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74pc of salaried Kenyans earn less than Sh50,000

office workers
Civil service workers in a Ministry of Lands office. PHOTO | file 

Three-quarters of all Kenyans working in the formal sector are on a monthly salary of below Sh50,000, the latest wage distribution data shows.

The Kenya National Bureau of Statistics (KNBS) says the number of people in this bottom-wage bracket stood at 1.9 million at the end of 2017.

It includes those at the bottom wage bracket (earning below Sh20,000 a month), mainly made up of minimum wage workers such as house servants, drivers, secretaries and low-ranking teachers and police officers.

The typical Kenyan employee, who is paid between Sh20,000 and Sh29,999 per month, stood at 964,943 or 36 per cent of the 2.6 million salaried workers.

The low-paid workers’ segment also includes the 749,344 with incomes of between Sh30,000 and Sh49,999 who are considered on the lower middle class earnings threshold.

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This group has expanded its ranks the most in the past five years, adding 95,664 members or a compound annual growth rate of 2.7 per cent over the period.

The 1.9 million workers are the most critical for the economy, accounting for a large share of aggregate demand for goods and services.

Most of these employees spend the bulk of their income on basic necessities such as food, housing, clothing, education and minor discretionary items such as entertainment.

Higher-income households tend to save more of their earnings while also spending on luxury items such as cars and holidays.

Next largest segment

The KNBS Statistical Abstract shows that those paid between Sh50,000 and Sh99,999 per month form the next largest segment with a population of 601,507.

This category includes most entry-level jobs for university graduates in diverse sectors such as banking, manufacturing, telecommunications as well as the civil service.

They form the majority of the middle class whose growth has sparked a consumerism culture as seen by the expansion of global luxury goods brands, including purveyors of premium alcohol, cars, clothing and smartphones.

Their ranks have grown by 81,853 members over the past five years, a growth rate of 2.9 per cent compounded annually.

Those earning Sh100,000 or more also grew at an almost similar rate to reach 76,804 last year, having added 10,261 members in the same period.

Workers in this top income club include professionals with several years of experience, State officers, managers and individuals with one or more postgraduate qualifications.

Most of the individuals in this bracket earn millions of shillings per year and represent the rich and upper middle classes.

At a minimum of Sh100,000, their pay is nearly seven times the gross monthly per capita income of Sh14,508.

The super-rich are also members of this club but they make most of their money from non-labour sources such as dividends, interest, royalties and capital gains.

Below per capita income level

Only 23,639 employees are paid below the per capita income level of Sh9,999 or less, partly due to the raising of the minimum wage over the years. Cashiers, drivers and clerks, for instance, have seen their pay set above Sh19,000 by law.

The 2.6 million workers in the formal sector shared total wage earnings of Sh1.8 trillion last year, up from Sh1.6 trillion distributed to 2.5 million employees in 2016.

The private sector doled out the biggest pay cheque of Sh1.2 trillion last year or 70 per cent of the total wage earnings, underlining the critical role of companies in creating and sustaining employment opportunities.

Scores of businesses, including banks and manufacturers, have laid off thousands of workers in the past one year, citing unfavourable policies and rising cost of doing business, among other factors.

Within the private sector, local firms had the largest payroll of Sh438.5 billion, followed by foreign companies (Sh162.1 billion).

The government paid its workers a total of Sh549.1 billion, with most of the money gobbled up by teachers at Sh180.9 billion, followed by county governments (Sh110 billion) and national government (Sh107.9 billion).

The actual labour earnings across the country is unclear, with most Kenyans employed in the informal agricultural sector.

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