Decent Life for Urbanites Mission Impossible? – Ethiopian Business Review

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It cannot get much worse for Ethiopians as has been the case over the last few years with numerous corners of the nation hit with conflict and drought as well as pandemic and locust infestation. Further, the cost of living has been hitting citizens hard, especially those in urban areas. With the mercilessly skyrocketing price of goods and services in the capital and other places, dwellers are being forced to live below the line of poverty. Record-hitting inflation figures have not been assuaged with a growth in salary scales as the last governmental remuneration revision took place in 2017. EBR’s Bamlak Fekadu queries if urbanites will ever achieve a decent life living alongside galloping inflation.

Looking at the holiday vibe some weeks back, one would think that happenings in marketplaces seemed pretty normal. The streets of Addis Ababa were decorated with fashionable clothes, street vendors were milling about, and contrasting music could be heard from street-side businesses. Life seemed good, or at least normal.

This vibe, however, does not tell the entire story. The story of city dwellers such as Alemnesh Reta, a Public Servant at one of the city administration’s district offices, tell a different narrative. Going out shopping for the holiday in Addis Ababa’s Shola Market—not far from the ever-busy Megenagna area—she budgeted ETB2,000 but things did not go well for her that day.

“Celebrating a holiday is now leisure,” she said. “The price of chicken ate up almost half of what I had”

For most urbanites, it is implausible to spend any holiday without doro wot, the onion-based chicken and egg stew flavored with fiery spices like Berbere and the mandatory clarified butter. During the holiday season at the market, the price of butter exhibited an increment of 100Pct from the previous year—selling for ETB800 in regular markets.

However, nothing seemed to have shocked Alemnesh more than the scarcity of edible oil and the rocketing prices of fundamental agricultural commodities like onions, which was being sold for ETB47 per kilo. “It all seems like we all are in the ‘survival of the fittest challenge,’” she says. “My monthly income is close to ETB5,000, not enough to manage a family with two kids in a rented house.”

Had it not been for her husband, the family’s main breadwinner, her salary could’ve covered only rent. “Even though our household’s income surpasses ETB20,000, nothing is left after covering our regular expenses. Saving is unthinkable,” she says. The civil servant believes a total household monthly income of ETB40,000 could suffice to make a comfortable and basic living upon the size and the demand of her family.

Yeshi Abera, a 36-year-old single mother of a 13-year-old boy, earns a monthly salary of ETB4,500 working at Bole Lemi, one of the nation’s pioneering large-scale industrial parks. The fabric Sewer with three years of experience shares her residence with a janitor aiming to ease rent expenditure— splitting the ETB1,700 monthly rent expense. Her other big-ticket monthly expenses are for Teff and cooking oil.

For the roommates, the Prime Minister’s advice for urbanites to engage in urban farming was no joke as they, and their entire neighborhood, have been planting and attending to cabbage, lettuce, and tomato plants for some time.

“The cost of living is getting more and more stressful each month; we have to do whatever is necessary to survive,” Yeshi told EBR while being thankful for public schools and their student-feeding programs. “Otherwise, I would not afford to send my kid to school.”

The worker who lives in a studio apartment in the commonly-named 90/10 condominiums, is also mindful of the support she is getting from her roommate, helping her with the rent expense that has doubled in the past two years. It has been a while since the idea of saving for emergencies has been thrown out of the window for the roommates.

When asked how much would suffice for a decent life, Yeshi responded with a minimum of ETB20,000.

The cost of living and rising expenses in the capital and elsewhere in Ethiopia seem to continually push the reach of decent living for households further and further away. Inflation is reaching new highs and Teff, one of the staple grains of Ethiopians, is being sold for ETB40 to 57 per kilo. Cooking oil, on the other hand, has rocketed from an average retail price of ETB520 few months ago—especially before the Russia-Ukraine war—to currently reach above ETB1,000 for a five-liter package. This is despite the fanfare of the two large refineries erected at a cost of over ETB10 billion. The potential of the two factories—owned by tycoons Worku Aytenew and Belayneh Kinde—combined with Shemu Oil Factory surpasses 75 million liters per month. Even though this is only 10Pct of national demand, the reality on the ground is still far from realizing the potential.

On May 5, Adanech Abiebie, Mayor, presented the nine-month report raising measures her administration took to counter the challenges of rising prices. “Our cabinet has disbursed a ETB1 billion revolving funds for cooperative unions, easing the burden of our residents as they seek to buy agricultural products.”

No matter the effort by administration and the praise that followed, urbanites are still being pushed away from a decent living.

The Human Development Report by the UNDP in 1993 describes a decent standard of living as “the capability of living a healthy life, guaranteeing physical and social mobility, communicating, and participating in the life of the community (including consumption).

In international law, adequate standard of living” was first described in the Universal Declaration of Human Rights (UDHR) and further described in the International Treaty on Economic, Social, and Cultural Rights.

UDHR Article 25/1 states that everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing, medical care, and necessary social services, as well as the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.

