KQ set to freeze salary increase in cost-cutting

Kenya Airways is set to freeze annual salary increments for its unionised workers for two years as part of the struggling carrier’s ongoing bid to cut costs.

The national carrier, known as KQ by its international code, has sought the consent of the Kenya Aviation Workers Union (Kawu) to freeze the annual pay rise beginning this month.

The 10,000-member workers’ lobby, a quarter of whom are KQ employees, excluding pilots, says it will consider the proposal in “good faith” as part of its contribution towards reviving the carrier.

KQ’s workforce stood at 3,973 as at March last year with staff costs having increased by 51 per cent in the past five years to Sh16.96 billion in the same period.

“From our previous consultative meetings, management has briefed the union on initiatives the company is taking with a view to cutting costs and increasing revenue,” KQ’s acting group HR director Lucy Muhiu says in a letter to Kawu.

“One such initiative is freezing of annual increments for the period of two years. We wish to implement freezing of the annual increments in the payroll this month in order to start realising the intended savings.”

KQ’s collective bargaining agreement (CBA) with its unionised workers provides that annual increments should be effected in January or July every year depending on the employee’s appointment or promotion date.

READ: Workers union says no more KQ layoffs after sacking of 80

Ms Muhiu, in her letter to Kawu secretary general Moss Ndiema, is seeking the union’s speedy green light before the close of the July payroll, adding that any delay in getting this will push the initiative’s implementation to January 2017.

“During our consultations we said that in good faith, we shall look at the proposal and see what we can forego for a given time,” Mr Ndiema said in an interview. “They are now seeking our consent as stipulated in the CBA and we shall consider it.”

KQ made the biggest net loss in the country’s corporate history at Sh25.7 billion in the year ended March 2015.

The record loss was attributed to an ambitious but ultimately unsuccessful fleet expansion.

The project was largely funded through debt, piling a heavy finance cost on the carrier.

KQ sacked 80 staff last week, half of them being Kawu members. The workers lobby said that the airline’s management had agreed to limit number of sacked employees significantly below the initial estimate of 600.