President Uhuru Kenyatta today increased the minimum wage for Kenyan workers by 12%, way below COTU’s 20% demand, but a blow to employers who have consistently complained about high salaries that are not accompanied by higher productivity.
Speaking when he led Kenyans to mark Labour Day in Nairobi, the President recognised workers effort in improving Kenya’s economy. “We want to increase salaries because the productivity has also increased,” he said. He reiterated that all workers require a good working environment, and that a favourable salary was one way of making the working conditions better.
Analysts say higher salaries are likely to lead to lay-offs or increases in commodity and service prices as organisations adjust to balance their finances. The move is also likely to discourage foreign investors who will see Kenya’s labour market as expensive and uncertain.
Labour is the biggest cost of production and Kenya is ranked among the most expensive labour markets in the world, eating into business revenues.
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