“We make clothes, but we can’t afford to wear them.” The lament comes from a 31-year-old maintenance worker at a textile factory on the outskirts of Addis Ababa, echoing a quiet desperation shared by thousands across Ethiopia’s once-promising textile sector.
“I work six days a week,” he told Reporter Magazine, “but I still can’t afford to send my daughter to school.” Supporting his wife and two children on his modest income, he spends each day maintaining machinery that produces garments for export—clothes he and his family could never dream of wearing.
His story is far from unique.
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A female worker at the same factory says more than half her monthly salary—just 4,039 birr—goes directly to rent. “Have you tried buying groceries with what’s left?” she asks, her voice tinged with exhaustion. “Emergency savings? That’s a dream. Supporting my family is out of the question. I don’t know what I’d do if I got sick.”
Most of her colleagues earn between 2,000 and 3,500 birr a month—barely enough to survive, let alone thrive, in an economy battered by inflation. In 2017, a kilo of onions cost 10 birr. Today, it’s over 70. Public transportation fares have tripled. Rents have soared.
“The price of everything is going up—except our salaries,” the maintenance worker said bitterly.
These grievances reflect a broader crisis engulfing Ethiopia’s textile and manufacturing sectors, once celebrated as engines of economic growth and employment.
A Mass Exodus
The frustration has translated into a dramatic wave of resignations. In the first nine months of the 2024/25 fiscal year alone, more than 37,000 workers abandoned jobs in Ethiopia’s industrial parks, according to data presented by the Industrial Parks Development Corporation (IPDC) to the House of Peoples’ Representatives.
The figure startled lawmakers. “The mass turnover is mainly due to low wages and insufficient employee benefits,” said Kamil Ibrahim, IPDC’s Chief of Operations and Park Management, during a recent hearing before the State-Owned Enterprises Affairs Standing Committee.
IPDC CEO Fissiha Yitagesu (PhD) echoed the concern, warning that resignations now outpace new hires. “The damage to industrial park operations is mounting,” he said. “The residual effects of prolonged conflict in northern Ethiopia have been severe—and they’re proving difficult to reverse.”
A Sector Built on Promise—and Precarity
Despite the challenges, the country’s textile sector continues to expand. In the past nine months alone, it has added over 18,000 new jobs. Data from the Textile and Garment Research and Development Center indicates that more than 450 medium and large-scale manufacturers now employ over 150,000 people nationwide.
“Each machine in a garment factory requires a trained operator,” said Alamirew Ayalneh, the center’s general manager. Technical and vocational colleges, along with six universities, have been feeding a steady pipeline of graduates into the industry.
Ethiopia’s history with textiles stretches back nearly a century. The country’s first integrated textile mill was established in Dire Dawa in 1939, followed by a wave of private sector expansion in the 60s. Even after nationalization under the Derg regime, the industry continued to grow.
Recent administrations have sought to transform Ethiopia into a global textile hub, attracting foreign investment with a blend of tax incentives, modern infrastructure, bundled services, and—until recently—some of the lowest electricity costs on the continent.
But today, the sector faces a reckoning.
In 2021, Ethiopia’s textile and apparel industry brought in USD 181.4 million in export revenues—nearly half of all manufacturing exports and 0.6 percent of the country’s GDP. But despite this contribution, the sector remains riddled with bottlenecks.
A 2022 survey by the Ethiopian Investment Commission revealed that clearing customs takes an average of 17 days—more than three times longer than in Sri Lanka. The report cited a lack of standardized procedures, leading to erratic and often delayed shipments. 10 percent of all cargo was reportedly held up due to customs inefficiencies.
Then came a heavy blow: Ethiopia’s suspension from the African Growth and Opportunity Act (AGOA) in January 2022, a US trade program that granted duty-free access to American markets. The suspension—triggered by human rights concerns—had swift and severe consequences. 18 foreign companies exited the country, over 11,500 jobs were lost, and industrial parks suffered a USD 45 million revenue hit, according to a February 2025 report from the National Bank of Ethiopia.
While the government has set a bold target of USD 2.98 billion in export earnings from the sector this fiscal year, the road ahead appears increasingly uncertain. Officials also hope to create 350,000 jobs in the textile and apparel sector by 2030, focusing heavily on women’s employment.
