The livelihoods of most Ethiopian citizens are under significant pressure as inflation and unemployment continues to mount against a backdrop of the rising salience, fragmentation and politicisation of the multitude of ethnic identities that exist within Ethiopia.

Ethnic actors mobilise sizeable constituencies demanding a greater share of power and economic spoils, which has raised tensions inside and outside the governing coalition.

This report seeks to examine the extent to which employment in the urban informal sector allows for the expression and reduction of (existing) grievances.

Defining poverty as the biggest threat to the regime’s survival, the federal state has relied heavily on output legitimacy based on a top-down developmental state model driving continuous economic growth, thereby justifying its continued existence while at the same time lacking a solid popular mandate and implementing significant repression of dissent.

A substantial part of donor policy in Ethiopia operates under the same assumption that (un)employment is a key driver of the instability affecting the country, and that increasing employment will substantially reduce tensions.

Ethiopia is pursuing economic growth through a developmental state model, consisting of state-led economic reform with strong centralised political control.

While this model has succeeded in sustaining high GDP growth rates for a number of years, Ethiopia faces a challenge in promoting shared prosperity, as job creation in Ethiopia’s urban centres has not kept pace with GDP growth, population growth nor rural-urban migration.

Employment in the informal economy has been key to an increasing number of individuals’ livelihoods, but the persistent poverty, inequality and marginalisation many face is also deepening grievances.

Ethno-nationalist cleavages are by no means novel, yet their rising salience is both a product of and an impetus to the changing form of political contestation and mobilisation.

Many of the Ethiopian government’s clientelistic approaches to political mobilisation and its claim to legitimacy based on economic growth have lost purchase.

The rising significance of ethnically based mobilisation appealing to widespread economic grievances requires the governing party to reinvent its own appeal, yet it has also facilitated the spread of ethnic tensions outside the traditional spaces of political contestation.

Ethnically based social capital has been key to many migrants’ decision to migrate, to finding employment and accommodation, and to gaining access to services and other support for their livelihoods.

With political debate extending beyond previously formalised channels, ethnically based networks are gaining significance on a new dimension as well, as political actors increasingly seek to use them for mobilisation on both clientelist and identity-based appeals.

Such appeals may help ethnic groupings secure control over various sectors, locations and at times even cities, yet they have also connected economic grievances with ethnic fault lines, allowing ethnic nationalist tensions to spill over into sometimes violent conflicts across urban spaces.

Based on the analysis, the following recommendations are made:

Livelihoods-related programming in Ethiopia should take into account and address the risks posed by the weak media environment

Interventions addressing employment or livelihoods more generally should actively avoid aligning with ethnic nationalist divides

Support organisations in the informal sector to become more inclusive, improve their ability to articulate grievances and represent stakeholder interests