Hiring Foreign Expats & Local Labor

1. What are the Rules & Requirements in Hiring of Expats and Locals, and the cost of Labour in Ethiopia?

The Ethiopian labor law governs all hiring (contract), wage and working hours of both expats and local staffs. Below are some of the summary points of the labor law:

  • Wage:

Ethiopia has a low cost labour compare to other countries. Ethiopia offers competitive labor cost ranging from USD $40 - $135 monthly. In addition, the country has

  • Suitable domestic labor laws and regulations.
  • No minimum wage requirements (it’s based on negotiation),
  • Educated and easily trainable labor force – over 50 Universities with around half million student population; over 1,300 Technical and Vocational Education and Training (TVET) Institutes with an annual intake close to one million students.
  • Overtime pay ranges from 1.25x hourly wage (on work days) to 2.5x hourly wage (on public holidays).
  • Working hours: The working hours is set at 48 hours per week;
  • Expatriates:  
    • Expatriates can be employed in Ethiopia and they are anticipated to develop the local capacity. Therefore, these expatriates are offered a competitive income tax package for a minimum of 2 years. Furthermore, if the proposed investment is out of Addis Ababa, the incentive package increases.
    • There is no limitation on the number of expatriates that can be recruited. However, this also depends on the availability of local professionals, the complexity of the investment and the need for high skilled professionals
  • Work Permit: EIC will assist in processing work permit for investors. It takes approximately 3 - 5 days to process and receive a work permit for expat hires. Expats will receive income tax exemption for 2 years starting from the issuance of the business license of the company.