Employers campaign against May 1 minimum wage review

Employers have launched a campaign against an increase of minimum wages ahead of Labour Day, arguing that the move makes Kenya uncompetitive.
The Federation of Kenya Employers (FKE) on Monday asked the government not to breach an agreement against reviewing wages during Labour Day on May 1.

“Employers wish to reiterate their unending and hitherto unheeded call to the government not to announce any changes in minimum wages during Labour Day celebrations,” said Jacqueline Mugo, executive director at FKE.

“The government cannot base the review on inflation alone while ignoring the other economic factors. Such increments must also be supported by productivity and the ability of the industry to pay.”

Last year, the government reviewed the minimum wage following President Uhuru Kenyatta’s directive to increase the wages by 14 per cent, up from 12.5 per cent in 2012.

FKE said that Kenya has the highest minimum wage among east Africa community members, adding that the country has focused more on the cost of living measure or inflation rate over workers’ productivity while making the increments.

“The 2013 increment of 14 per cent was above the 4.6 per cent GDP growth. This basically amounts to over-compensation of labour relative to capital, which impacts negatively on the economy,” said Ms Mugo.

But labour unions have been demanding increments to help their members cope with soaring prices, especially of food, fuel and housing.

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

Inflation has remained within the single-digit range over the past year and last month stood at 6.27 per cent. Kenyan authorities prefer to see inflation at between 3.5 and 7.5 per cent.

The government is under pressure to trim the civil service wage bill that stands at Sh560 billion or nearly 13 per cent of the gross domestic product, up from Sh240 billion in 2009.

READ: Treasury secretary raises the alarm over rising wage bill

Governments in the rich world, including the US, Germany and Britain, are pushing for the boosting on minimum wage-rates in their countries to compensate for stagnant pay for much of the past decade

In Kenya, each region and occupation has a set minimum wage. A night watchman in Nairobi is expected to earn a minimum salary of Sh10,910 per day and Sh10,115 in smaller towns like Mavoko.

Failure to adhere to guidelines on minimum wage is a criminal offence and employers in breach face a fine of Sh50,000 or three months imprisonment.