With the expansion of rice production in Ethiopia’s Fogera Plain, the rural labour market, highly characterised by the casual unskilled labour supply, has flourished. This is mainly associated with the nature of rice production, where certain agronomic practices demand a significant investment of time and thus family labour may not be sufficient. This has created an opportunity for rice farmers to hire labour when they need for extra help, and also for unskilled labourers to gain casual employment. This paper explores the characteristics of rural labour markets, trends in hired labour use and the impact of hired labour on smallholder farmers’ rice productivity and commercialisation using data collected from 723 randomly selected smallholder rice farmers in the Fogera Plain.