In Ethiopia’s competitive job market, recent research by the International Growth Center (IGC) suggests that being well-liked in your community may be more important than qualifications. A study mapping social networks in local kebeles revealed that job opportunities often favor popular individuals over the most skilled candidates, a trend that could be detrimental to productivity.
Tewodros Mekonnen, a senior economist at IGC, explained to Capital that one of their key findings highlighted how social connections dominate hiring practices. “We mapped kebele residents in Addis Ababa who knew each other and created job opportunities,” he noted. “Most recommended candidates were well-liked in their community, not necessarily the most qualified.”
The researcher, who was a PhD candidate at the University of Oxford at the time, found that Ethiopian workers tend to rely more on social networks than on hiring professionals with the necessary skills.
Consequently, individuals who are popular in their community have a higher chance of securing a job than those who are genuinely qualified. This social network-based recruitment practice often excludes skilled workers, ultimately lowering productivity.
Tewodros mentioned that IGC has conducted around 30 studies related to the labor market.
He pointed out that the establishment of industry parks marked a significant turning point in the nation’s development when IGC began its operations in Ethiopia nearly 13 years ago.
“Labour turnover was one of the main issues at industry parks at the time,” he added, noting that the benefits offered by jobs in these parks were often unsatisfactory for workers.
A study on this issue found that 70% of workers left their jobs within three months, leading to efficiency problems. “One of our studies proposed a retention bonus incentive for employees who stayed longer, which really helped manufacturers and addressed the issue,” he said.
Another intriguing finding from IGC’s research concerns skills mismatch. The main conclusion of this experimental study was that many job seekers are unaware of their greatest strengths.
For instance, someone may believe that language skills are their strongest asset, while in reality, collaboration may be their true strength. Additionally, job seekers often lack knowledge about what employers are looking for during the hiring process.
The report indicated that most job seekers think companies prioritize technical proficiency and intelligence. However, employers tend to favor behavioral traits such as honesty, teamwork, and communication skills.
Tewodros noted that, according to an IGC-backed report, while technological skills and education are highly sought after in the market, the system predominantly produces accountants.
“The key to addressing these two issues lies in closing the information gap. Therefore, a labor market information system has been established to facilitate interaction between employers and job seekers,” he explained, adding that a skill assessment mechanism should also be developed to meet employer demands.
Internships and apprenticeships are crucial components of education. While 40% of candidates possess experience, a staggering 80% of job vacancies require experienced workers.
To bridge the gap between the supply of and demand for experienced labor, internships and apprenticeships have been proposed as viable solutions.
In an interview with Capital, Tewodros remarked, “We have provided studies that will contribute to policy-making.”
The International Growth Centre (IGC) is an international research initiative that delivers evidence-based policy recommendations to developing countries to foster sustainable economic growth. Founded in 2008 through a collaboration between the University of Oxford and the London School of Economics, the IGC has formed a significant partnership with Ethiopia.
To address key economic challenges—such as industrialization, export competitiveness, agricultural productivity, rural transformation, urban infrastructure, housing affordability, fiscal policy, and domestic revenue mobilization—the center collaborates with Ethiopian institutions, researchers, and policymakers.
Recently, the IGC has focused on macroeconomic policy research, providing essential insights for the government’s macroeconomic reform efforts.
