Number of Kenyan super earners shrinks as income gap grows


Workers during this year’s Labour Day celebrations at Uhuru Park in Nairobi. PHOTO | FILE

Only 68,676 or 2.89 per cent of formal sector employees in Kenya earn more than Sh100,000 per month, according to newly released data, showing a widening income gap in the country.

The data from the Kenya National Bureau of Statistics (KNBS) shows that more than half of formal sector workers (64.5 per cent) are living on low wages of between Sh20,000 and Sh49,000 that have barely increased in the past 10 years, eroding the wage earners’ purchasing power.

The formal sector wages data also shows that although the number of people in the top earning bracket declined last year compared to 2013, the number of those at the bottom of the pyramid grew even faster, widening the inequality gap in the economy. 

The KNBS data shows that the proportion of workers earning more than Sh100,000 dropped from 2.91 per cent in 2013 to 2.89 last year, indicating that the number of better-paid employees grew at a slower pace than the other segments of the employment market.

Besides, wages grew faster for the small number of formal sector workers at the top compared to the majority at the bottom of the pile, deepening the income inequality rift.

Raymond Muthama, a human resource consultant with KPMG, said that while the pay disparity may exist, there has been a rise in salaries even in the lower cadres of employment.

“People should not look at just the pay disparities in the different earning brackets but also appreciate that the mean salaries even among the lower income earners have risen significantly from what they were five years ago,” Mr Muthama said.

“People who earned Sh30,000 are now earning Sh50,000 because the economy has improved. It’s not so much how one’s pay compares to those paid more but whether the person earning Sh50,000 is living a better life now.”

He added that the bigger salaries, especially in the corporate sector, are usually pegged on performance.

“If someone is paying you that much, they will also demand a lot in terms of service,” he said.


Kenya recorded a modest average annual growth rate of 4.6 per cent in the past decade but the World Bank has ranked it as the most unequal country in Eastern Africa in terms of income.

Although the country has a higher income per capita compared to her neighbours, high levels of inequality in Kenya means the money is poorly distributed and is largely held by a small group of super-earners.

The KNBS report is based on the wages of employees who pay income tax to the Kenya Revenue Authority (KRA).

Kenya had a total of 2,370,184 formal sector workers last year, growing by 300,000 in the past four years.

The data shows that slightly over a quarter of the workers earn less than Sh25,000 a month, making settlement of household bills a tricky game of balancing especially in cities such as Nairobi, Mombasa and Nakuru where the cost of key items such as house rent has steeply risen in the past decade.

In Nairobi, for example, the monthly rent for a two-bedroom house ranges between Sh10,000 and Sh15,000.

Food and transport has also become dearer with the general rise in the cost of living. A two-kilogramme packet of maize flour that cost about Sh90 in 2013 is now priced at an average of Sh115.

READ: Nairobi moves up on list of most expensive cities

Households also have to meet the cost of healthcare, education, clothing and entertainment.

Financial services sector

Financial institutions such as banks, insurers, and asset managers remain the best paid workers in Kenya where 15.35 per cent of the total sector workforce earn over Sh100,000, according to the KNBS data.

Some 53.31 per cent of workers in this sector also earn between Sh50,000 and Sh99,000, meaning nearly 68.6 per cent of workers in this sector earn more than Sh70,000.

The Economic Survey 2015 indicated that the average pay in the financial services sector stood at Sh115,481. But the fact that only 15 per cent of the workers are earning more than Sh100,000 means the bulk of the wages are paid to the super earners at the top.

The wage gap is expected to widen further following the signing of a collective bargaining agreement (CBA) between the 8,000 unionisable banking sector workers and their employers to avert a strike.

The two-year CBA means workers in banking, who are by far the best paid in the formal sector, have moved up the pay ladder, widening the distance between them and the majority at the bottom of the pay pyramid.

The CBA raised the bankers’ starting salary by seven per cent to Sh59,770, a figure that is due for upward review next year.

Banks and stock brokerages continued to register impressive profits in the past couple of years, spurring the growth of wages for their workers.

Data from the Central Bank of Kenya shows that the pre-tax profit of commercial banks rose by 8.3 per cent in the first half of this year to Sh76.9 billion. Stockbrokers and investment banks collectively earned Sh2.6 billion in the same period — a 15 per cent growth.

Deploying technology has also seen the institutions cut on clerical jobs, leaving them with a lean workforce that they are able to pay better.

Education and agriculture

In absolute terms, the education sector had the highest number of those earning Sh100,000 and above. The 13,809 represent mostly lecturers, senior administrators and head teachers who form the top layer of the sector’s 450,000 workforce. A majority of teachers, however, earn less than Sh50,000, according to the KNBS data.

Public school teachers have been pushing for a 50-60 per cent pay increase and only resumed teaching this week after a court ruled that the matter be resolved in the next three months.

The Treasury insists that it does not have the extra Sh17 billion needed to implement the pay increase per year, which if effected will see the number of those earning more than Sh100,000 swell.

Agriculture which contributes 27.3 per cent of the gross domestic product (GDP) has relatively few high earners. The bulk of the workers in the sector earn less than Sh30,000 and are mostly employed in large-scale farms that produce tea, cut flowers, coffee and fruits.

Remuneration on these farms remains generally low as professional jobs are few. However, there has been employee unrest, especially on flower farms where workers have been demanding better pay.

Gender disparity

The KNBS data also reveals the huge wage disparity between men and women with twice as many men as women earning in excess of Sh100,000. The silver lining in the dark cloud, however, is that the number of women in top pay bracket is rising faster than that of men.

Between 2011 and last year, the number of women earning more than Sh100,000 rose by 7,329 to 25,101.

In the same period the number of men increased by 4,963 to 43,575.

Workers in other sectors who are relatively well-paid include electricity and gas where the pay for 6.88 per cent is above the Sh100,000 mark.

Others are arts, entertainment and recreation (7.65 per cent) and wholesale and retail trade (4.32 per cent). Only 2.03 per cent of those in manufacturing earn this amount.

The water supply and sanitation sector has the least number of these well-paid workers at 103.

Their position at the bottom of the income ladder is linked to the routine nature of their tasks, a phenomenon that has depressed wages for similar industries that lack high-level skills and qualifications.