Job quality in the micro and small enterprise sector in Ethiopia: Evidence from firm-level data

Figures & data

Table 1. Sampling distribution of MSEs in Addis Ababa

Sub cities	Population		Surveyed
	Small	Micro	Small (census)	Micro (sample)
Addis Ketema	373	1090	373	141
Akaki Kaliti	406	1177	406	86
Arada	229	739	229	58
Bole	361	1791	361	162
Gulele	298	1144	298	100
Kirkos	191	840	191	76
Kolfie	229	2426	229	247
Lideta	125	520	125	59
Nifas Silk	738	1626	738	121
Yeka	348	1353	348	145
All	3298	12,706	3298	1195

Notes: A firm with 1–5 employees is micro and a firm with 6–50 employees is small.

Source: ESBDE Baseline Survey, 2017

Table 2. Sampling distribution of MSEs in the nine major regional cities

Cities	Population		Surveyed
	Small	Micro	Small (census)	Micro (sample)
Adama	121	531	121	140
Bahir Dar	252	948	252	314
Dessie	89	384	89	147
Dire Dawa	126	447	126	118
Gondar	126	737	126	211
Hawassa	316	806	316	143
Jigjiga	60	120	60	44
Jimma	146	480	146	148
Mekele	330	2449	330	850
All	1,566	6902	1,566	2,115

Notes: A firm with 1–5 employees is micro and a firm with 6–50 employees is small.

Source: ESBDE Baseline Survey, 2017

Table 3. Sample composition and explanatory variables

Variables	Number	Percentage
Owner (entrepreneur) characteristics
Gender
Male	6,618	81.08
Female	1,544	18.92
Age group
18–30	2,084	25.5
31–50	5,199	63.6
51–65	722	8.83
>65	169	2.07
Marital status
Single	1,706	20.91
Married	6,199	75.97
Divorced	113	1.38
Separated	42	0.51
Widowed	100	1.23
Level of education
No education	142	1.74
Read & write (Basic)	581	7.13
Primary education	1,330	16.31
Secondary education	2,605	31.95
Preparatory education	347	4.26
TVET completed	1,383	16.96
Diploma	758	9.3
Bachelor and above	1,007	12.35
Business ownership experience
No experience	58	0.71
1–15 years	7,311	89.44
16–30 years	669	8.18
31–45 years	95	1.16
>45 years	41	0.50
Cognition, time and risk preferences*
Cognitive test score above average (max = 5)	3,334	40.8
Risk taker	1,897	23.22
Patient	492	6.02
Firm characteristics
Ownership sector
Public owned	3	0.04
Private limited	921	11.27
Share company	268	3.28
Partnership	1,130	13.82
Sole proprietorship	4,662	57.03
Cooperative	1,182	14.46
others	8	0.1
Firm size
Micro	3,310	40.49
Small	4,553	55.7
Medium	311	3.8
Firm age category
2–4 years	4016	49.1
5–9 years	2605	31.9
> 9 years	1548	19.0
Economic sub-sector
Food and beverages	1,648	20.16
Textiles	328	4.01
Garments	769	9.41
Chemicals	102	1.25
Plastics and rubber	98	1.2
Nonmetallic mineral products	554	6.78
Metal working workshop	1,635	20
Printing	322	3.94
Machinery and equipment	60	0.73
Electronics	27	0.33
Furniture and wood working	1,882	23.02
Leather and Leather products	296	3.62
Blocket and other construction inputs	367	4.49
Metal and Woodwork	44	0.54
Other	42	0.51
Enterprise location
Adama	261	3.19
Addis Ababa	4,493	54.97
Bahir Dar	566	6.92
Dessie	236	2.89
Dire Dawa	244	2.99
Gondar	337	4.12
Hawassa	459	5.62
Jigjiga	104	1.27
Jimma	294	3.6
Mekelle	1,180	14.44

Notes: *Cognitive test score is measured using five selected questions derived from the Raven test, which reflects analytical skills (McKenzie and Woodruff, 2015). Time preference (or patience) is measured using a hypothetical question asking respondents whether they would delay their current happiness if given a choice between 1000 birr tomorrow and 1100 birr a month from tomorrow. Patient entrepreneurs are those who decide to wait a month to receive 1100 birr. Risk-taking is measured using a lottery game in which the respondents had to choose between a safe outcome and a bet with the same expected values. Those who chose to play the lottery games are considered risk takers and those who chose the sure outcome are considered risk averse.

