Inclusiveness of Wage Employment and Determinants of Wage Incomes in Ethiopia

Empirical Evidence from Large-Scale Farms

Abstract

Unemployment is one of the critical problems of developing countries, including Ethiopia. Agriculture is not only the mainstay of the economy of Ethiopia, but it is also a major contributor of employment opportunities for its citizens. The government of Ethiopia promotes commercialization of the agricultural sector through large-scale farming investment by the private sector. The article examined inclusiveness of large-scale farming and factors that determine wage incomes earned by plantation workers in Ethiopia. Both primary and secondary data were generated from households, and large-scale farming companies. Data were subjected to a modified Mincer's earnings function to see which group of the society benefited from wage employment. Inclusiveness in plantation agriculture in the form of wage employment was very limited to the local indigenous population in Gambella and Benshangul Gumuz regional states due to lack of prior farming experiences of the workers.  Men and those with technical trainings received better incomes from wage employment. Regional variation in wage rates was observed among Oromia, Gambela and Benshangul Gumuz regional states due to harsh working environment and low availability of workforce. Inclusion of the local people in wage employment should receive attention by owners and the government, which will otherwise affect smooth and sustainable operation of the farms. Further, it calls for an intervention to enhance the technical skills of workers and improve women’s participation and earnings in plantation agriculture.

Keywords: Plantation agriculture; wage employment; large-scale farms; inclusiveness; Mincer earning regression; Ethiopia