Impact of Industrialization on Employment Opportunities in Ethiopia

Abstract

Ethiopia, with an estimated population of 126.5 million in 2024, is the second most populated country in Africa after Nigeria (WB, 2024). Notwithstanding experiencing relatively strong economic growth compared to other Sub-Saharan countries, unemployment remains a significant socio-economic challenge. In response, the Ethiopian government has promoted industrial development as a strategy for structural transformation and job creation. Over the past decade. However, the industrial sector continues to be underdeveloped, contributing only 6.5 percent to national employment for the last four decades. This study was aimed at assessing the impact of industrialization on employment opportunities in Ethiopia using both a secondary data of quantitative meta-analysis and a narrative synthesis. The study employed a theoretical review method because of the absence of at least 30 years data on Ethiopia that hurdles employ econometrics methodology. Thus, the study uses the accessible quantitative data of employment that ranges from 1990 to 2023, making it supportive of this research. The quantitative data were collected from the reliable sources of the World Bank World Development Indicator dataset. Whereas, the reviewed theoretical and empirical literature was collected from Google Scholar. The study relies on existing research to assess industrial employment trends, GDP contributions, and comparative experiences from other developing countries and the constraints faced in fostering decent employment. Findings indicate that while industry has some potential for job creation, structural transformation has not been realized. The share of the industrial sector’s employment is 6.4 percent in 2023. The minimal job creation achieved is still largely driven by the agriculture and service sectors. The study recommends that public policy should more effectively support industrial growth to meet the employment needs of a rapidly growing population, especially the youth. Further research is needed to explore the barriers hampering industrialization’s role in employment generation and effective structural transformation in Ethiopia.