The issue of minimum wage reform has become a flashpoint, with labour unions and employer representatives locked in a heated debate. Unions fear that a minimum wage will not keep pace with soaring inflation, leaving workers struggling to afford necessities. Their members, particularly those in the manufacturing sector, are already facing the harsh reality of declining real wages and a high cost of living.

On the other hand, employer representatives worry that implementing a minimum wage could stifle productivity. They fear businesses might be forced to cut costs, leading to layoffs or reduced employee benefits. Adding fuel to the fire, the conspicuous absence of the Ministry of Labour & Skills at a recent meeting on the topic, held at the Hyatt Regency, has raised concerns about their commitment to finding a solution.

International Labour Organisation (ILO) experts presented a study on the potential implementation of minimum wage laws in Ethiopia and delved into the multifaceted implications for the nation's socioeconomic fabric. The primary concern was the wage policy's various dimensions, particularly the pros and cons of reforming workers' conditions amid soaring inflation, high turnover rates, low labour productivity, and macroeconomic challenges.

Guillaume Delautre, an ILO wage specialist, emphasised that low wages are a major factor behind Ethiopia's high worker turnover rates. This issue forces companies to incur substantial expenses in rehiring and training new employees. He recommends an intervention through minimum wage legislation.

"Many workers struggle to make ends meet while facing labour-intensive work," Guillaume told Fortune.

The ILO study revealed a median monthly wage of 3,000 Br nationally and a tripling of nominal wages over the past decade. However, real wages only increased by 7.4pc due to double-digit inflation. There is a vast discrepancy between the public and private sectors, with civil service wages generally higher by around 2,000 Br on average.

"Low wages are a major source of dissatisfaction for workers," he said.

This is supported by a two-year study revealing that 48pc of Ethiopian workers in foreign-owned apparel firms left their jobs due to poor wages, averaging around 2,800 Br. Higher wages are concentrated in Addis Abeba, Amhara, and Oromia regional states. A similar study from six years ago indicated that a five-person household would need an average of 5,278 Br to cover basic food, housing, and education costs. The wage specialist noted how much more difficult things must have become since then due to galloping inflation.

"It's for the greater good," Guillaume said.

He recommended a gradual implementation of minimum wage laws through proper legislation to improve workers' living standards without significantly undermining businesses' capacity to pay.

Negeri Lencho (PhD), chairman of Parliament's Standing Committee for Human Resources & Technology Affairs, led a delegation to learn from Vietnam's experience, which implemented minimum wage laws 11 years ago.

"We are pushing the government to implement it," Negeri told Fortune.

Vietnam's transformation due to its minimum wage law was widely presented. Its stratified minimum wage policy varies by location, with highs of 195 dollars in major cities and lows of 135 dollars in smaller regional states. A further six percent increase is scheduled for next month.

Kidist Challa, another ILO wage expert, explained that Vietnam employs a two-way structure: a National Wage Council and a technical board comprising various stakeholders responsible for updating wages.

"They have been consistent in their reforms," she said.

According to Kidist, a robust employer-employee participation process would increase the likelihood of creating a consensual minimum wage law in Ethiopia, improving livelihoods and attracting quality-oriented investment.

However, Ethiopia's implementation has been delayed for several years. Muferihat Kamil, minister of Labor & Skills, told parliamentarians last year that introducing the law in a post-war economy would be difficult. Daniel Teresa, the State Minister, said they are conducting their own study to understand the comprehensive socio-economic impact of a minimum wage law. He said several implementation strategies and necessary administrative structures need consideration.

"It's not something we can easily apply," he told Fortune.