Source: ESBDE Baseline Survey, 2017

Table 4. Job quality (productivity) indicators by entrepreneurs’ highest completed level of education

Highest level of education completed	Productive (quality) employment indicators
	Average monthly earning	Offers written contract (%)	What Percentage of your workers have written contract? (%)	Proportion of permanent workers (%)	Average number of work related accidents in the last six months	Provide all necessary PPCE (%)	Occupational Safety training (%)
No education	1039	5.6	64	8	0.05	49.3	13.89
Read and write (basic)	1557	4.8	68	6	0.16	57.8	6
Primary education	1661	8.1	62.1	9	0.13	57.1	11.03
Secondary education	1921	14.3	61.6	12	0.15	61.8	14.51
Preparatory education	1823	11.9	71	9	0.34	82.6	18.46
TVET completed	2158	14.1	63.4	13	0.19	67.3	15.35
Diploma	2333	26.3	68.3	24	0.13	74.0	20.38
Bachelor and above	2244	36.8	74.6	27	0.16	74.8	29.17
All	1954	16.4	67.1	14	0.16	65.1	16.33

Source: ESBDE Baseline Survey, 2017

Table 5. Productive (quality) job indicators by years of operation of enterprises

Age category of enterprises	Productive (quality) employment indicators by years of operation of the enterprises
	Average monthly earning	Offers written contract (%)	What Percentage of your workers have written contract? (%)	Proportion of permanent workers (%)	Average work-related accidents in the last six months	Offers PPCE (%)	Occupational safety training (%)
2–4 years	1781.5	12.4	65.9	10	0.15	62.2	14.7
5–9 years	2056.3	17.7	64.5	20	0.21	66	15.7
>9 years	2237.6	24.6	71.9	20	0.15	71.2	21.9
All	1956.2	16.4	67.2	10	0.17	65.2	7.8

Source: ESBDE Baseline Survey, 2017

Table 6. Job quality (productivity) indicators by enterprise size

Size category	Productive (quality) employment indicators
	Average monthly earning	Offers written contract? (Yes)		What Percentage of your workers have written contract? (%)	Proportion of permanent workers (%)	Average work related accidents in the last six months	Offers PPCE? (Yes)		Occupational safety training? (Yes)
		Number	%				Number	%	Number	%
Micro	1604	174	5.6	67.0	8	0.15	200	12.6	1906	58.8
Small	2133	920	21.0	65.2	17	0.17	369	17.5	3065	68.7
Medium	2945	188	61.0	76.9	43	0.19	60	38.0	244	80.0
All	1956.4	1284	16.4	67.2	14	0.16	629	16.3	5215	65.2

Source: ESBDE Baseline Survey, 2017

Table 7. Productive (quality) indicators by enterprise location

Location of enterprises	Productive (quality) indicators by enterprise location
	Average monthly earning	Offers written contract (%)	What Percentage of your workers have written contract? (%)	Proportion of permanent workers (%)	Average work related accidents in the last six months	Offers PPCE (%)	Occupational safety training (%)
Addis Ababa	2150	26.2	68.2	24	0.13	72	20
Other cities	1720	4.4	59.3	3	0.20	57	13
All	1956	16.4	67.2	14	0.17	65	16

Source: ESBDE Baseline Survey, 2017

Table 8. Productive (quality) job indicators by sex of entrepreneurs

Sex	Productive (quality) job indicators by sex of entrepreneur
	Average monthly earning	Offers written contract (%)	What Percentage of your workers have written contract? (%)	Proportion of permanent workers (%)	Average work related accidents in the last six months	Provide PPCE (%)	Occupational safety training? (%)
Male	2045	16.14	66.1	14	0.18	66.5	16.5
Female	1563	17.37	71.3	16	0.09	59	15.5
All	1954	16.37	67.1	15	0.165	65	16.3

Source: ESBDE Baseline Survey, 2017

Table 9. Productive (quality) job indicators by age of entrepreneurs

Age class	Productive (quality) job indicators by age of entrepreneurs
	Average monthly earning	Offers written contract (%)	What Percentage of your workers have written contract? (%)	Proportion of permanent workers (%)	Average work related accidents in the last six months	Offers PPCE (%)	Occupational safety training (%)
18–30	1683	8.1	64.7	7	0.16	12.7	60.3
31–50	2042	17.7	64.8	15	0.16	16.8	66.6
51–65	2106	28.1	76	24	0.13	22.3	68.4
>65	2037	28.5	85.3	30	0.16	23.3	66.1
All	1956	16.4	67.2	14	0.16	16.3	65.2

Source: ESBDE Baseline Survey, 2017

Table 10. Estimated regression models for key job quality variables—wage, contract and health and occupational safety

