Skills for Trade and Economic Diversification in Ethiopia: A background paper for drafting of a Sector Skills Strategy for the Garment sector in Ethiopia

The textile and garment industry is not new to Ethiopia. While the tradition of spinning, weaving and handloom is several centuries old, the first recorded formal textile company started operation in Ethiopia in the 1930s. The high levels of labor intensity and its potential link to the agricultural sector has made the sector a key policy focus area for job creation and exports throughout the 20th and the 21st centuries. The textile and garment industry remained a key industry designated for promotion in the formulation and implementation of industrial policies and development plans with different styles and vigor by various governments. This report examines the state of the industry in more recent years in depth with the objective of providing useful insights into the skills situation in the industry.

The textile and garment industry has absorbed a substantial share of the labor force. The sector has particularly created gainful employment opportunities for young, unskilled, less educated and female job seekers in the past two decades. In the 1990s, the sector employed nearly a third of all workers in the manufacturing industry. While this share has steadily declined in recent years, the industry still employs close to 17% of the entire workforce engaged in the formal manufacturing sector. Indeed, the industry is highly labor intensive; employing 555 workers on average, of which 76 % are female workers. The share of female workers is higher in the garment subsector than textile. The only sector that come close to the textile and garment industry in aggregate and female labor intensity is floriculture, where a typical firm employs about 500 workers on average with an 80% female employment rate. Yet, the pace of job creation in the industry still remains far lower than targets set by the government. For examine, it achieved only 50% of the job creation targets set in the Growth and Transformation Plan (GTP I) document. The industry is further stricken by exceedingly high rates of labor turnover. Various studies indicate that nearly two thirds of new production workers who join the garment factories quit after six months.