A decent standard of living varies among individuals depending on different aspects of life. It is generally measured by standards such as inflation-adjusted income per person and the poverty rate. Other measures such as access and quality of health care, income growth inequality, and educational standards are also used.

Inflation has become a common word in Ethiopia’s economy. The hardest hit area by skyrocketing prices of goods and services seems to be the capital, which contributes 54Pct to the country’s GDP. Other parts of Ethiopia, especially those under war, blockade, or insecurity, are also facing dire inflation. According to a report from the Central Statistics Service (CSS), Ethiopia’s inflation rate rose to a record high of 36.6Pct in April, up from 34.7Pct in March. The cost of food in April exhibited a 42.9Pct growth from the previous year.

Even though a few measures such as the banning of any increase in residential rental prices and moves to stabilize edible oil prices have been undertaken by the city administration, the burn continues to be well felt among city dwellers. Adding salt to the wound has been ongoing conflicts as well as drought in the southeastern Ethiopia.

The Ethiopian Human Rights Commission (EHRC), as part of its commemoration of May Day, urged the government to set up a minimum wage for workers. It stressed how nationwide salary scales have not been revised since 2017, while calling for the establishment of the Wage Board as provided by the 2019 Labor Proclamation. The commission also underlined the findings of the International Labor Organization’s (ILO’s) January finding that half of employed people in Ethiopia are poor, of which 31Pct are moderately poor and 18Pct live in extreme poverty.

Muferiat Kamil, Minister of Labor and Skills, confirmed that the government will keep its promise, stating that “the proposal to set a minimum wage requires comprehensive study.”

Daniel Bekele, Chief Commissioner of EHRC said that “while minimum wage is not a cure to all the problems that workers are facing in Ethiopia, it is a crucial step that can ensure decent living for workers and their families, particularly if it is coupled with other necessary socio-economic measures.”

Unable to reach a consensus on a national guideline towards the acceptable minimum wage, some public sector institutions and enterprises have set their own minimum wages. In response to such calls, the former Ministry of Labor and Social Affairs drafted a labor proclamation to establish a commission to set a minimum wage.

The proclamation did not set a minimum wage, but rather established a commission that sets base wages whenever necessary based on the economy, cost of living, and other factors in order to avoid the hassle of revising the proclamation repeatedly.

“The draft labor proclamation is believed to solve recurrent issues demanding for salary increment, and other work-related issues raised by workers, particularly in the manufacturing sector,” says Kassahun Follow, President of the Confederation of Ethiopian Trade Unions (CETU).

With individuals having their own answers on how much income is enough to have a decent living, one thing is for sure—it should be sufficient enough to cover the necessities of life.

According to Business Insider Africa, which listed 15 African cities with the highest cost of living index comparing average costs of basic necessities including food, healthcare, and clothing, Addis Ababa is on the top. The Ethiopian capital is placed at an index of 58.9 followed by Abidjan scoring 55.73 and Harare on third with 52.2.

According to CSS’s estimation, the nation’s major cities like Addis Ababa, Dire Dawa and other urban settings are the hub for job opportunities—totaling 37 million. The capital alone is home for approximately close to 1.5 million officially employed people. CSS’s report also presents the rural part of the country being the major source of employment positions being filled in cities.

The report states that around 41.6 million people are employed nationwide—33.5 million in rural and 8.1 million in urban settings. Additionally, 6.7 million are reported to be employed domestically in households. These workers in Ethiopia garner average salaries of between ETB3,500 and ETB9,500—making the idea of decent living laughable. Public sector employees haven’t entertained salary raises since 2017, even though the country has seen skyrocketing cost of living conditions during the period.

According to the Human Development Index (HDI) of Statista, Mauritius ranks top in Africa followed by the Seychelles, Algeria, Tunisia, and Botswana in 2021. HDI is a summary measure of human development assessing a nation’s achievement in three basic aspects including health, knowledge, and standard of living.

One indication of lacking decent living standards are the numbers of citizens leaving the nation. According to a joint CSS and ILO report, an estimated 839,224 Ethiopian emigrants, excluding from the State of Tigray, left the country in 2021. The State of Oromia with 309,700 followed by Amhara with 211,604 and South with 171,572 SNNP fill up the top three spots.

A member of the Prime Minister’s advisory macroeconomic committee and professor at Addis Ababa University told EBR that more than 70Pct of the population in urban settings live under the poverty line of USD1.25 used by the World Bank as a threshold. Therefore, a vast swathe of the population is believed to not experience a decent living. The World Bank also stated that 17Pct of the capital’s population live under abject poverty, although much lower than the 23.5Pct national average.

“Even those earning above the USD1.25 consume less than their needs, which disqualifies them as having a decent living,” the professor told EBR. He recommends the government moves faster to set the minimum wage while revising salary scales and also strictly regulating the market. “Otherwise, the current condition will only get worse, making decent living unthinkable.” EBR


10th Year •June 2022 • No. 108

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