Employment and Income in the Urban Informal Sector; A case Study of Katikala Producers in Assela Town

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Addis Ababa University


Katikala, which in the past was a traditional home made alcoholic drink, has now became a commercial item and is supporting considerable number of labour force (of female), particularly in urban parts of Ethiopia. The purpose of this study is to assess employment and income generating capacity of katikala business in Assela town. In order to achieve this, a multi-stage sampling procedure was employed. Usable questionnaires were collected from 200 katikala producing households in six systematically selected kebeles andfrom 30 katikala distributors. In order to achieve this objective, both descriptive and statistical analytical techniques have been utilized. Pearson's product moment model was employed so as to measure the degree of association between the dependent variable (income) and the different independent variables. The Dega and Weina-Dega partsof Arsi Zone have excess production of crops like barley, wheat, tef!, etc. while the adjacent low-lands (kola) parts are producing excess volume of maize, sorghum and others. As a result all the inputs for the production of Katikala are available in and around Assela. The finding indicated that Katikala industry is found to support huge labour force (almost entirely of female) particularly in the production sector. Lack of job opportunity, family responsibility, insufficient family income from other sources are found to be the major pushing factors for the operators to be involved into the activity. The producers are using simple and rudimentary tools and they work unsanitary conditions. The finding further revealed that Katikala producers generate average monthly income of Birr J 02. 9, while the distributors get average monthly income of Birr 260. O. Both the producers and distributors of Katikala are carrying out other side line activities in Katikala business to augment their incomes. Of the total volume of Katikala produced in Assela, 68 to 80% is exported and destined at Addis Ababa (Akaki and Kality), Nazreth (including Wonji), Methehara, Harar, Dire-Dawa and others. These towns constitute substantial proportion of industrial labour force whose monthly income is amongst the lowest in the country. These low salaried and waged people are found to be the major consumers of such liquors as Tella and Katikala.As the study underscored, monthly income of the producers was influenced by lack of capital, family size as well as the level of income from other sideline activities. Similarly, investing capital, work experience and their age are found to be the principal determinants of income of the distributors. The problems of housing, fluctuation of cost of input and out put, inadequate infrastructural facilities, the rudimentary equipment used in the activity and the backward techniques of production are found to be major constraints among the producers. On the distributors side, absence of defined or predetermined location for sale of katikala in the open market, inadequacy of the existing transportation and the excessive governmental tax were reported as major constraints



Employment Income in the Urban Informal Sector