A McKinsey & Company survey has identified East Africa, including Ethiopia, as a region with the potential to export up to USD three billion worth of garments by 2025. But those ambitions are undercut by the stark realities on the ground.
The Shadow of ‘Cheap Labor’
At the heart of Ethiopia’s textile narrative lies an uncomfortable truth: the nation has staked its competitive edge on offering some of the lowest wages in the world. But critics argue that model is backfiring. Garment workers in Ethiopia earn around USD 26 a month—compared to USD 120 to USD 150 in Kenya and more than USD 600 in Turkey.
Factory workers, many earning as little as 2,500 birr per month, remain trapped in cycles of poverty. “At such low wages, even income tax feels like a form of labor abuse,” said Tolera Aderie(PhD), anexecutive member of the Ethiopian Textile and Apparel Professionals Association (ETAPA).
A 2023 report by GIZ, Germany’s international development agency, echoed these concerns, citing precarious employment conditions, poor wages, and lax adherence to labor and environmental standards.
A 2023 study also found that women in textile factories earn an average of just 2,029 birr per month, falling short of the international poverty line of $2.15 a day. “Employment alone doesn’t guarantee empowerment,” the report concluded.
The strategy of promoting ‘cheap labor’ to attract foreign direct investment may have drawn factories—but it’s undermining long-term industrial development, critics warn. “This approach might deliver short-term gains, but it weakens productivity, stunts skill development, and tarnishes the sector’s global image,” Tolera said.
According to Bahir Dar University, job placement rates among textile engineering and garment design graduates were high—83 percent and 92 percent, respectively, in 2021/22. But Tolera questions the quality and sustainability of those jobs. “Why would anyone study textile engineering when the future looks this bleak?”
Another destabilizing factor: new investors increasingly poach skilled workers from established firms rather than train newcomers, said Kamil. The trend contributes to high turnover and weakens institutional knowledge across the sector.
Toward a Living Wage: The Path Forward
One widely proposed solution to Ethiopia’s textile industry crisis is the implementation of a national minimum wage. The Confederation of Ethiopian Trade Unions (CETU) has long championed this idea. So has Tolera, who points to Türkiye’s inflation-adjusted minimum wage model as a potential blueprint. Their call is also echoed by Fissiha.
In 2023, the government pledged to reform income tax and introduce a minimum wage law. Yet the process has stalled.
Kassahun Folo, CETU’s president, said that progress now hinges on high-level dialogue with Prime Minister Abiy Ahmed (PhD). The primary roadblock, according to Kassahun and Senior Labor Expert Zerihun Gezahegn, is the Council of Ministers’ failure to approve the regulation that would formally establish a Wage Board—mandated under the 2019 labor proclamation but still absent.
“Until then, what we can do within our capacity is adjust salaries to help workers cope with the rising cost of living,” Kassahun told lawmakers in a recent parliamentary session.
But wage hikes, while necessary, are not enough, IPDC’s Fissiha argued. “Investors must also contribute—by providing meals, housing, and other basic services.”
Another systemic problem is the lack of union representation.
Fewer than 10 percent of Ethiopia’s textile workers belong to labor unions, a reality that undermines collective bargaining. Many workers remain without formal contracts, legal protections, or job security, according to Zerihun.
The consequences are stark.
Tesfaye Abdissa, president of the Ethiopian Textile Federation, described dire conditions during a recent Forum for Social Studies (FSS) roundtable.
“Some workers with families survive on leftover food from hotels,” he said.
Perhaps most distressing were reports that some female garment workers are turning to commercial sex work after hours—simply to afford food, rent, or basic necessities.
A Crossroads for Industry and Conscience
Ethiopia’s textile industry stands at a decisive crossroads. It holds the potential to power job creation, attract investment, and anchor inclusive economic development. But that promise is dimmed by its continued reliance on poverty wages, precarious work, and an outdated labor model.
The sector’s future depends not only on export targets or investor incentives, but on its ability to guarantee fair wages, safe workplaces, and meaningful protections for its workers.
As Ethiopia races to meet its industrial targets, the country must grapple with a defining question: Can a sector built on cheap labor transform into one driven by skill, dignity, and sustainable growth? These are not optional reforms. They are the price of a sustainable and ethical path forward.
