During last year's Labour Day celebrations, retired President Uhuru Kenyatta announced an increase in the minimum wage by 12 per cent to enable workers to survive a surge in consumer prices “driven in part by the war in Ukraine”.
“There is a compelling case to review the minimum wage to cushion our workers against further erosion of their purchasing power,” he said, with inflation having risen to 6.47 per cent year-on-year.
When his successor President William Ruto took the podium on Monday, he addressed workers hit by tougher economic conditions, which have led to considerably higher costs of living.
The inflation rate has now hit 9.19 per cent and the Central Bank Rate is up to 9.5 per cent as the dollar, which traded at Sh115 in April 2022, is now past Sh135.
Dr Ruto’s statement, on April 23, that civil servants would be required to contribute three per cent to the housing fund, an amount which would be matched by the government, attracted the ire and resistance of trade unions, with Kenya Union of Post Primary Education Teachers (Kuppet) saying its members were already heavily taxed and that the levy would be an unbearable blow.
“We have the housing fund in which we expect every Kenyan to contribute three per cent of their income. In the future, we will help you buy a house. Every worker who puts in three per cent will have the employer also contribute three per cent as will be required by law. We want to create a fund that will assist the people of Kenya to acquire homes,” Ruto said.
Guns blazing, Kuppet came out in protest, saying it was already navigating difficult times. Kuppet Deputy Secretary General Moses Nthurima said the housing fund levy would compound an already dire situation for teachers, with the National Health Insurance Fund (NHIF) increased to three per cent and another 7.5 per cent levy introduced for retirement contributions under the Public Service Superannuation Scheme (PSSS).
“We are paying high taxes under pay as you earn (PAYE), there is a 16 per cent value-added tax (VAT) and inflation is also high,” lamented Mr Nthurima.
In addition, he said, the teachers’ salaries had not been increased in five years. More deductions to a salary already battered by tough economic conditions meant worse livelihoods for them.
The Kenya National Union of Teachers (Knut), Universities Academic Staff Union (Uasu) and the Kenya Medical Practitioners, Pharmacists and Dentists Union (KMPDU) said they were never consulted ahead of passing the decision.
Add that to the fact that the country has been rocked by complaints over delayed salaries for civil servants in some key government departments and threats of going on strike and you have a labour day full of angry, demotivated celebrants.
In mid-April, civil servants in some ministries were yet to receive salaries, with these ministries requiring up to 13.7 billion to clear their arrears. Newly recruited junior secondary school teachers were also complaining of delays in payments, for up to three months.
“March is a particularly poor month for revenue. April is usually a good month because you have two corporate income taxes that are paid,” said presidential economic adviser David Ndii on the operational liquidity crunch.
By the time they went into their Easter sabbatical, county governments were demanding the release of funds from the National Treasury, with many workers in most of the devolved units unpaid.
Counties said they were owed Sh122.1 billion, with governors blaming the delayed cash for their lateness in paying salaries.
“We have had a delay with disbursements to the county. It is something we want to address. We have had a conversation with the treasury to see how we can smoothen this so that going forward we can distance ourselves from the delay, including the one we saw in paying salaries,” said Prime Cabinet Secretary Musalia Mudavadi.
Esther Njagi, a nurse contracted to a county government, says she easily could be lured to the streets for the anti-government protests, which had been launched by the opposition for Mondays and Thursdays until something of a truce was reached, giving room for bipartisan talks.
“If this will ensure I am paid, and the cost of living goes down, then so be it. I earn peanuts. Instead of a salary increment, the money comes in late and then it is taxed so much it is unsustainable,” she says.
“I have a friend under the Universal Health Care programme who was to be absorbed into the county. It has been long; it has never happened. Sometimes I want to complain about the meagre pay but there, it is even worse.”
On April 11, President Ruto said that his government was not willing to borrow to pay salaries. In a raft of changes after taking over power, the new government had quickly done away with many subsidies meant to cushion consumers, instead insisting on prioritisation of subsidising production and immediately embarking on the provision of cheaper fertiliser.
Kenyans are struggling with a spell of the high cost of living, with basic commodities’ prices consistently out of reach as salaries remain stagnated and unemployment high.
The Kenya National Labour of Statistics’ (KNBS) Quarterly Labour Force Report for the last quarter of 2022 shows that out of a total population of 29,066,237, there were 18,438,164 employed people for an employment rate of 63.4 per cent.
It was marginally higher than the 62.4 per cent recorded in a similar period in 2021, and 62.6 for the third quarter of 2022.
For people aged between 20 and 24, there were 2.3 million out of a total of 4.8 million employed, which is 48.3 per cent in the last quarter of 2022.
For people aged between 25 and 29, 2.9 million out of 4.1 million were employed, which is 72.8 per cent.
For ages 30 to 34, 3 million out of 3.8 million are employed. The percentage increases with age, with at least over 82 per cent of employable people at work for the other age brackets until 64, meaning more youth are out of duty than older people.
“The unemployment rate, measured based on the strict definition of not working, seeking work in the last four weeks and available to work, was 4.9 per cent in the fourth quarter of 2022, compared to 5.3 per cent registered in the previous quarter and 5.6 per cent recorded in the fourth quarter of 2021,” read the report.
But amid delayed salaries and demotivation among civil servants, the Salaries and Remuneration Commission (SRC) has said that public servants will earn bonuses if they are able to hit targets, one of the ways the government will boost productivity.
There will be financial rewards for measurable productivity and performance. Public institutions will be required to hit 101 per cent of the annual performance ratings to qualify for these bonuses.
The Kenya Association of Manufacturers (KAM) says that Kenya’s manufacturing sector is faced with a conundrum - while the nominal value of output is growing, the sectoral contribution to the overall GDP is falling. Manufacturers are also unable to employ as many people as they would want to.
“This is largely attributed to the environment in which manufacturers operate – for instance, over taxation, over-regulation and policy instability and unpredictability, which have led to the high cost of doing business,” KAM CEO Anthony Mwangi says.