The Kenyan labour market is staring at more turbulent times over the next few years, as pressure to devise a basic-wage policy continues to mount while more workers drift into poverty due to increased cost of living, experts are warning.

A decision by the Government to maintain a minimum wage policy has been blamed for the joblessness and slow economic takeoff that has persisted in the country over the past four years.

As the cost of living continues to rise, there has been pressure to also have salaries and wages increased as well.

This is among the key reasons the Government has increased salaries of various categories of civil servants in the last three years-although marginally compared to the rate of inflation.

According to experts, among the challenges which labour market players must grapple with urgently is more enhanced productivity-based remuneration and structured salary agreements as opposed to public pronouncements especially for Government workers.

"Currently most employers use outdated models for wage-setting paying little attention to key work place parameters such as productivity, consumer price indices, and economic performance, "said Jacob Omolo, a labour economist at the Institute of Policy Analysis and Research (IPAR), a local policy think-tank.

Mr Omollo argues that it has therefore not been uncommon for unions to demand pay hikes even in situations where there is clear evidence that productivity - the output per unit hour - has dropped, and with it the company's profitability.

Millions of Kenyan workers celebrate Labour Day today-which is being marked globally-against a backdrop of spiralling inflation buoyed by high food and fuel prices.

A combination of unfavourable agronomic conditions, inferior farming methods and shortage of arable land makes Kenya a net food importer and therefore sustained high world prices are likely to erode people's real incomes rather than benefit farmers who form the bulk of the population.

The latest figures from the Kenya National Bureau of Statistics show that the month-on-month overall inflation rate increased from 19.1 per cent in February 2008 to 21.8 per cent in March 2008- a new decade high-in response to rising food prices.

Hopes of better times ahead for workers are however in the offing as the newly enacted five labour laws-seen by many as a boon to employees, providing for a wide range of measures aimed at improving working conditions -take effect.

Employers say they are also grappling with high labour costs informed by slowed growth and disruptions caused by the post election crisis in January.

The Federation of Kenya Employers (FKE) which is opposed to retrogressive implementation of the new laws has raised a red flag that the rules are likely to make employment expensive.

Private employers have been leading the pack in effecting productivity-based remuneration.

The basic wage policy which will reflect employment outcomes could reduce the cost of production in Kenya which remains above the regional average.

"The era of increasing salaries through public pronouncements has really hurt Government employees as this has just been a political tool devoid of economic considerations," says Tom Odege, the secretary general of the 110,000-plus members Union of Kenya Civil Servants.

"We want packages out of structured agreements especially through CBAs"

Central Organisation of Trade Unions (COTU) secretary general Francis Atwoli is on record saying quality jobs and better service delivery can only come from productivity-based work-places, adding that the time for wage-fixing is long gone.

Analysts said that the reason the wages have failed to rise despite statutory provisions was laxity in government to police the private sector-which employs the bulk of Kenyan workers.

This has been made worse by weak labour force supervision by the ministry of labour owing mainly to financial limitations.

On May 2006, last year, President Kibaki rekindled the Labour Day tradition when he raised the minimum wage by 12 per cent for the lowest paid workers, pushing their earnings to Sh5,395 a month.

But last year, there was no mention on the minimum wage during the celebrations-perhaps an indication that the Government was giving in to pressure to devise a basic wage-policy as the popularity of minimum wage wanes.

Trade unions have stepped up pressure for annual wage reviews for unionisable employees kicking up a storm over pay disparity at the work place despite increased rate of economic growth, buoyed by increased profitability in the corporate sector.