Hard times ahead as high cost of living leaves workers poorer

Prices of basic household goods has doubled over the last decade, more than wiping out any pay rises and leaving the average worker poorer.

This comes as President Uhuru Kenyatta’s government faces growing demands for a higher minimum wage from workers amid rising cost of living.

Uhuru is expected to weigh in on the minimum wage debate during today’s Labour Day celebrations.

Low paid workers have borne the brunt of declining value of their salaries and job security, which is expected to feature in today’s deliberations.

Experts have warned that prices of basic household goods have doubled over the last decade, wiping out any pay rises granted to workers during this period and leaving thousands of workers poorer. 

And as the workers troop to Labour Day celebrations today, many will be expecting a new and higher minimum wage announcement from the Government.

Struck deal

Already, there are reports that the Government has struck a deal with the Central Organisation of Trade Unions (Cotu) for a workers’ pay rise in exchange for the union’s support for the Housing Levy, which the employers are fighting in court.  

But representatives of employers have warned the Government against granting the minimum wage increment.

The employers are lobbying against further salary increments, saying these would have huge implications for the overall cost of doing business and competitiveness in Kenya.

“The Government should actually be concerned with the high level of unemployment,” said Federation of Kenya Employers (FKE) Executive Director Jacqueline Mugo.

She ruled out automatic annual pay increment terming it unfeasible.

But workers’ trade unions will be making a case for the improved pay for their members. According to Ernest Nadome, the Cotu deputy secretary general, workers’ representatives were busy defending their proposals on an “agreeable increment” that would involve State House before an announcement is made.  

He acknowledged that the feeling was that the economy was not working for Kenyan workers and life was only getting more difficult.

“The situation has worsened if you listen to the workers on the ground,” he said.

Nadome spoke after attending a wages council meeting, whose recommendations will be considered in pay rise talks. He said the recommended pay increment also factored in the country’s economic performance and how it had affected employers.

Analysis of earnings against the rise of cost of living provided by the Kenya National Bureau of Statistics paints the picture of a worker struggling to keep up in an increasingly harsh economic environment.

While salaries have risen by up to 89 per cent since 2009, the cost of living has risen sharply by 97 per cent, eroding any benefits from the nominal pay increments over the period. 

Experts say the disparity between pay and cost of living becomes more apparent as you go lower on the income scale. Worst affected are the estimated 2 million employed in the private sector, where pay has stagnated as the profit-driven employers struggle to remain afloat.

Public sector workers have had improved pay over the period, owing to major reviews championed by Salaries and Remuneration Commission, whose result today places the State as a better employer.

However, the pay hikes and subsequent harmonisation among the various job grades has still lagged behind inflation, taking away workers’ purchasing power.

Experts warn that implementing an 8 per cent pay rise alone would only succeed in placing workers at the same economic level they were a decade ago.

At the heart of today’s push for better pay is non-compliance with the minimum pay, whose review has become an annual ritual that only appears on paper and is often ignored by employers.

Tea pickers, for instance, earn between Sh9,400 and Sh14,000 a month, depending on the magnanimity of their multinational employers, some who have moved to court to have previous agreements set aside. 

Already, there have been concerns about disconnect between the country’s economic expansion and workers, compounding fear that only a tiny minority are feeling the growth. 

Hardest hit are the low to lower middle income earners whose purchasing power has been eroded the fastest, partly because most of their household budgets are spent on commodities with volatile prices.

Available statistics indicate that since 2014, average cash spent on Nairobi’s low income shopping basket have risen by 30 per cent, compared to the 21.7 per cent for the middle income and only 17.6 per cent for the wealthy class.

Worst hit

Patterns showing the poorest to be worst hit are replicated in other regions, in Kenya National Bureau of Statistics (KNBS) analysis of how households spend income.

Save for cabbages, whose prices have held steady over the last five years at about Sh40 per kilo, the rest of basic foodstuff are up to twice as expensive over the period.

Electricity prices, as tracked by KNBS, have soared by 50 per cent since 2014, with huge implications for many households who have hurriedly been connected to the national grid in a Government push to discourage use of kerosene.

Consumers on the lifeline electricity tariff identified by using 50 units and below in a month have seen their bills rise by 38 per cent in the period, from Sh586 to Sh814.

For a watchman whose minimum pay, as proscribed by State, has risen from Sh5,606 in 2014 to Sh7,779 today, the rise in electricity cost has left a gaping hole in household budgets.

Further, KNBS points out that low skill jobs are characterised by little or zero job security.