I recently listened to an episode of the International Trade Union Confederations Collective Voices podcast built around a deceptively simple question: If the economy is growing, why are we still broke? It is the kind of question that stays with you because it challenges something we have become accustomed to accepting: that when the economy grows, people’s lives must necessarily be getting better.
The question was raised in a global context and does not describe Ethiopia’s economy in every respect. Ethiopia has its own development challenges, its own economic reforms and its own structural realities. Yet the question travels well because it asks us to look beyond the headline figures and consider what economic growth means at the level where people actually live.
Ethiopia is pursuing economic growth, investment, industrialisation and structural transformation. These ambitions are necessary. A country with a rapidly growing population cannot create prosperity without expanding productive economic activity and generating employment. But growth, important as it is, cannot be the final measure of economic success.
At some point, the national economic story has to meet the household economic story.
If Ethiopia’s economy is growing, how are its workers actually living?
That is not an argument against growth. It is an argument about what growth is supposed to accomplish.
The Economy Is Growing. But What Does the Worker Feel?
For policymakers, economic performance is often expressed through GDP growth, investment, exports, productivity, foreign exchange and other macroeconomic indicators. These measures are important. They tell us whether economic activity is expanding or contracting and whether the productive capacity of the country is changing.
But workers experience the economy differently.
They experience it through the price of food at the market, the rent they have to pay, the cost of transportation, school expenses, medical bills and the amount of money left at the end of the month. A worker does not experience inflation as a percentage appearing in an economic report. Inflation arrives at the market, at the rent counter, at the transport station and at the pharmacy.
This is where the distinction between nominal income and real income becomes important. A worker may receive the same salary for months, or even receive an increase, while the prices of essential goods rise much faster. On paper, the worker may appear to be earning more. In practice, the purchasing power of that income may have fallen.
The same applies to productivity. If a worker produces more, an enterprise becomes more productive and the economy becomes more productive. But an important question follows: who benefits from that additional productivity?
If productivity rises while workers’ real incomes stagnate, the national economy may become more productive without the improvement being equally visible in workers’ lives.
This is why GDP cannot tell the entire story.
GDP tells us how much the economy produces. It does not, by itself, tell us how the people producing that wealth are living.
Economic growth therefore needs a human dimension. It should eventually be visible not only in national accounts, investment figures and production statistics, but also in the ability of working households to live with greater security and dignity.
When Having a Job Does Not Mean Being Secure
The second question concerns employment itself.
For a country like Ethiopia, creating jobs is an enormous priority. Young people are entering the labour market in large numbers, while the economy is still struggling to create enough productive opportunities for everyone. In such an environment, simply finding work can feel like an achievement in itself.
But having a job and having secure employment are not necessarily the same thing.
A person can be economically active and still live with unstable income, inadequate social protection, poor working conditions, excessive working hours or very limited bargaining power. Employment statistics can tell us that people are working without necessarily telling us whether the work provides a sustainable livelihood.
This distinction becomes particularly important when unemployment or underemployment leaves workers with few alternatives.
When someone desperately needs a job and an employer has the power to offer one, the bargaining relationship is rarely equal. A worker may accept low pay, temporary employment, excessive hours or insecure conditions because the alternative is to remain without work.
That is where a country’s employment challenge can become a labour-rights challenge.
The urgency of creating jobs is real. But it cannot become a justification for creating jobs in which workers remain permanently vulnerable.
The scarcity of jobs should not become an excuse for the scarcity of rights.
Ethiopia therefore needs to ask not only how many jobs it is creating, but what kind of employment those jobs represent. Are they productive? Are they secure? Are workers adequately protected? Do they have access to social protection? Are workplaces safe? Can workers organise and bargain collectively? And can a person realistically build a stable life around the income that employment provides?
These are not questions that should come after job creation.
They are part of what successful job creation means.
Can Cheap Labour Be the Foundation of Ethiopia’s Competitiveness?
This question becomes even more important as Ethiopia seeks to industrialise and attract investment.
Low labour costs can make an economy attractive to investors, particularly in labour-intensive industries. But there is a crucial distinction between competitive labour and cheap labour.
Competitive labour is productive labour. It is supported by skills, technology, infrastructure, efficient management, innovation and a workforce capable of moving into higher-value production.
Cheap labour is simply inexpensive.
There may be circumstances in which low labour costs help an emerging economy attract investment. But they cannot provide a permanent foundation for development. If Ethiopia’s industrial strategy depends indefinitely on keeping wages low, then the country risks building competitiveness around the very thing that should change as development progresses.
The long-term objective should be to increase productivity and move into higher-value production. As productivity rises, workers should also have a reasonable opportunity to benefit from the value they help create.
This is not an argument that businesses should be forced to absorb unsustainable labour costs. Businesses need to survive and grow. Investors need confidence. Enterprises need to remain competitive.
But the answer cannot simply be to keep labour cheap.
