Bank employees get 7pc pay raise in new pact

More than 20,000 unionisable bank workers will get a seven percent salary increase next month on the back of industry recovery from the Covid disruptions.

The bank employees will get a four percent basic pay increase backdated for the period between March 1, 2020 and February 28, 2021.

The workers had not received a salary increase in this period because of the outbreak of the Covid-19 pandemic.

They will also get an additional three percent pay rise for the period from March 1, 2021 to February 28, 2022 which will also be backdated.

The move comes after Banking Insurance and Finance Union of Kenya (BIFU) concluded new negotiations with the Kenya Bankers Association (KBA), representing 38 institutions.

The collective bargaining agreement covers the years 2020 to 2023.

“There was no pay cut or raise during last year because of Covid-19, we also did not negotiate salary changes,” Tom Odero, the BIFU spokesperson, said.

The new agreement comes amid recovery of bank earnings as Kenya and other countries increased vaccinations and loosen restrictions aimed at containing the pandemic.

The new agreement also provides for a six percent rise in all other allowances such as house, owner occupier, medical, leave and travelling.

Employees covered include supervisors, clerical staff and copy typists, technical staff and subordinate staff, messengers, drivers and chauffeurs.

Clerical staff in charge of issuance of ATM cards and cheque books will receive Sh78,169 basic salary per month from Sh72,974 in 2019 having worked for two years.

Effective from March 1, 2021, the employees will receive Sh15,476 house allowance per month.

Local leave allowance will be paid between Sh5,724 -12,773 per year depending on job category and years of service.

The four percent and three percent rise for 2020 and this year respectively is, however, lower than the six percent pay jump in the three years to 2019.

“The difference is not entirely on Covid-19 as such, although it also contributed. When we negotiated, we looked at cost of living as provided by Kenya National Bureau of Statistics and the productivity of the banking industry in the period under review. Banks were trying to mitigate their risks from loan defaults,” Mr Odero said.

The salary increment comes as lenders’ fortunes rebound on improved economic environment.

Banks’ pre-tax profits shrank by Sh46 billion in the year ended December to Sh112.8 billion, mainly due to increased provision for bad loans, according to data from the Central Bank of Kenya (CBK).

The lenders had restructured loans worth Sh1.63 trillion or 54.2 percent of the total Sh3 trillion loan book in the review period as companies and individuals struggled to repay loans due to reduced incomes.

Banks have, however, made a record pre-tax profit of Sh96.4 billion in the first half ended June compared to Sh60 billion recorded a year earlier as loan repayments improved and provisions for non-performing loans declined.

“We are pleased with the outcome of the union negotiations,” said Habil Olaka, the KBA chief executive.

“Bank employees have been essential workers throughout this pandemic, and we thank them for their personal sacrifice and commitment to delivering uninterrupted services to the banking public.’’

The minimum basic salary for staff entering the banking industry such as clerical and subordinate, office messenger will be Sh69,172, Sh70,777 and 58,066 per month respectively.

The pay raise is set to increase staff costs for the industry that has been retrenching, shifting to digital banking platforms to cut costs and reducing the need for new branches

Staff costs increased 1.3 percent to Sh93.56 billion in the year ended December 2020 from Sh92.32 billion the previous year.

The number of bank staff slightly dropped 1.3 percent or 420 to 31,605 in the review period.