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Here's why you always feel poorer

By Moses Michira and Dominic Omondi | Updated Thu, April 20th 2017 at 00:00 GMT +3

Working Kenyans are poorer now than they were a year ago thanks to rapidly shrinking payslips occasioned by soaring cost of living.

Economic statistics released Wednesday laid out how workers' salaries are lagging behind inflation, meaning that any pay hike is more than wiped out by inflation.

High cost of foodstuff was specifically responsible for the inflation data of 6.3 per cent against average salary increment of only 5.9 per cent.

In essence, the average Kenyan took a pay cut because the value of the wages earned has been eroded by the rise in the prices of basic commodities and services.

"Annual average wage earnings grew to Sh644,800 in 2016," the Kenya National Bureau of Statistics (KNBS) said in its latest Economic Survey report.

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The average Kenyan, according to the report, earns a monthly salary of Sh53,733. Very few people earn high salaries, as most of the workers earn much lower salaries.

This might help explain why the goods that Sh1,000 note can buy reduces constantly and that the exact shopping basket would cost a little more in almost every subsequent shopping trip.

It is not the first time that inflation is marching ahead of pay increments. In 2015, the cost of living rose by 6.6 per cent while earnings rose by just about 5 per cent, explaining in part why the average Kenyan feels worse off over the years.

And in almost all previous years, employers including the Government are unable to keep up remuneration offered to their employees with inflation.

Informal sector

Thousands of workers in various sectors including the informal sector, which incidentally account for about 90 per cent of all new jobs, do not receive the State-defined minimum wage.

Nine out of 10 jobs created last year were in the informal sector that include roadside food kiosks and farm labourers, an indication to the importance of this sector.

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According to the Economic Survey 2017, the country generated a total of 839,000 jobs in 2016 with 747,300 in the informal sector. There were 13.3 million persons employed in the informal sector, an increase of 5.9 per cent.

Employment in the modern sector grew by 3.3 per cent from 2,601,200 persons in 2015 to 2,686,800 persons in 2016.

Building and construction contributed significantly to this job growth employing 163,000 persons in 2016 up from 148,600 in the year before.

However, jobs created in the private sector slowed down last year, with 57,600 jobs being created compared to 90,200 jobs created in 2015, a reflection of tumultuous times by businesses.

Wage employment in the public sector registered a 2.6 per cent growth compared to an increase of 2.5 per cent recorded in 2015.

"The low expansion of employment was attributed to a freeze in employment by the Government. Recruitment was limited to essential services in the health, education and security functions," reads the survey in part.

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