3 July 2019
- New report focuses on Chinese firms and employment dynamics in Africa
- Findings show proportion of national (Ethiopian and Angolan) workers in the labour force are substantially higher than assumed in media perceptions
- Wages in Chinese firms broadly similar to other top firms in the same sectors
- Chinese firms contribute to training and skill development at least as much as other firms in the same sector
New findings from the Industrial Development, Construction and Employment in Africa (IDCEA) project challenges commonly held perceptions of labour practices in Africa by Chinese firms.
The project led by SOAS University of London’s Dr Carlos Oya, Reader in the Political Economy of Development, shows that national, sector and economic context are more important in understanding labour conditions in Africa than the country origin of the firm itself.
Road construction workers, Angola, © Davide Scalenghe
The findings are based on 4 years of fieldwork-intensive research on employment patterns and outcomes in the infrastructure construction and manufacturing sectors in Angola and Ethiopia, where large-scale surveys of workers and extensive qualitative research were conducted between 2016 and 2018.
Dr Oya said: "One of the common perceptions of Chinese firms working in Africa is that they do not employ locals, the working conditions are exploitative and that they don't contribute to skills development. However our findings after four years of research have drawn up a very different picture. In Angola, for example, the firms employ some of the poorest where accommodation and food is provided, which in many ways can be seen as a route to actively help with poverty reduction in the region."
In terms of job creation the project found that the proportion of national (Ethiopian and Angolan) workers in the labour force is substantially higher than usually assumed in media perceptions. In Ethiopia these rates were 90% of all workers (and 100% for low-skilled workers) and in Angola, where rates are usually much lower due to skill shortages, estimated rates were 74%.
In Angola the project found that localisation had grown significantly in the previous 10 years as Chinese firms settled in that market context. Given that Chinese contractors have dominated the road construction market in Ethiopia and Angola, they have been the main contributors to job creation in absolute terms in this sector, especially in recent years. Chinese firms have also led job creation in the Ethiopian manufacturing sector during the same period.
The researchers also compared take-home wages for workers by skill-group (low-skilled and semi-skilled) and by sector across different firms by origin. They found that although there are significant variation in wages, the main determinants are, for Ethiopia: skill level of workers; working in construction (higher wages); job tenure; education; work experience; socio-economic status and location, like being located in an industrial park, where wages are slightly lower. In Angola the main determinants of wages are: skill level of workers; job tenure; work experience; socio-economic status; and specific location effects.
Once all these factors are taken into account the origin of a firm does not impact on wages on average. Wages in sampled Chinese firms were broadly similar to other top firms in the same sectors, once other worker, sector and company characteristics are taken into account. In addition, they found that in Angola many Chinese firms adopted a migrant dormitory labour regime by employing relatively poorer workers from the south of the country, where employment opportunities are scarce. Therefore, these workers also obtained food and accommodation and managed to save more from their wages than workers employed in other firms, especially in Luanda, where living costs are high, and this may actively result in poverty reduction.
In Ethiopia, sampled Chinese firms contribute to training and skill development at least as much as other firms in the same sector, and in the manufacturing sector training is widespread and considered as much more necessary by firms. In Angola, all firms have to provide different forms of informal on-the-job training given the severe skill shortages in the country especially for workers lacking relevant experience and education, but national firms and some foreign firms tend to have some more formal types of initial induction training.
The project also looked at labour relations in the workplace and found evidence that leading national firms are more used to having trade union presence, whereas foreign firms, including Chinese companies, are more reluctant to engage with unions, and they adopt different management styles to deal with industrial relations and bargaining.
The full reports from the research are available on the SOAS website. The research project has also been reported in the Financial Times today (3 July) 'It is wrong to demonise Chinese labour practices in Africa'.