Nakumatt Supermarkets has signed a 12 per cent salary increase for its 4,500 unionisable staff in a deal that is set to significantly raise its wage bill.
The workers are also set to earn higher housing, transport and night-shift allowances and additional leave days as per the two-year collective bargaining agreement (CBA) signed with the Kenya Union of Commercial, Food and Allied Workers (Kucfaw) backdated to May.
The new deal also states that all confirmed employees will now join the Nakumatt pension scheme and 24 leave days from the previous 23 days.
“All unionisabe employees in the employment of the company as at April 30 2014 shall receive a wage increase of 12 per cent to cover the first year and an increase of 10 per cent to cover the second year,” reads the CBA signed on Friday last week.
Cashiers at Nakumatt will now earn a basic monthly pay of Sh22,321 and are entitled to free accommodation from the retailer or a house allowance equivalent to 15 per cent of basic wage and a further Sh3,000 from Sh2,500 in the earlier deal.
Night shift meal allowances have doubled to Sh200 per night, transport allowance has increased 39 per cent to Sh3,200 per month while safari and subsistence allowances has increased by a fifth to Sh3,600 monthly for duties within Kenya and Sh4,500 in East Africa.
“We think it’s a good deal. The cost of living has been going up and the new terms and conditions of service will be welcome to our members,” said Boniface Kavuvi, Kucfaw’s secretary-general.
Implementing these new demands will see Nakumatt’s staff costs rise by about Sh200 million annually.
“On confirmation all unionisable employees shall contribute five per cent of their gross salary to the pension scheme while the employer shall contribute five per cent of the respective employee’s gross salary to the scheme,” says the contract.
The contract between Nakumatt and its employees comes after a year in which the retailer’s sales dropped by nearly a tenth last year following the loss of its prime outlet at the Westgate Shopping Mall to a terror attack.
The regional retailer reported gross sales of Sh52.2 billion ($600 million) for the fiscal ended February 2014 compared to Sh56.5 billion ($650 million) a year earlier, a drop of 7.7 per cent.
Nakumatt is ranked Kenya’s biggest retailer in terms of revenue and has a total of 50 outlets and over 7,000 staff regionally.
The higher staff costs coupled with rising operational costs such as rent and insurance are expected to exert profit margin pressures on Nakumatt in an environment characterised by insecurity concerns and sluggish economic growth.
Research by Kestrel Capital shows Kenyan retail and grocery stores earn a return on sales of between one and three per cent, hence the need for cost cutting and innovation to grow earnings.
Kenya’s top retailers have been hit with a rising spate of industrial action, as workers push for better salaries and working conditions.
Tuskys Supermarkets’ 7,000 employees went on strike in December last year demanding a 10 per cent pay rise and allowances, months after they joined Kucfaw.
A supermarket cashier at Tuskys currently earns a basic monthly pay of Sh22,000 and the CBA deal signed to end the strike will see them get Sh24,000 in the first year and Sh26,640 in the second year.
The standoff was resolved when the Nairobi bourse-listed retailer agreed to implement the deal.