State rethinks annual minimum wage increase

The State is rethinking the annual minimum wage review following pressure to trim the civil service wage bill.

Labour PS Ali Noor said that the review will not be automatic and it would depend on the outcome of the ongoing talks on ways to tame the public service wage bill.

The government normally reviews the minimum wages for different work categories during Labour Day on May 1, a practice that has been opposed by the private sector for making local businesses uncompetitive and Kenya unattractive investment destination.

Last year, the government reviewed the minimum wage paid to employees following President Uhuru Kenyatta’s directive to increase the wages by 14 per cent.

“The rising wage bill will be a critical thing in considering whether there will be a review on minimum wages,” said Mr Noor.

The PS, who was speaking during the final day of the Cabinet secretaries briefing on their achievements in the past year and targets for the coming year, said that there was still time to deliberate on the matter.

Mr Noor noted that many factors, including whether the review of the minimum wage would be sustainable in the long run and its impact on the economy, would be considered during the consultations.

The Kenya Federation of Employers has in the past faulted the annual review saying the increment should not only be based on the cost of living measure or inflation rate but also workers’ productivity.

READ: Manufacturers fault raise on basic wage

But trade unions have been demanding higher increments to help their members cope with soaring costs of basic goods, especially food, fuel and housing prices.

This has triggered workers’ strike, which the Labour ministry says affected 44 firms and 310,475 employees in the past year.

In 2012, the government raised the minimum wage by 12.5 per cent. The average minimum wage was Sh5,044 in 2011, but it is now Sh6, 475.

Debate over the minimum pay comes as Kenya warns that the rising civil service wage bill is one of the biggest threats to attaining the targeted double-digit economic growth.

The Salaries and Remuneration Commission is currently conducting nationwide talks on how to tame the wage burden. The wage bill stands at Sh560 billion or nearly 13 per cent of the gross domestic product up from Sh240 billion in 2009.

President Uhuru and his deputy William Ruto have taken a 20 per cent pay cut while the Cabinet and PSs will have their salaries lowered by 10 per cent.

The government has also ordered CEOs of state-owned firms to take a 20 per cent pay cut.