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Ethiopia Wages and Prices
Prior to the revolution, the Central Personnel Agency
formulated and regulated wage policies. At the time of the
military takeover, there was no minimum wage law; wages and
salaries depended much on demand. There was, however, some
legislation that defined pay scales. For instance, Notice 49
of l972 defined pay scales and details regarding incremental
steps for civil servants. Similarly, the Ethiopian Workers
Commission had developed pay-scale guidelines based on
skill, experience, and employment. In l974 CELU asked for a
3 birr daily minimum wage, which the imperial government
eventually granted.
After the revolution, the government's policy was to
control wage growth to reduce pay scales. For parastatal and
public enterprise workers earning 650 birr or less per month
(real income, i.e., income adjusted for inflation) and civil
servants earning 600 birr or less per month, the government
allowed incremental pay increases. But for those above these
cutoff points, there was a general salary freeze. However,
promotions sometimes provided a worker a raise over the
cutoff levels.
Given inflation, the salary freeze affected the real income
of many workers. For instance, the starting salary of a
science graduate in l975 was 600 birr per month. In l984 the
real monthly income of a science graduate had dropped to 239
birr. Similarly, the highest civil servant's maximum salary
in l975 was l,440 birr per month; the real monthly income of
the same civil servant in l984 was 573 birr.
Data on real wages of manufacturing workers and the
behavior of price indexes provide further evidence of
worsening living standards after the revolution. In l985/86
the average real monthly income of an industrial worker was
65.6 percent of the l974/75 level (see table 11,
Appendix).
The general trend shows that real income fell as consumer
prices continued to increase. The retail price index for
Addis Ababa rose from 375.2 in l980/8l (l963=100) to 480.0
in l987/88. This rise in the retail price index included
increases in the cost of food (27 percent), household items
(38 percent), and transportation (l7 percent) (see table
12,
Appendix).
Price increases mainly affected urban wage earners on fixed
incomes, as purchases of necessities used larger portions of
their pay. The government's wage freeze and the controls it
placed on job transfers and changes made it difficult for
most urban wage earners to improve their living standards.
The freeze on wages and job changes also reduced
productivity.
Data as of 1991
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