Informal sector workers miss out on minimum wage awards

Kenya’s informal sector workers suffer poor remuneration despite the government’s effort to improve their plight with the setting of a minimum wage, a new survey has revealed.

Four out of every 10 workers in the informal sector are earning less than Sh6,000 per month – raising questions over the effectiveness of minimum wage policies.

The survey - ‘Critical success factors for a micro-pension scheme’ - also shows that 65 per cent of the workers in the sector earn less than Sh12,000 per month. The survey was done by the Retirement Benefits Authority and the United States International University in May this year.

ALSO READ: Informal sector workers shun retirement savings schemes

Under the minimum wage guidelines gazetted last month, the lowest paid worker with hardly any skills should earn Sh8,580 in cities, Sh7,915 in the municipalities and suburbs just outside Nairobi and Sh4,577 in all other areas.

It means that those who earn Sh6,000 and below in the cities and municipalities, which have the majority of informal sector businesses (popularly referred to as jua kali), are grossly underpaid.

Trade union leaders pointed to the difficulty in recruiting informal sector workers to join collective bargaining associations saying the workers are often intimidated and even sacked at the mere mention of getting into arrangements that could demand payment of the minimum wage.

“We are aware that minimum wage legislation is not being applied in the informal sector and have been trying to recruit workers in the sector but they are often intimidated or even sacked if found,” said Ernest Nadome, a Cotu national board member, who also represents unionised electrical and allied workers.

Mr Nadome said between 80 to 90 per cent of the workers in the sector are not unionised due to resistance of the workers fearing victimisation.

He said that before a recognition agreement can be made between the employer and the union, the union is required to submit evidence that at least 51 per cent of the unionisable workers are willing to join it.

“But it never reaches that point. Once the union submits the list to the employer, it is used to identify the workers who are then intimidated or sacked leaving their earnings intact,” said Mr Nadome.

Other opinion leaders, including formal sector employers and experts, said it was unrealistic to expect the informal sector to strictly adhere to minimum wage levels when they are struggling to survive difficult market conditions.

“In the formal sector, we encourage the companies to pay the minimum wage because of the need to respect the law and not risk heavy penalties and injury to their reputation. But in the informal sector, people are merely trying to survive. If you raise the standards too high, you wipe out jobs,” said Jacqueline Mugo, the CEO of the Federation of Kenya Employers.

Ms Mugo said the level at which the country has pegged minimum wages may be too high for the informal sector, given that they are the largest creators of jobs and their workers are just trying to make ends meet.

She said the minimum wage guidelines are the major reason that many employers, even in the formal sector, have been trying to find way to minimise recruitment.