrialization goals of Ethiopia and other African countries.

Labour outcomes and industrial relations depend much on workplace arrangements and the broader labour market context of each sector and country. Organizational and managerial capabilities are, in this regard, critical to understanding some of the labour challenges that firms face, especially in the case of new foreign firms investing in new sourcing countries as in the textile and garment (T&G) sector in Ethiopia. These are firms that are subject to tight competitive pressures from the global production networks in which they are integrated or willing to join. The factories starting in Ethiopia face the twin challenge of attracting a trainable and motivated workforce in a context of limited industrial development and meeting the productivity and quality imperatives of global production networks. The role of low and middle-level managers seems to be critical in these nodes of the chain as they constitute the interface between the tight demands coming from top management and the responses and demands from production workers. Indeed, some of the key labour problems confronted by new investors, such as high labour turnover, relatively lower than expected staff retention and labour conflict, were linked to the limited progress in incorporating a suitable local managerial force at different levels of factory management and to the difficulties in labour relations when expat managers had to manage/supervise local workers. This was considered by most stakeholders, especially the Ethiopian government (particularly the EIC and the IPDC) as well as private investors' groups, a significant challenge that required some remedy action.

The initial 2015-2019 project focused primarily on the experiences and working conditions of unskilled and semi-skilled workers, i.e. the bulk of workers employed by companies in the construction and manufacturing sectors. However, our qualitative research and interviews with factory managers stressed the equal importance of skilled and management labour force for the success of these industries. These interviews corroborated the importance of and constraints in finding and retaining high-quality local managers for factory floor operations. This is consistent with similar findings from other studies of industrialization in developing countries and diagnostic research by ILO in Ethiopia.
We there propose to extend our current research to deepen the understanding of the current and past experiences of existing and especially new emerging industrial firms in finding, developing and retaining a skilled and managerial workforce, in order to improve the sustainability of the firm in the country and labour relations at the workplace. We will ask questions and do qualitative research about the constraints on hiring and retaining Ethiopian managers and the processes of skill transfer that have worked best to incorporate this labour force at the factory floor level. We will also compile relevant data from existing datasets emerging from other studies that have been conducted in the last 5 years in Ethiopia.

This proposed project plans to have a broad impact not only on academic audiences but also on policymakers in national governments, regional and international organisations. The focus of the research and related surveys is on the experiences of management employees in new industrial firms and the difficulties of new investors in filling management positions with local workers in Ethiopia. As described in the Case for Support, this is becoming a policy problem of growing significance given the ambitious aspirations to industrialise currently present in Ethiopia. There are also wider implications for other African countries developing effective industrial policies.

Who will benefit from this research?

National and regional governments.
The Ethiopian government has the development of industrial sectors, especially light manufacturing, via industrial parks, as a key policy priority. Different institutions involved in driving the process have admitted the unexpected labour challenges that these sectors are facing in a context of plentiful labour supply. The key institutions that would be interested in the findings of this project are:
a. The Ethiopian Investment Commission, which has a leading role in the attraction of FDI and the management of industrial policy.
b. Ministry of Industry, with direct overseeing role of industrial development and sector-level institutes.
c. Textile Industrial Development Institute, which has a role in training and skill development for skilled and managerial positions.
d. Industrial Park Development Corporation, in charge of coordinating efforts to expand and manage industrial parks where most foreign manufacturing investors are located.
e. Ministry of Science and Higher Education, leading role in national training programmes and universities.
f. Regional governments, where industrial parks are developed and where universities and training centres are located. They may have an interest in playing a role to improve the quantity and quality of local management labour force.

International organisations.
There are some organizations that have recently shown a significant interest in industrial development in Ethiopia and the labour challenges mentioned above.
a. International Labour Organization and Better Work programme, both with relevant projects and interventions in this domain.
b. United Nations Economic Commission for Africa, key regional organization with a growing interest in prospects for industrial development and upgrading in Africa.
3. Private sector, business organisations. They are likely to be key stakeholders as directly affected by these challenges. Key examples are:
a. Foreign investors in light manufacturing.
b. Ethiopian Textile and Garment Manufacturers Association
c. Hawassa Park Investors' Association.
d. Eastern Industrial Park management firm.


The findings of this project may provide more precise information on the main sources of the constraints they face, on the examples of best business practices to maximise the incorporation of local management workforce and the most effective mechanisms of skill upgrading, by learning from the comparative analysis of different cases. The project plans to have such a proposed impact through various means and channels, as summarised below:
a. Follow-up informal meetings with top company management (directly through firms or indirectly through relevant business associations) to share initial findings.
b. One dissemination workshop in Addis Ababa where all stakeholders will take part in an open discussion of findings.
c. Additional more focused events to be shared with the ILO and the relevant institutions of the Ethiopian government (especially the EIC and the MoI).
d. Production of focused dissemination briefs tailored to the interests and needs of different stakeholders.
The legacy of the project will be promoted by setting up a special website, where we will be depositing project publications.