President Uhuru Kenyatta has directed that the minimum wage for Kenyan workers be raised by 18 per cent.
He made the announcement during his Labour Day speech at Uhuru Park in Nairobi.
The head of State also issued a directive to raise non-taxable bonuses and overtime to cushion low-income earners.
“I understand that you want to have more disposable income to be able to meet your families’ needs. I am aware the workers on the lower income bracket are struggling to afford basic necessities. It is not fair that they should be taxed heavily,” said Mr Kenyatta.
The directives come amid concerns by Kenyan employers that any further increase to the minimum wage would push up expenses for businesses and force further retrenchments.
The average minimum wage for a labourer in Nairobi, Kisumu and Mombasa currently stands at Sh10,955.
The State did not adjust the minimum pay for workers last year.
According to official data, soaring inflation has lifted the cost of living to a 57-month high of of 11.48 per cent, mostly driven by rising food prices.
This has eroded the purchasing power of many workers who now find it harder to put food on the table.