VARIABLES	Wage and contract variables			Health and occupational safety variables
	ln(wage)	Written contract (binary)	Permanent workers (Proportion)	PPCE (binary)	Safety training (binary)	Number of work related accidents
	OLS (1)	Logistic (2)	Tobit (4)	Logistic (5)	Logistic (6)	Poisson (7)
Entrepreneur characteristics & background
Male	0.061***	−0.113	−0.020	0.133*	0.107	0.379**
	(0.018)	(0.102)	(0.028)	(0.070)	(0.134)	(0.176)
Age	0.010**	0.069***	0.0199***	0.0280*	−0.026	0.058
	(0.004)	(0.025)	(0.007)	(0.016)	(0.027)	(0.045)
Age square	−0.0002**	−0.0006**	−0.0001*	−0.0003*	0.0004	−0.001
	(0.00005)	(0.0003)	(0.0001)	(0.0002)	(0.0003)	(0.001)
Married	0.034**	0.106	0.030	0.037	−0.189	−0.064
	(0.016)	(0.101)	(0.027)	(0.065)	(0.119)	(0.123)
Christian	−0.024	−0.733*	0.113	−0.006	−0.632	2.343**
	(0.088)	(0.424)	(0.133)	(0.365)	(0.498)	(0.993)
Muslim	−0.003	−0.837*	0.140	0.167	−0.185	2.384**
	(0.089)	(0.441)	(0.136)	(0.371)	(0.510)	(1.053)
Education (number of years)	0.006***	0.058***	0.016***	0.014**	0.009	−0.002
	(0.001)	(0.014)	(0.005)	(0.006)	(0.013)	(0.008)
Had vocational training	0.059***	−0.176**	−0.021	0.373***	0.632***	−0.059
	(0.015)	(0.086)	(0.024)	(0.062)	(0.101)	(0.113)
Speaks English	0.050***	0.545***	0.109***	−0.069	0.377***	−0.159
	(0.017)	(0.093)	(0.028)	(0.069)	(0.116)	(0.118)
Worked as wage worker	0.019	−0.240***	−0.074***	0.294***	−0.450***	−0.129
	(0.014)	(0.081)	(0.022)	(0.054)	(0.098)	(0.139)
Self-employment experience (years)	0.002	0.014**	0.002	0.001	0.032***	−0.023**
	(0.001)	(0.007)	(0.002)	(0.005)	(0.008)	(0.011)
Father has business background	−0.103***	0.028	−0.119***	0.135**	−0.030	−0.572***
	(0.015)	(0.086)	(0.023)	(0.060)	(0.108)	(0.115)
Number of siblings in similar business	−0.001	0.008	−0.007**	−0.006	−0.028**	0.004
	(0.003)	(0.019)	(0.003)	(0.012)	(0.013)	(0.013)
Enterprise characteristics
Firm age	0.002	0.019**	0.002	0.011*	−0.013	0.014
	(0.002)	(0.008)	(0.002)	(0.007)	(0.010)	(0.011)
Is cooperative	−0.084	13.15	−0.012	−0.290	13.60	12.793
	(0.200)	(1,133)	(0.435)	(0.700)	(817.0)
Is self-initiated	−0.065	13.94	0.149	−0.126	13.26	13.082
	(0.199)	(1,133)	(0.434)	(0.697)	(817.0)
Located in Addis Ababa	0.074***	1.565***	0.764***	0.586***	−0.032	−0.465**
	(0.015)	(0.107)	(0.030)	(0.060)	(0.110)	(0.185)
Is managed professionally	−0.007	0.962***	0.241***	−0.356**	−0.107	0.494
	(0.040)	(0.174)	(0.049)	(0.155)	(0.255)	(0.337)
Size (lagged by one year)	0.010***	0.063***	0.012***	0.019***	0.020***	0.015***
	(0.001)	(0.004)	(0.002)	(0.004)	(0.001)	(0.004)
Is patient	0.043	0.151	0.115***	0.427***	−0.179	0.271*
	(0.027)	(0.151)	(0.039)	(0.115)	(0.207)	(0.162)
Is risk-taker	0.059***	0.056	0.096***	−0.003	−0.099	0.519***
	(0.015)	(0.090)	(0.023)	(0.062)	(0.111)	(0.117)
Cognitive test score	0.035***	0.083***	0.020**	0.162***	0.102***	0.028
	(0.005)	(0.030)	(0.008)	(0.021)	(0.036)	(0.053)
Controls (sector & ethnic)	Yes	Yes	Yes	Yes	Yes	Yes
Constant	6.906***	−19.63	−2.120***	−1.430	−16.22	−18.778***
	(0.255)	(1,133)	(0.493)	(0.943)	(817.0)	(1.111)
Number of observations	7,148	7,922	7,922	7,922	7,890	8,143
R-squared/ Pseudo R-squared	0.21	0.28	0.24	0.15	0.20	0.08

Notes (1): *** p < 0.01, ** p < 0.05, * p < 0.1 are significance levels at 1, 5 & 10 percent respectively. And numbers in parentheses are robust (heteroscedasticity-consistent) standard errors.

Notes (2): Coefficients for logistic regression are in log-odds units.

Source: ESBDE Baseline Survey, 2017