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Economy

Uhuru hands workers 14pc raise in minimum wage

President Uhuru Kenyatta making his speech during Labour Day celebration at Nairobi’s Uhuru Park on May 1, 2013. Photo/BILLY MUTAI
President Uhuru Kenyatta making his speech during Labour Day celebration at Nairobi’s Uhuru Park on May 1, 2013. Photo/BILLY MUTAI  

President Uhuru Kenyatta on Wednesday awarded lowest paid workers a 14 per cent pay increase, setting his government on a collision course with employers opposed to statutory wage thresholds.

Mr Kenyatta said the new wage guidelines, which take effect immediately, were part of the government’s plan to protect workers and improve their welfare.

“We acknowledge the constitutional obligation to workers and we’ll safeguard their rights,” Mr Kenyatta said at the Labour Day celebrations ceremony in Nairobi.

The move increases the minimum wage for the lowest paid unskilled workers in the agricultural sector (the lowest paying job) from Sh4,258 to Sh4,854 and that of a house help in Nairobi to Sh8,648 up from Sh7,586.

The issue of minimum wage — and government’s annual increments — has been hotly contested by employers who hold that workers’ pay should be pegged on market forces and productivity.

During their campaigns last year, the eight presidential candidates — keen to please both the unions and employers — avoided questions on the validity of minimum wages with Mr Kenyatta maintaining that his government would go for wages that vary with the cost of living.

The Federation of Kenya Employers (FKE) stoked the old debate Wednesday when its chairman Erastus Mwongera asked the government to delink annual minimum wage reviews from Labour Day celebrations.

“Kenya has low productivity of labour and capital and this makes continued annual review of wages unsustainable,” Mr Mwongera said.

President Kenyatta, however, acceded to the private sector’s call for a regulatory framework to speed up job creation. The government will take immediate steps to implement the national employment policy and strategy approved by the Cabinet last year, Mr Kenyatta said.

Under the national employment policy, all future projects will be approved on the basis of the number of jobs they are likely to generate.

Its other key planks are affirmative action for small and medium-sized enterprises as well as collaboration among employers and educational institutions to produce employable graduates.

For the first time since independence, the government is also set to implement a national income and wages policy as part of the effort by the Salaries and Remuneration Commission to address disparity in public sector pay.

The government also intends to sign bilateral pacts with other countries to spell terms and procedures for hiring Kenyans, a move aimed at addressing growing cases of harassment of job seekers in foreign lands.

The new changes planned by the Jubilee Coalition also target key institutions in the labour market.

Labour permanent secretary Beatrice Kituyi said the National Social Security Fund (NSSF) would be reformed to make it accessible to more workers.

“The reforms of social protection in this country must begin with the reform of NSSF,” Ms Kituyi.

The recently drafted NSSF Transformation Bill, she said, would reduce the cost of running the organisation to only two per cent of its recurrent expenses.

So far, Mr Kenyatta has enjoyed a relative calm in the labour market, partly as a result of lower cost of living with inflation staying below the psychological five per cent in the last seven months.

His predecessor President Kibaki’s administration had to grapple with numerous strikes that frequently affected key sectors of the economy like education and health.

On Wednesday, the Central Organisation for Trade Unions Secretary-General Francis Atwoli appealed to his colleagues in the trade union movement to give the new administration more time to put its house in order.

“Even after that, we will try dialogue and use other means to get what we want from them instead of strikes,” Mr Atwoli said.

Mr Kenyatta and Deputy President William Ruto made use of the Labour Day fete to repeat their campaign pledge to reduce cost of items such as foodstuff to ease pressure on workers’ earnings.

But the two would not comment on the demand for higher salaries by legislators even as FKE prodded them to reduce the public wage bill.

At the moment, the country is reeling under the weight of public wage bill estimated at Sh458 billion, almost half of the revenue that the government expects to collect in the current financial year.

This level of expenditure on public wages is slightly over 12 per cent of the country’s GDP and well above the internationally accepted standard of seven per cent, President Kenyatta noted when he opened the 11th Parliament.

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