Privatisation And Labour In Sub-Saharan Africa: Empirical Findings From Ethiopia

This article examines the impact of privatisation on labour in Ethiopia. In the wake of privatisation, which was implemented in 1994-95 EFY (Ethiopian Fiscal Year), about 220 State-Owned Enterprises (SOEs) were sold out over the study period. These constituted about 60% of the total SOEs. The objective was to launch a market-led economy in the country. Although there are many transitional issues affecting the economy such as processing, and also the larger political, economic and social issues, labour issues are considered more important. However, many a time they have been ignored in many African countries while evaluating privatisation. This study uses a period of 10 years, 1994-95–2003-04 with the objective of examining the effect of privatisation on employment, followed by a survey conducted in April-May 2004, to measure its impact on important labour variables in privatised enterprises: wage and salary, incentives, job security, work load, adherence to labour laws, and labour and management relations. The study finds that privatisation led to net job losses, but brought positive changes in the selected labour variables. It also demonstrates that the enterprises bought by foreign buyers were found to be better performers in these areas than those bought by the domestic buyers. The study suggests that the government should ensure strict adherence of labour laws in order to protect the labour rights, and enforce reforms and laws in such a way that the privatised enterprises could operate well and to full capacity utilisation so as to prevent job losses in future.