2 May 2006

Kenya: Kibaki Raises Minimum Wage

Nairobi — President Kibaki has rekindled the spirit of Labour Day in Kenya by raising the minimum wage by 12 per cent.

The lowest paid worker will now earn Sh5,395 - up from Sh4,817. Addressing workers during celebrations at Nairobi's Uhuru Park, the President also warned the country of the futility of engaging in "endless talk on politics and party issues."

The President dismissed politicians who dwelt on party politics as irrelevant, saying this could not help the country to develop. He wondered whether those who speak about parties "today, tomorrow and the day after, have nothing else to discuss." The President appeared to be talking about the raging row in the ruling coalition on whether to field candidates in the coming by-elections as Narc or the newly registered Narc Kenya.

The political scene is also raging with another debate on how LDP and Kanu - both members of the Orange Democratic Movement - should approach the by-elections. This is the second time the President has graced the Labour Day celebrations since he took office in 2002. In 2003, he raised the minimum wage for teachers and three other categories by between 11-15 per cent.

High cost of living

Kibaki assured Kenyans that the Government would do everything within its reach to mitigate the effects of the drought and the high oil prices. It would continue to move grains such as maize and wheat from surplus to deficit areas at a minimal cost.

"I also appeal to our oil companies not to take advantage of increased international oil prices, to have a disproportionate increase in local pump prices," he said.

"In all fairness, when the international oil prices come down, fuel pump prices should be reduced with the same speed," he said.

Announcing the increase in wages, the President said this would cushion workers against the effects of high cost of living.

"In harmony with the principle of corporate social responsibility, as well as in support of the endeavour by employers to create and sustain employment opportunities, I direct that the statutory minimum wage be increased by 12 per cent under the General Wages Order," he said.

He separately raised the wages of those in the agricultural sector by 11 per cent, with a rider that this was the base of Kenya's growing economy. The President said the Government would continue to reward farmers in a strategy aimed at faster economic growth.

Cereals farmers, he said, had benefited from the scheme that was started in 2003, after the National Rainbow Coalition took power.

Targeted GDP growth rate

The Narc Government, he said, came into office at a time when the country was experiencing serious economic decline. He thanked workers for contributing to the country's economic growth. He called on farmers and other workers to redouble their efforts to improve the Gross Domestic Product growth rate from last year's five per cent to the new target of seven and above.

He enumerated various indicators of economic growth under his rule, including the rise by more than 140 per cent of the Nairobi Stock Exchange share index in the last three years. Foreign Direct Investments, he said, rose from US$34 million in 2002 to US$166 million in 2004.

"Similarly, the value of building plans approved by local authorities has increased by over 166 per cent."

He said the Gross Domestic Product growth rate increased from 2.8 per cent in 2003 to 4.3 per cent in 2004 and five per cent last year.

To achieve the targeted GDP growth rate of more than seven per cent, he said, Kenyans should fight against poverty and unemployment. There were challenges in the fight, including the surging international oil prices, which constrained the gains already made.

He expressed regret that the high pump prices had greatly increased transportation costs and food prices in the country. This could erode the purchasing power of the Kenyan worker.

Increasing productivity

The prolonged drought that affected parts of the country had also slowed down the momentum of economic growth as resources meant for development were diverted to address the emergency matters.

Despite the challenges the country faced, the President said, Kenyans should re-double their efforts to achieve "our vision of a prosperous working and caring nation". He said wealth creation involved mobilisation of both material and human resources. There was need for fair play between employers and workers for mutual benefit and growth of the economy.

"To this end, the traditional methods of wage or salary determination through individual worker negotiation, collective bargaining and minimum statutory wage determination should be strengthened."

The President said the Government, through the Productivity Centre of Kenya, would establish an equitable way of linking workers' earnings to their performance. The guidelines, he said, would help to minimise industrial disputes between workers and employers.

He said the Government was exploring ways of increasing productivity among civil servants by promoting a culture of co-ownership of enterprises by workers through purchase of shares.

"Accordingly, we will continue to encourage privatisation through public share issues."

The President said he was aware that the ongoing restructuring in various organisations is a subject of concern to Kenyans and especially workers.

Employment opportunities

The restructuring, which was "inevitable" , was due to the fast changing global business environment, he said. He said the Government had not wavered from its election promise to create more jobs for the youth, adding that it was making every effort, through sound and prudent management of the economy to achieve its targets.

The Government was implementing policies aimed at expanding opportunities in the informal sector, which currently employed over 6 million. Some 1.8 million were in the formal sector. Last year alone, he said, the informal sector provided employment for over 474,000 workers.

This means that the Government could have met its target to create 500,000 jobs last year. Incentives would be given to those in the Information Communication and Technology sector, which was rapidly expanding to create more training opportunities for the youth.

The Government, through the Directorate of Personnel Management, would assist skilled Kenyans to be employed abroad.

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