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Economy

State House rejects FKE fears on Uhuru pay call

Mr Manoah Esipisu. FILE PHOTO | NMG
Mr Manoah Esipisu. FILE PHOTO |   NMG

State House has rebuffed the Federation of Kenya Employers’ (FKE) concerns over labour cost after it restated President Uhuru Kenyatta’s promise to increase minimum wages on May Day.

Spokesperson Manoah Esipisu said the Public Service Commission, Central Organisation of Trade Unions (Cotu) and the Salaries and Remuneration Commission were holding talks to agree on new rates for the lowest paid public sector workers.

Mr Kenyatta, responding to sustained pressure from Cotu, has since asked the private sector consider raising minimum wages for their workers on May 1 Labour Day.

“The President recognises that while overall the Kenyan economy remains robust, ordinary citizens still experience difficulties in their daily lives, and he is working to help tackle these challenges,” said Mr Esipisu.

The country has had a long running debate over the relevance of the minimum wages in a free labour market.

While trade unions see the setting of minimum wages as a way of protecting lowest cadre employees from effects of inflation and exploitation by workers, the FKE wants workers’ pay to be determined by market forces and employees output.

The minimum wage in Kenya is about Sh12,600 on average, compared to Egypt’s Sh6,500 and Ethiopia’s Sh5,000, for instance, according to the FKE. Official data places the average minimum wage in Nairobi, Mombasa and Kisumu at Sh17,200 and Sh13,393 in other towns.

Kenya has not increased the minimum wages in the last two years. Cotu secretary-general Francis Atwoli has been pushing for minimum wages to be increased by at least Sh2,700 to compensate workers from sky-high inflation.

Inflation stood at 10.28 in March, the highest inflation rate since June of 2012 owing to a sharp rise in food prices caused by drought.

The FKE, however, says the minimum wage increases have crippled a number of business as they come with a ripple effect on other statutory deductions and indirect benefits to workers.

But Mr Esipisu, maintained that an increase in minimum wage would be part of President Kenyatta’s gift to workers on May 1.

“Government has not increased the minimum wage in two years, and the President favours an increase this year. It is something that workers can look to,” he said.

The government, he added, was also waiting for new salary recommendations from the National Police Service Commission and the SRC for members of the security agencies.

Last week, FKE executive director Jacqueline Mugo lamented that a number of firms had opted out of the country to markets such as Ethiopia, Egypt, Tanzania, Uganda, Malawi and Rwanda where the minimum wage is sustainable. She did not name the individual firms pushed out of Kenya by high minimum wages.

“Many of our enterprises are struggling because they are forced to use the little profits they make to sustain their bloated wage bill instead of expanding and create more jobs,” Ms Mugo is quoted as having said.

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