Communication Skills at the Heart of Earnings and Skills Transfer: Evidence from Apparel Industry in Ethiopia

This paper explores the impact of local workers’ communication skills (CS) on the transfer of soft and hard skills, and the effect of CS vis-à-vis practical skills (PS) on earnings, drawing on economic sociology. It also investigates the continued importance of CS after a significant reduction in expatriate managers. The findings indicate that CS influences the transfer of soft skills, but not hard skills. Expatriate managers significantly contribute to soft skills transfer, while local supervisors are more prominent in transferring hard skills. CS is important for earnings, regardless of the operator’s PS level, but the returns to PS depend on the CS level. As firms mature and expatriate manager numbers decline the influence of CS diminishes, although it remains crucial in affecting earnings. Enhancing workers’ effective communication and shared language skills, as well as regulating recruited expatriate managers’ CS, or the assigning interpreters, can facilitate both skills transfer and earnings.