The more sustainable question is how Ethiopia can make labour more productive, more skilled and more valuable.
That means investing in skills, technology, occupational safety, infrastructure, management and innovation. It means creating conditions in which businesses can increase productivity while workers benefit from the resulting economic gains.
Poor pay can also carry costs for businesses themselves. When workers cannot remain in jobs because wages are inadequate, enterprises can face high turnover, recruitment costs, training costs and difficulty retaining experienced workers.
So the wage question is not merely about redistribution.
It is also about productivity and the kind of economic model Ethiopia wants to build.
The question should therefore not be, How cheaply can Ethiopia employ its workers?
It should be:
How productively can Ethiopia employ its peopleand how fairly can the gains from that productivity be shared?
Who Pays the Price of Economic Adjustment?
This question becomes even harder when we look at economic reform.
Ethiopia is undertaking economic changes because the existing economic structure cannot simply remain unchanged. Reform is necessary to address structural weaknesses, improve productivity, attract investment and create the conditions for sustainable growth.
But reform is not experienced equally.
For policymakers, adjustment may be expressed through exchange rates, fiscal policy, monetary policy, taxation, investment or other macroeconomic measures. For workers and households, however, adjustment can arrive much more immediately. It can appear in the price of food, transport, housing and other necessities, while wages may take longer to respond.
This raises a question that should be at the centre of economic policy: who carries the cost of adjustment?
Taxation illustrates the issue particularly clearly. Government needs revenue. Public services, infrastructure, education, healthcare and social protection cannot be financed without it. The question is therefore not whether taxation is necessary.
The question is whether the burden is distributed fairly.
A low-income worker and a high-income household do not have the same capacity to absorb an increase in prices or taxes. The same amount of additional expenditure can represent a minor inconvenience for one household and a serious reduction in food, healthcare or education for another.
This is why wage policy and tax policy cannot be considered entirely separately.
What matters to a worker is not simply the amount printed on the payslip. What matters is real disposable incomewhat remains after taxes and deductions and after the cost of everyday life has taken its share.
Economic reform should therefore be judged not only by whether it improves macroeconomic indicators, but also by whether it protects those who have the least capacity to absorb its immediate costs.
This does not mean shielding workers from every consequence of reform.
It means asking whether the costs and benefits of reform are being shared fairly.
Growth Needs Workers, Too
There is a tendency in economic debates to frame workers’ demands and business interests as competing agendas. That is too simplistic.
Businesses need investment, profitability, productivity and a predictable economic environment. Workers need decent wages, security, rights and safe working conditions. An economy needs both.
Indeed, workers occupy a more important place in the economy than the simple employer-employee relationship suggests. Workers are producers, but they are also consumers. Their wages support families, local businesses and domestic demand. When household purchasing power is squeezed, the consequences do not necessarily stop at the household door.
This does not mean that every wage increase automatically produces economic growth. Wage policy must be connected to productivity, inflation, employment conditions and the capacity of enterprises to adjust.
But it does mean that wages should not be understood solely as a cost to business.
They are also part of the economic circulation that allows people to consume, save, invest in their families and participate in the wider economy.
For Ethiopia, this relationship is particularly important as industrialisation and structural transformation advance.
The country should not have to choose between viable businesses and decent wages. The challenge is to create a development model in which investment creates productivity, productivity creates greater value, and workers have a fair opportunity to share in that value.
That is a much more sustainable basis for economic development than permanently competing on low wages.
Workers are not outside the economy. Workers are the economy.
The Minimum Wage Is More Than a Labour Demand
This is why the minimum-wage debate deserves to be treated as part of Ethiopia’s economic policy rather than as a narrow demand from organised labour.
At its most basic level, a minimum wage establishes a floor beneath which employment should not fall. It recognises that the individual worker and employer do not always negotiate from equal positions.
A worker who has savings, alternative employment opportunities and strong bargaining power negotiates differently from a worker who needs an income immediately to feed a family.
Collective bargaining can help correct that imbalance. But a broader wage-setting mechanism can establish a minimum standard for the labour market.
The Ethiopian debate should therefore go beyond the question of whether workers deserve higher wages.
The more difficult question is whether workers at the bottom of the labour market can reasonably live on what they earn.
At the same time, wage policy cannot ignore employers. A sustainable wage-setting system has to consider living costs, inflation, productivity, employment, business conditions and differences between sectors. It must allow enterprises to remain viable while preventing the weakest workers from being pushed into a race to the bottom.
That is precisely why wage policy should be developed through meaningful social dialogue among government, employers and workers.
A minimum wage is not a magic solution to poverty or unemployment. But the absence of an effective wage floor leaves those with the weakest bargaining power especially exposed.
For Ethiopia, therefore, the minimum-wage debate is about more than the size of a number.
It is about what the country believes a job should be worth.
Workers Should Have a Voice in Economic Reform
There is another lesson in the ITUC discussion that deserves greater attention: economic policy is not only about numbers. It is about choices, priorities and whose interests are considered when those choices are made.
