Columnists

Why are employees still on pay cuts?

pay
jenny

Summary

  • In the great swirling mass of interrupted activity that hit earnings everywhere, the only oddity of it all is that it didn’t add up to a bigger overall economic contraction.
  • For sure, in Kenya’s culture, built as it is, every tendency is towards pushing the losses down to those with the least voice and the fewest alternatives.

Poverty is a grinding, destructive force. I don’t even know how people cope with it emotionally, where they find the resilience, or how they must feel each hungry day. But that the Covid pandemic and all the measures we lived through have made it worse, as reported this week, can come as no surprise.

Pollsters Geopoll put out poll results that showed earnings fell immediately the pandemic started, from April to July 2020, and then fell again and by much more from August to November of the same year.

As a consequence, villages filled up with former city residents, returning home as a safety net, with their jobs gone, or in retreat from the unmeetable sum of a cut salary coming in, but a city rent going out.

Behind that migration sat city landlords with now empty income-less properties who were buying less, employing fewer. Closed offices dropped messengers and askari. The working from home hit matatus and SACCOs.

In the great swirling mass of interrupted activity that hit earnings everywhere, the only oddity of it all is that it didn’t add up to a bigger overall economic contraction.

Kenya’s GDP growth did fall from an expected 5.4 per cent in 2020 to a now adjusted contraction of 0.3 per cent, according to the World Bank, or 0.1 per cent, according to the IMF. But, either way, both tiny contractions, and hard to grasp as the outcome of so many dropped incomes: who was earning more to balance out all those everywhere losses?

Yet, in 2021, the consensus is that Kenyan GDP grew, and by more than 5 per cent.

So now we have a sheep and goats issue playing out: two types of businesses, two types of employers, two types of vision, and two types of relationships with stakeholders and staff – the ones who have restored salary levels, and the ones who have not.

For only some of the salary cuts of 2020 have ever been restored. For many, the 40 per cent or 50 per cent cut then, is a rate still in place in 2022.

Of course, businesses have taken a hit. Hotels sat virtually empty, newspapers dropped advertisers, manufacturers sat idle on raw material hold ups, and sold less when they were producing. These are all losses.

But when an organisation that is a group of people in various functions takes a hit, there is a unique kind of destruction that can follow from it being the powerful who decide how the losses are distributed. That is especially so when those powerful decide that it is those with the least power and the fewest resources that will carry the can for everyone.

So, in those companies, the employees and casual workers are still paying back the losses that the whole organisation suffered from their own salaries, to maintain or improve returns to shareholders, or maintain the same price to customers.

For sure, in Kenya’s culture, built as it is, every tendency is towards pushing the losses down to those with the least voice and the fewest alternatives.

But little wonder then, that people are leaving jobs as never before. And little wonder, too, that poverty is up, now including the family of the askari who has been earning 30 per cent less for coming up for two years.

In truth, we should be examining firms that are holding on to pay cuts in 2022 for their real, underlying performance, both as shareholders and as employees.

For, if last year brought over 5 per cent GDP growth, if the hotels are back up to near-previous occupancy levels, if the ports are open and the tourists are moving if the curfew is gone and the widespread absenteeism too, then why would salaries be down now, even by 5 per cent?

Yes, the hits left a hole in profits and in cash flow, but after two years there are ways to look at pricing formulas, and if a business is without the innovation to see any new opportunities, honestly: get out. Find another job at standard salary, or sell the share. For businesses don’t thrive and grow and excel on 60 per cent payments, ever.