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Five per cent minimum wage increase insufficient for workers

FINANCIAL STANDARD
By Frankline Sunday | May 8th 2018 | 2 min read
By Frankline Sunday | May 8th 2018
FINANCIAL STANDARD
COTU Secretary General Francis Atwoli

Last week’s Labour Day celebrations saw the settlement of a dispute that had raged on for several weeks between trade unions and employers.

The Central Organisation of Trade Unions (Cotu) led the calls for an increase in the minimum wage, citing an increase in inflation and stagnant employment opportunities as grounds for an upward review.

A week before the Labour Day fete, Cotu Secretary General Francis Atwoli had demanded that employers concede to as much as 18 per cent increase in the minimum wage, much to the chagrin of employers who responded in a predictable fashion.

“The effects of a drastic minimum wage increase will mean restructuring and downsizing in many business operations. Unfortunately, this also comes at a time when Kenya has been cited as having the highest unemployment rate in the East African Community at 39.1 per cent,” said the Kenya Association of Manufacturers in a statement.

The manufacturers’ lobby said a small increase in the minimum wage would not lead to any significant change in the lives of low-income earners, which is the objective of minimum wage increases.

Reading President Uhuru Kenyatta’s speech during the celebrations last week, Labour and Social Protection Cabinet Secretary Ukur Yattani said the Government had granted workers a five per cent increase.

The president said the increase was the fruit of negotiations between the Government and unions. “My Government has recruited labour officers who will soon be deployed to the counties,” he said his speech in part. “I also direct the National Treasury to release money for hiring additional labour officers so we can continue to make our already good labour relations better.”

This increase is, however, insufficient given the current economic situation facing most low-income workers.

Data from the Kenya National Bureau of Statistics’ 2017 Economic Survey, shows that the cost of living for low-income workers was much higher than what the minimum wage increase can cover.

Overall inflation stood at eight per cent in 2017 up from 6.3 per cent in 2016 for workers spending less than Sh23, 670; a large portion of the country’s households. This means the workers’ five per cent wage increase is eroded by the increase in inflation.

Research by Nairobi data start-up Odipo Dev found despite the government stating unemployment rates being lowest in a decade, most Kenyans’ still remained unemployed or underemployed.

Out of the 897,000 jobs created in 2017 for example, more than 87 per cent of them were in the informal sector; inadequate jobs plagued by low incomes and uncertain opportunities for advancement. A five per cent increase in the minimum wage is therefore inadequate for Kenyan low-income wage earners.

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