Over 14pct Of Employed Ethiopians Earn Less Than USD2.15 A Day: UNCTAD

Ethiopia among top five LDCs in service exports

By Surafel Ashebir

Despite recording steady economic growth and continued job creation, Ethiopia is grappling with a persistently high level of working poverty, according to a report released by the UN Trade and Development agency (UNCTAD) this week.

More than 14 percent of Ethiopia’s employed workforce earns less than USD 2.15 a day in terms of purchasing power parity, it reveals.

While this figure is lower than the average for least developed countries (30.7 percent), it indicates that millions of Ethiopians remain trapped in poverty despite being employed.

The figure is high for Madagascar (77.6 percent), Malawi (67.9 percent), Central African Republic (65.7 percent), Mozambique (70.2 percent), Somalia (63.2 percent) and Burundi (58 percent). The figure is at the lowest in Nepal (0.2 percent), Myanmar (2.8 percent), Lao peoples democratic republic (6 percent).

The findings highlight a structural challenge within Ethiopia’s labor market: the shortage of quality jobs. The report notes that a significant portion of the workforce is concentrated in low-productivity sectors, particularly agriculture and informal service activities, where earnings remain limited.

Although the service sector accounts for the largest share of Ethiopia’s economy, UNCTAD points out that it has not generated a sufficient number of well-paying and secure jobs. Many service-related activities are concentrated in small-scale, informal, and unregistered businesses, making it difficult to improve wages and expand social protection coverage.

Tourism and transport are identified as major sources of service export revenue. However, tourism accounted for only 3.5 percent of total employment in 2024, underscoring the sector’s limited capacity to absorb the growing labor force.

The report further indicates that Ethiopia led least developed countries in service exports, registering USD 7.4 billion in 2024.

Much of this performance was driven by growth in transport, logistics, and travel-related services. While this reflects increasing foreign exchange earnings, the report suggests that such gains have yet to translate into broad-based improvements in job quality and income levels.

As a policy recommendation, UNCTAD urges Ethiopia to prioritize skills development, digital infrastructure expansion, and productivity enhancement. Without strategic investment in these areas, the report warns, Ethiopia risks sustaining an economy where employment does not necessarily provide a pathway out of poverty.

The findings underscore a central dilemma for policymakers: economic growth alone may not be sufficient unless it is accompanied by structural transformation that delivers higher productivity and better-paying jobs for the country’s workforce.