Employee turnover still a major challenge in Ethiopia’s labor market, says study

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(L) Alemayehu Seyoum Taffesse, Dr. Country Director, IGC Ethiopia and Adnan Khan

High employee turnover continues to be one of the biggest challenges that companies face in Ethiopia, according to research on the local labor market.
The study that was presented by Stefano Caria who is a Departmental Lecturer at the University of Oxford and works at the International Growth Center (IGC) showed that most employees choose to leave their jobs because it is not the job they wanted in the first place.
“Comparing the US and Ethiopia, both countries with high turnover rates, it is surprising that most of the employees in Ethiopia quit their jobs while in the US people get fired. This shows that a lot of people are in jobs that they don’t want, and they usually take those jobs as a last resort,” Caria said. The research also implies that companies need to put more emphasis on incentives such as high wages when they are hiring, in which case the most qualified people for the given position will be interested in applying.
Another study looked at the growth of entrepreneurship in developing countries, and found the challenges of growth for companies is mostly attributed to lack of managerial skills. According to Adnan Khan, Research and Policy Director at IGC, most firms’ growth is held back due to managers who do not have the right skills and poor selection of specific leadership talent by companies.
“Here are a few challenges; one is identifying and selecting target people that have the most potential to grow (managers and businesses owners that have the most potential to grow) and allocating resources to them so that they run firms that have the potential to grow. The second challenge is how to support them in growing their businesses through a number of interventions such as trainings,” Khan said.
Assisting small businesses as well as encouraging entrepreneurship among the poor through providing financial and skill capacity building is what is crucial for aggregated growth in Ethiopia.