Legal hitch dims workers’ hopes of President Ruto raising pay

The delay in creating a board that normally advises the state on minimum wages is the latest hurdle in pushing workers to get a pay rise this Labor Day today amid soaring consumer prices.

The Cabinet Secretary has yet to set up a Wages Council, which is made up of representatives of workers and employers plus three independent members, and which makes recommendations to the Minister on minimum wages.

The absence of the council and its meetings is an indication that President William Ruto is unlikely to raise the country’s minimum wage to help workers mired in a difficult financial situation in an economic environment where employers keep a lid on payroll costs.

Last year, on May Day, former President Uhuru Kenyatta raised the country’s minimum wage by 12 percent after a three-year freeze.

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We do not expect the government to revise the statutory minimum wage this year given the 12 percent increase last year. Jacqueline Mugo, Executive Director of the Federation of Kenya Employers (FKE), told The daily business.

Also, the wage councils were not formed by the Ministry of Labor, and none of them held any meetings this year.

The Wage Board usually takes into account inflation, the state of the economy, the ability of employers to pay, and the need to encourage new investment before recommending a new revision of the minimum wage — which varies by occupation and region.

As in other countries across the region, Kenyans are grappling with soaring prices for commodities, including food and fuel, exacerbated by supply concerns after Russia’s invasion of Ukraine that began in February last year.

This has prompted workers led by Kenya’s main trade union, the Central Organization of Trade Unions (KOTO), to push for higher wages to compensate for skyrocketing inflation as employers warn that higher salaries will weaken competitiveness and spur companies to shed jobs.

Families are feeling the strain across Kenya as skyrocketing food and fuel prices have pushed inflation above the government’s preferred cap since June last year.

Inflation eased to 7.9 percent last month from 9.2 percent in March, due to moderating growth in food prices.

The Central Bank of Kenya (CBK) expects the economy to expand by 5.8 percent this year, at a slower pace than the previous forecast of 6.1 percent due to lower growth in the agricultural sector.

Kenya is emerging from its worst drought in four decades, a jump in commodity prices that has slashed consumer demand and is also suffering from the effects of a weak currency and heavy public debt burden.

Kenya’s economy will grow by about 5.6 percent in 2022.

Increases in the minimum wage primarily benefit lower-cadre workers such as domestic workers, cashiers, drivers, cleaners, salespeople, and property caretakers.

But his review has the potential to trigger similar increases in other calibers, largely through collective bargaining agreements (CBAs).

“The minimum wage in Kenya, because of political considerations, inflation and all the other things, could go up every year,” said Anthony Mwangi, CEO of the Kenya Association of Manufacturers.

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“What we are saying is that (wages) should be based on productivity so that if you work hard, you earn more and vice versa. Globally, this is the way things are done. With minimum wages, our productivity is severely affected because you are hiding behind other people.” .

Regular wage growth has waned in recent years due to faster-rising consumer prices, with the result that real wages, adjusted for inflation, have remained negative since Covid-19 in 2020.

The average earnings of private sector workers grew at the slowest pace in 11 years in 2021 at 2.24 percent, compared to 3.97 percent in 2020.

The real wage in 2021 was -3.83% after adjusting for inflation, down from -0.59% in 2020.

Last year’s numbers will be announced on Wednesday.

FKE estimated that productivity in Kenya was “not only low, it’s actually declining”, citing the findings of the 2022 Economic Position Paper on Wages released by the Ministry of Labour.

The employers’ lobby has said that workers’ compensation to cover inflation will resume when productivity begins to grow faster than a cost-of-living measure.

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