Workers should not be treated simply as recipients of economic policy.
They should be participants in making it.
If reforms affect wages, employment, taxation, social protection and the future of work, then workers and their representative organisations should have a meaningful role in shaping those reforms.
This is the purpose of social dialogue.
Trade unions are not simply organisations that negotiate salaries. They are institutions through which workers can collectively participate in decisions affecting their livelihoods and the wider economy.
But social dialogue means more than inviting representatives to a meeting after the major decisions have already been made. Consultation after a policy has been designed is not the same as participation in designing it.
Meaningful social dialogue requires regular, structured and substantive engagement between government, employers and workers. It requires that workers’ concerns be considered while policies are being formulated, rather than simply explained once the consequences have reached workplaces and households.
Economic transformation should happen with workers, not simply to workers.
What Would a New Social Contract Mean for Ethiopia?
The ITUC’s response to the global challenges discussed in the podcast is a call for a New Social Contract centred on decent jobs, workers’ rights, living wages, social protection, equality and inclusion.
Ethiopia does not need to copy another country’s framework. Its economic circumstances are different, and its development priorities are its own.
But the underlying idea raises an important question: what should the relationship between economic development and social progress look like in Ethiopia?
An Ethiopian social contract would begin with the understanding that economic development must generate opportunities that people can actually use to improve their lives. Job creation would therefore need to be considered not only in terms of numbers but also in terms of productivity, security, wages and rights.
It would require wage policies that recognise the relationship between income and living costs. It would require taxation that raises the revenue the country needs while paying attention to the capacity of households to contribute. It would require stronger social protection so that illness, injury, unemployment, old age or other shocks do not immediately push working families into deeper insecurity.
It would also require stronger institutions of collective bargaining, occupational safety and health, and effective mechanisms through which workers can report violations and obtain remedies.
And the social contract must look ahead.
Technology and digitalisation are changing the nature of production and work. New technologies can create productivity gains and new opportunities, but they can also alter occupations and skill requirements. Ethiopia’s economic transformation should therefore prepare workers for these changes rather than treating them as passive recipients of technological disruption.
Young people and women must also be central to the conversation. Ethiopia cannot achieve inclusive growth if large sections of its potential workforce remain trapped outside productive and decent employment or underrepresented in economic decision-making.
Nor can a social contract be meaningful if informal and vulnerable workers remain outside effective labour protection.
At its heart, the principle is simple:
Workers are not merely an input into economic production. They are stakeholders in economic development.
Beyond GDP: What Should Ethiopia Measure?
None of this means that GDP growth is unimportant.
It is extremely important.
The mistake would be to treat it as sufficient.
If Ethiopia wants to know whether economic growth is translating into social progress, it should look beyond the size of the economy and examine what is happening to real wages, the quality of employment, productivity, social protection, youth employment, women’s participation and workers’ ability to influence decisions that affect their livelihoods.
These are not alternative measures designed to replace GDP.
They are measures that help explain what GDP growth is actually doing for society.
An economy can expand while households remain under pressure. Investment can increase while workers remain insecure. Employment can grow while the quality of that employment remains poor. Productivity can rise without workers seeing a corresponding improvement in their incomes.
None of these possibilities makes growth meaningless.
But they do tell us that the distribution and quality of growth matter as much as its headline size.
Growth Must Improve Lives
Ethiopia cannot afford to choose between economic growth and decent work.
It needs both.
The country needs investment, industrialisation, exports, productivity and structural transformation. But it also needs workers who can live with dignity from their labour, families that can withstand economic shocks, young people who can find productive employment, and institutions capable of protecting workers when the balance of power becomes unequal.
The question is therefore not whether Ethiopia should grow.
It must.
The more important question is what kind of growth Ethiopia wantsand whether the people whose labour makes that growth possible are able to share in its gains.
If economic output rises while purchasing power falls, if employment expands while insecurity remains widespread, if productivity improves without workers sharing in the gains, and if economic decisions are made without meaningful worker participation, then something important is missing from the growth story.
That does not make growth an illusion.
It means growth must be judged by what it delivers beyond the headline number.
And perhaps that is the Ethiopian version of the question that first caught my attention in the ITUC podcast.
Not simply:
If the economy is growing, why are we still broke?
But something more relevant to Ethiopia:
If Ethiopias economy is growing, how are its workers livingand who is actually benefiting from that growth?
That is not a question that belongs to trade unions alone. It belongs to government, employers, workers, economists and anyone concerned with the country’s economic future.
Because the ultimate purpose of economic development is not simply to make the economy bigger.
It is to make people’s lives better.
And if the people whose labour produces economic growth cannot feel that growth in their own lives, then the growth story is not finished.
It still has something left to prove.
Solomon Zena is a Journalist, Communication Practitioner and Labour Rights Writer and can be reached via solomonzena88@gmail.com
