Company DL: General

The company was one of the oldest leather factories in Ethiopia. It was established, in 1925, by two Armenians although, in 1935, the company was taken over by one of the two owners and became a one-man enterprise until it was nationalised in 1975. It had 150 employees at the time of establishment (1925) and it was mainly an export-oriented enterprise with the aim of exporting tanned hides and skins. At the time of the military regime, however, its production process mainly targeted on the provision of upper shoe covers for enterprises that produced shoes for the national army. As a result, its products had a huge domestic demand due to the large size of the national army at the time.126

During the Transitional period, the company was one of those State-owned enterprises established as autonomous business entities under Public Enterprises’ Proc. No. 25/1992. Following the introduction of the privatisation programme in Ethiopia, it was divested in 2006 to Geo-Traco plc, an Ethiopian Private Limited Company (Ericsson, 2009:49).

In the hands of the Private Limited Company, the company used to produce raw hides and skins both for export and local market an activity similar to its pre-nationalisation period. Nevertheless, in 2008, a high tariff on export of hides was introduced by the government so as to discourage the export of raw hides with the aim of exporting value added products. With this purpose in view, the Government introduced a 150% of its value in the form of export tax on raw hides and skin (Proc. No. 567/2008; Art. 4(1)). In fact, a total ban on export of raw hides and skins was introduced in September 2011 and has taken effect since December 2011 (Addis Fortune: 2011).

In compliance with the government’s prescription, the company decided to redesign its business strategy towards supplying its tanned hides to the local market. In fact, the company plans to establish a shoe factory of its own within the next five years (Ericsson, 2009:49), thereby

126_{It was believed that the Ethiopian military then had around half a million army and this made it one of the huge,}

engaging in a more value added venture and producing shoes both for domestic and export markets.

Union presence and density at DL pre- and post-privatisation

Oral information obtained from a long serving employee of the enterprise recorded that there had been an employees’ association in the form of mutual help association at the time when the enterprise was under the Armenians. One of the current trade union leaders127 _{at the company}

recalled that a trade union was officially formed immediately after the promulgation of the 1963 labour law. The union maintained its activities uninterrupted even after the private limited company took possession of the enterprise. As with the position at both FT and DT, there has been a single union in the enterprise. Thus fear of the national trade union leaders towards proliferation of unions has not been borne out here either.

Table 4 Size of the labour force and union membership at DL pre- and post- privatisation periods

Number of labour

force Union membership Uniondensity Non-unionised

Gender mix Male Female Total Male Female Total % M F Total

Pre- privatisatio n period (Year- 2005) 249 69 318 245 69 314 98.4 4 - 4 Post- privatisatio n period (Year- 2009) 145 29 174128 123 21 144 82.7 22 8 30 Post- privatisatio n (Year- 2012) 143 28 171129 _{92 11 103 60.2 51 17 68}

Source: Records of the first level trade union at the Company

127 _{Interview with a member of the trade union leadership at the Company, at the Head Office of CETU on 05}

October 2010

128 _{65 of the employees (i.e. 53 male and 12 female) were fixed term employees.} 129 _{83 of the employees (i.e. 67 male and 16 female) are fixed term employees.}

The total labour force during pre-privatisation was 318 while post-privatisation records show that there is now just slightly more than half of the pre-privatisation labour force. In 2009, three years after privatisation, the record showed 174 employees but the position seems to have stabilised in 2012 as the difference in size from 2009 is statistically insignificant. This tendency again suggested that job losses associated with privatisation is only temporary. During preparations for privatisation, the Government retrenched 115 employees on a mandatory early retirement scheme. The employment of those who had at least twenty years of service and who had attained forty five years of age was terminated130 with an immediate pension entitlement (Ericsson, 2009:49). It was after this government induced down-sizing measure that the new private owner took delivery of the enterprise. Restructuring and slimming down of the labour force was undertaken prior to privatisation with a view to attracting potential buyers.

The trade union leaders stated that after the private limited company acquired the enterprise, it outsourced the security service of the premises of the enterprise to another company, thereby making the former security personnel redundant further shrinking the size of the labour force. The private owner introduced an outsourcing scheme on its non-core business activity with cost reduction and efficiency purpose in view.131 _{Furthermore, similar to that of the above two}

enterprises, fixed-term employment has been on the increase since privatisation in the present company. In the total labour profile at DL, though unlike the above two enterprises, the number of male employees is higher than the female, the ratio of fixed-term employment is still higher for female employees.

With respect to unionisation, as is evidenced from Table 4, although employees of DL were not fully unionised even under state ownership, they had a membership density of 98.4 % and this was a figure very close to full unionisation. In 2009, three years after privatisation, union density declined to around 82.7 %. It is also interesting to note that six years after privatisation, in 2012, the membership density is further reduced to 60.2%. As far as the policy of admission to the trade union is concerned, union membership has been open to all employees working in the enterprise regardless of their employment status with the exception of probationary employees.

130 _{Although the normal retirement age is 60 years of age, the government issued an amendment to this which}

entitles an employee who has completed 20 years of service and who has attained 45 years of age would receive retirement pension for life upon approval by the Council of Ministers. This applies only to an employee who had been working in government office that ceased to exist or the employee is retrenched due to privatisation from State- owned enterprises (Proclamation No.424/2004, Negarit Gazette, 11th_{year, No 9, Addis Ababa)}

In a pattern similar to that of FT and DT, union membership density has consistently decreased at DL during the post-privatisation period compared to its pre-privatisation situation. It is noticeable that, unlike the other two enterprises which have been with high proportion of female labour force, this reduction in membership density at DL has occurred even with a predominantly male workforce.

As to the unity and strength of the trade union, the union leaders in the enterprise complained132 in the course of the data gathering for this study that there were instances where the private employer interfered into the internal affairs of the union. For instance, trade union leaders recalled that, the employer sought to put pressure on the union to the extent of ‘recommending’ who the chairperson of the trade union should be.

In addition, trade union leaders at the enterprise perceived that, the employer has the tendency of frustrating the union’s activities. As a manifestation of such a strategy, they indicated the following incident. Although under the collective agreement in force the employer is obligated to deduct union dues from the payroll of the union members and deliver the same to the union within five working days (Art.29 (5)), there was an incident when six months elapsed without any check-off payment being transferred to the union’s bank account. The reason submitted to them by the employer for the delay was ‘unforeseen financial problem’ of the enterprise.

Trade union leaders suspected that withholding of finance could be one way of paralysing the union’s activities as the sole source for the running cost of the union has been union dues. During the pre-privatisation period, trade union leaders recalled that union dues were always transferred to the union’s bank account, within five working days from the pay day, as stipulated under Art.29 (5) of the collective agreement. They did not encounter any instances of delayed delivery. On the contrary, they rather recalled that during the pre-privatisation period, the employer had been setting aside an additional amount of Birr 5000 (in cash or in kind) from its own account annually for purposes of sporting activities of the trade union as per Art.40 (2) (1) of the collective agreement then in force.

The General Manager133 _{of the company, for his part, stated that trade union leaders at the}

enterprise have been confrontational in their approach rather than cooperatively working with the management team. Even then, according to him, the company is extending its cooperation with the union by deducting the membership fee of union members from the payroll and depositing the same in the bank account of union. His view was that trade union leaders have been much more interested on the immediate benefit of their members at any cost instead of supporting the management on how to make the company competitive and profitable so that long-term benefit of the workforce could be ensured. Although it proved difficult to verify the accuracy of the respective claims of the parties, the accusation and counter-accusations of the trade union leaders and the management of the company seems to manifest the unhealthy relationship the social partners have in their day to day dealings.