New Minimum Wage Regulations for Workers in Ethiopia’s Special Economic Zones

The Ethiopian Government has set a minimum salary for civil servants, however, there is no national minimum wage policy in the country so far. As a result, according to ILO labour force surveys, a substantial number of work force are earning low wage that do not commensurate to their labour. However, within the SEZs, this decree, approved last week, changes the landscape. It stipulates that a commission, in collaboration with the Ministry of Labor and Skills, labor affairs offices, workers’ representatives, and investors, will develop a minimum wage and compensation system.

The decree includes provisions on workers’ wages and rights, stating that the commission will enforce the minimum wage rate, types of wages, and promotion systems in SEZs. Furthermore, it outlines the need for a uniform system for workers’ insurance and other rights, developed in cooperation with relevant authorities and representatives.

The commission is also tasked with ensuring that the rights and obligations of employees are clearly communicated and properly implemented. This includes establishing consultation and communication platforms to create a favorable working environment and prevent conflicts.

Priority will be given to consultation and alternative dispute resolution methods to resolve work-related issues, ensuring industrial peace in the SEZs. The decree also allows for the issuance of transit visas or residence permits valid for three years to key personnel involved in SEZ operations.

Additionally, the National Bank of Ethiopia will establish a system to enable local and foreign banks to operate in SEZs, providing necessary financial and foreign exchange services. Foreign and domestic financial institutions approved by the National Bank will have the right to offer services in the SEZs, enhancing the economic attractiveness and competitiveness of these zones.

This new decree marks a significant step towards improving labor conditions and promoting a fair and competitive economic environment in Ethiopia’s special economic zones.

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