
My Opinion | Oct 16,2021
June 7 , 2020
By Brook Kebede ( Brook Kebede (brook.kebede@uog.edu.et), lecturer of law at the University of Gonder. )
Over the past decade, Ethiopia has boasted significant economic growth, averaging around 10pc. This has been possible thanks to several factors including developments in agriculture, services and manufacturing. Most importantly, there has been a boom in the construction industry, which stimulated the economy to become one of the fastest-growing in the world.
Still, Ethiopia has one of the weakest economies in the world, with high rates of unemployment and inflation and stagnant foreign currency reserves. Now, the nation has to contend with the economic challenges unleashed in the wake of the COVID-19 pandemic. It is triggering huge economic disruptions and will result in further unemployment. Protecting the livelihoods of those who work for private enterprises thus needs to be a priority.
This is not to say that the government has not been trying to cushion the impact. Economic response measures have been unveiled with the aim of mitigating negative impacts. The measures have mainly depended on the public health safety steps taken by the government.
For instance, to contain the spread of the virus, the Ethiopian government has closed learning institutions, bars, entertainment centres and banned public gatherings. It has also required that many civil servants work from home.
The restrictions on daily life have led to the closure of many companies and the laying off of staff – either permanently or temporarily. For instance, night clubs and bars in Addis Abeba are currently closed, which means that many of these will inevitably go bankrupt. Since employers are allowed different modalities in how they lay off employees, people working in these places may not have their contracts permanently terminated.
Practically speaking, the effect is the same with termination if the employees are furloughed without pay or there is a large likelihood that businesses under this type of long-term financial stress never recover and permanently close. The impact will all be equally devastating to livelihoods.
The government does provide guidelines on how to deal with private employees when it comes to termination through the Ministry of Labour & Social Affairs (MoLSA) during the pandemic. However, the protocol issued by MoLSA is not binding since it does not have the power of law.
Instead of termination, the protocol advises employers to take alternative measures to freeze any salary increments for the year; suspend all kinds of fringe benefits and allowances; revise existing salary scales; use unutilised annual leave and negotiate on future annual leave and provide loans with a written guarantee. Even if these directives were binding, they will be a far cry from protecting employees from layoffs.
The dilemma the government finds itself in is understandable. On one hand, there are the public health implications of not attempting to mitigate this pandemic. Allowing people to work, travel and perform day-to-day business activities will be a recipe for allowing the virus to transmit exponentially. The number of lives that could be lost will be unimaginable. But restricting the movement of people, which will also constrain the movement of goods, will also be devastating to the economy and the livelihoods of people.
There has to be an alternative solution that will balance these two competing interests: public health and economic well-being. When the Ethiopian government restricted business activity, it should have taken into consideration several variables including the absence of a social security scheme.
Indeed, there have been initiatives to move homeless people into shelters, as we have seen in the northern parts of the country such as Meqelle. Food banks across the country have also gone into overdrive thanks to donations by individuals and businesses that will be instrumental in supporting persons without a salaried income. These kinds of measures are critical to those who will not be able to support themselves or cannot be reached through the government’s economic response measures due to being a part of the informal sector.
The country should solicit funds to take effective and comprehensive financial and economic measures to mitigate the impact of COVID-19 on the labour market. Fortunately, international financial institutions have stepped up.
The World Bank Group has approved 82.6 million dollars for Ethiopia to deal with the health and economic impact of COVID-19. The International Monetary Fund (IMF) has also approved 411 million dollars in emergency assistance to Ethiopia to address the urgent need of the COVID-19 pandemic.
Such financial resources can help the government take measures to mitigate the economic impacts of the virus against employees. It is all the more important that the government continues its lobbying institutions with the goodwill to believe that it is to the benefit of everyone to broaden financial assistance packages.
The government will also need to dig deep into its own pockets and perhaps even print additional money as cash support for lower-income groups. This may worsen inflation but is an acceptable risk to take in an attempt to protect livelihoods and get the economy back on track.
No doubt, private companies have a great role to play in mitigating the impact of COVID-19 on their employees. They may adopt several measures to protect its employees. This could be by providing and disseminating information about health and safety at work and creating the possibility of telecommuting.
Employers may communicate with MOLSA and follow its guidelines closely to ensure that their employees do not get the short end of the stick. To that end, utilising the concept of collective agreements to protect employees would thus be critical.
PUBLISHED ON
Jun 07,2020 [ VOL
21 , NO
1050]
My Opinion | Oct 16,2021
View From Arada | Jan 31,2021
Fortune News | Nov 23,2019
Radar | Jul 03,2021
Commentaries | Nov 14,2020
Viewpoints | Dec 07,2019
Sunday with Eden | Feb 26,2022
Fortune News | Nov 02,2019
Radar | Feb 09,2019
Commentaries | Sep 10,2021
Photo Gallery | 53001 Views | May 06,2019
Fortune News | 45945 Views | Jul 18,2020
Photo Gallery | 44739 Views | Apr 26,2019
Fortune News | 44715 Views | Sep 01,2021
November 27 , 2021
Against my will, I have witnessed the most terrible defeat of reason and the most sa...
November 13 , 2021
Plans and reality do not always gel. They rarely do in a fast-moving world. Every act...
October 16 , 2021 . By HAWI DADHI
Residing in a country with no capital market, an organised marketplace for trading se...
August 28 , 2021 . By HAWI DADHI
The streets of Addis Abeba are as varied as they are many, although too many of them have yet to be named. From the narrow alleyways of the...
June 25 , 2022
It is not the best of times to be in charge of governance in Ethiopia, whether at the...
June 18 , 2022
Some of Ethiopia's economic policymakers may take solace from realising that inflatio...
June 11 , 2022
The stereotype many people have of parliamentarians is as clueless seat fillers who exist to rubber stamp legislative bi...
June 4 , 2022
It was an institution confident in its mission, capabilities and progress that was on...
June 25 , 2022 . By TSION HAILEMICHAEL
Regional state officials and cement distribution agents are in an uproar over new rul...
June 25 , 2022 . By BERSABEH GEBRE
Mayor Adanech Abiebie has won the approval of the Addis Abeba City Cabinet to give re...
The Addis Abeba City Administration is undergoing an extensive reshuffling leading th...
June 25 , 2022 . By RUTH TAYE
Dashen Bank has rolled out a data centre for nearly a quarter of a billion Birr. Installed by two local firms, the centr...
Put your comments here