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Kenya: Turbulent Times Ahead for Local Workers
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Business Daily (Nairobi)
4 May 2008
Posted to the web 5 May 2008
Mwaura Kimani
When President Kibaki concluded his address during the Labour Day celebrations last Thursday without mention of wage adjustments for Kenyan labourers, scores of workers walked out of the meeting in protest.
This was an indication of high expectations among Kenyans - boxed by economic hardships - that their wages would be increased to cushion them from spiralling inflation buoyed by high food and fuel prices.
Employers on their part say that, they are also facing similar hardships in high costs related to tax, electricity, fuel, water, infrastructure and labour jeopardising any plans for upward reviews of salaries and wages.
For those who are increasing wages, it is by small margins.
Thus high inflation, said to have 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 and fuel prices has continued to erode people's real incomes.
This is the dicey dilemma facing the Kenyan labour market which has left analysts warning of more turbulent times at the work place by the end of the year.
The absence of a basic wage policy coupled with a decision by the Government to maintain the minimum wage policy has been blamed for the joblessness and slow economic takeoff that has persisted in the country over the past four years.
Labour experts say the absence of a basic wage/income policy has only but aggravated the problem for millions of Kenyan workers as possibilities of increased earnings lie only on their employers.
A basic wage policy would clearly indicate when wages are to be effected and the expected margins of adjustments.
According to the proponents of the policy, it will also reflect employment outcomes and could reduce the cost of production in Kenya which remains above the regional average.
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.
While labour remains one of the most crucial component in the running of the business, employers say it had become more expensive as workers were demanding more.
This has meant minimal adjustments in the salary scales for workers - marginal compared to the rate of inflation.
Mr Mwangi Ngumo, the chief executive officer at Kenya Institute of Management (KIM), said employers should cut down on other costs arguing labour should never be compromised.
"If the State reduced costs of electricity, and transport and step up subsidies on investors, employees would never fall victims as it is the case," said Mr Ngumo.
"If we could fix the problem of competitiveness of Kenyan firms regionally and globally, the issue of remuneration cost would be solved."
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.
Private employers have been leading the pack in effecting productivity-based remuneration.
High costs of labour have the potential impact of rallying the cost of doing business in Kenya to an all time high.
The country has been enjoying a boom in investments backed by companies expanding but all this could slow down owing to the high cost of inputs and labour.
For most Kenyan firms, labour accounts for more than 10 per cent of operational costs although it varies with the industry.
The chief executive officer of Eveready East Africa Limited, Mr Steve Smith, told Business Daily that labour accounts for 12-15 per cent of the total costs for the battery maker.
Harder times lie ahead for employers as the five labour laws take effect--seen by many as a boon to employees, providing for a wide range of measures aimed at improving working conditions -but coming at an additional cost for employers.
While trade unionists and labour market have upped their pressure on the Government to devise a wage policy, some employers have been opposed to it citing among other shortcomings possibilities of increased inflation.
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They argue industry dynamics should be left to determine the wages and salaries for workers.
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