Private sector wages up six months in a row as employees push firms to counter inflation

Wages in the private sector have risen for the sixth month in a row as workers demand higher pay to help fight the soaring cost of living. FILE PHOTO | NMG

Wages in the private sector have risen for the sixth month in a row as workers demand higher pay to help fight the soaring cost of living, findings of a monthly survey suggests.

Companies in key sectors such as agriculture, manufacturing, construction as well as wholesale and retail— which largely rely on casual labourers — have reported higher pay demands between March and August.

The pay raises have, however, been marginal at a time when firms largely hired to “boost client services and complete work on time” amid falling sales, according to Stanbic Bank Kenya’s Purchasing Managers Index (PMI).

“Firms that saw an uptick [in pay] mostly attributed this to higher compensation offers due to the rising cost of living,” analysts at Stanbic Bank and American analytics firm, S&P Global, wrote in the PMI report for August. “Despite picking up slightly from July, however, the rate of staff wage inflation [in August] was only mild overall.”

Inflation — a measure of the cost of living over the last 12 months— climbed to a 62-month high of 8.5 percent in August, the fastest since 9.21 percent in June 2017 when the country battled a biting drought.

The deepening cost-of-living crisis this year has largely been exacerbated by Russia’s brutal war in Ukraine which disrupted global supply chains and affected the availability of items such as wheat, edible oil and fertilizer, thus raising their prices.

That has been compounded by below-average rainfall since last year which has hit agricultural output, including staple maize, and a weakening shilling against the globally bullish US dollar in a net import economy.

Unlike back in 2017 when the Treasury largely allowed waiver of import duties to smoothen the purchase of key food items such as maize, rice and milk powder from abroad for several months, the government in July entered into a month-long subsidy deal with maize millers.

The Sh4 billion deal, which targeted to halve the price of a two-kilogramme packet of maize meal which had crossed Sh200 for the first time, failed to benefit the majority of consumers who struggled to access the subsidised flour.

Manufacturers last month flagged rising labour costs as a key driver of operational costs in an economic setting of depressed sales amid the fastest climb in inflation in more than five years.

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