This year’s Labour Day holds hope for the workers. The president recently promised to give workers a pay rise to cushion themselves against rising cost of living.
It is an election year and a pay rise is inevitable. President Uhuru Kenyatta is expected to increase the minimum wage for workers, which would affect thousands of workers who earn just below Ksh20,000.
The last time the minimum wage was revised was in 2015 when President Kenyatta raised the figure by 12% even though COTU had pushed for 20%
With a 12% increase, the average minimum wages in the agricultural industry rose to Ksh6, 780, with unskilled labourers — the lowest paid — getting Ksh5,436. Average minimum wages in urban areas are between Ksh13,592 and Ksh17,199.
The Central Organisation of Trade Unions (Cotu) has urged the government to improve workers’ welfare by increasing the minimum wage annually. However, the Federation of Kenya Employers opposes this, citing tough economic times.
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Just as it has been the norm, every worker looks up to the government during Labour Day to increase their salary. This time round the workers union and the government have alluded to an increase.
According to the Chairlady of Kenya Association of Manufacturers Ms Flora Mutahi, said increased costs on salary might force some industries to close down or relocate, affecting the lives of the workers who depend on them. Already a number of companies have retrenched their workers, including Nation Media Group, Radio Africa, Kenya Airways, Kenya Commercial Bank and Barclays Bank, among others.
“There will be an increase in the cost of basic commodities and services in order for the businesses to cover their costs. Additionally, fewer workers with an increased workload will affect their general productivity and the company output. At this point many of the companies will reconsider decisions to stay or expand locally, and investors will take this as a sign to stay clear of this market,” says Ms Mutahi.
Ms Mutahi advises that the bread basket used in calculating inflation needs to be expanded so that we are not just talking of maize flour and bread.
“We need to include the reduction of items such as milk, sugar, salt, rice, tea leaves, wheat, beans, cooking oil and paraffin. If we could at least reduce these by 10%, workers would save approximately Kh1400 per month as their average household food basket bill is estimate at Ksh14000 for one family,” she said.
She says the country needs to explore social housing, which lessens the rent burden for the low-income earners and guarantees them housing long after they have retired from service.
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“It is possible to improve the quality of life for workers without hiking the wages and hurting the economy,” says Ms Mutahi. “Part of which are measures to increase the tax bracket and reduce the costs of necessities in the bread basket as proposed in this year’s budget.”
Currently, the average take home for workers is Ksh16,000 per month including the overtime which is affected by minimum wage increase. These workers are already in 15% tax bracket which is why in the recently proposed budget, government has increased the tax bracket and also exempted over time and bonus for the low income earners. Ideally this means an approximate Ksh1150 savings per month.