Business Daily (Nairobi)
Mwaura Kimani
11 November 2009
Most Kenyan workers have been locked out of benefits as employers dodge costs to cushion themselves against a harsh business environment, a new survey shows.
Employers have not complied with key provisions, especially those deemed to potentially increase the cost of doing business, at a time when the Kenyan economy is underperforming.
A survey by audit firm PricewaterhouseCoopers (PwC) reveals that half of Kenya's biggest employers are yet to convert causal workers into contract employees as provided under the Employment Act 2007 despite their preference for such workers.
Labour experts warned that non compliance with the laws could open costly legal minefields against employers, as employees move to the Industrial Court to seek redress.
As a result of the labour laws, a majority of participating companies said they had recorded between one per cent and 15 per cent in labour costs.
The PwC survey shows that only 51 per cent of polled employers had fully converted casual employment into contract terms, the rest either partially or not at all.
"Non-complying employers are sitting on a legal time bomb should employees move to Court," said Ms Hellen Wasilwa, the registrar of the Industrial Court.
"This could also trigger turbulence in the labour market through industrial unrest," Ms Wasilwa told Business Daily.
The labour market is already facing stormy times due to the global financial crisis and a weakening economy.
A dim economic outlook is fast eroding business leaders' confidence in the economy's ability to post strong corporate earnings, creating the possibility of layoffs and a freeze on hiring to cut costs.
However, according to PwC, majority of employers have implemented the provisions for an enhanced maternity leave and the newly introduced paternity leave, at 95 and 94 per cent compliance respectively.
The low compliance with the labour legislation raises questions on the effectiveness of the country's enforcement machinery.
The other laws include the Labour Relations Act, Labour Institutions Act, Occupational Safety and Health Act, and Work Injury Benefits Act (WIBA).
The delay in full implementation of the Acts has dashed hopes for thousands of Kenyan workers who are struggling to keep their heads above the water during the prevailing economic hardship.
The PwC survey shows salaries across the labour market increased by an average of 10 per cent in 2008, growing faster than the rate of economic expansion (at 1.7 per cent), but much lower than inflation which averaged 22.6 per cent.
As a result, workers' purchasing power was eroded by no less than 50 per cent, a trend experts from PwC see as likely to persist in 2010.
"Employers have experienced a number of challenges in implementing the new labour laws including revising human resources policies and employment terms and conditions," says the 2009 PwC National Human Resources Survey released on Friday.
Other problems include increased HR costs and difficulty in creating awareness of the new policies.
But what has thrown employers off the balance is the confusion surrounding the Work Injury Benefits Act (WIBA) in the absence of a court ruling and guidance from the Ministry of Labour.
This followed a judgement by the High Court in March which declared various sections of the Act unconstitutional and hence void, leaving many employers wondering where they stand with regard to their legal obligations to provide compensation to employees for work related injuries and diseases.
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