Soft economy slows down growth of high paying jobs

Bigger salaries are usually pegged on performance and come with higher responsibilities. PHOTO | SALATON NJAU 

By NEVILLE OTUKI

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Summary

• New data shows that only 74,293 or 2.9 per cent of formal sector employees earned more than Sh100,000 per month in the year – meaning the economy added only 2,495 workers to the category of high income earners.
• In 2015, the number of Kenyans earning more than Sh100,000 a month stood at 71,798, after some 3,122 employees moved up the pay ladder to join the special class.
• Employees got a paltry 0.1 per cent growth in average take-home pay in the financial year ended June 30, 2017 after adjusting for inflation.

Kenya’s economy produced fewer better paid workers in 2016, reflecting the softening of economic activity and the loss of quality jobs that came as companies trimmed their payrolls to survive the turbulence.

Newly-released economic data shows that only 74,293 or 2.9 per cent of formal sector employees earned more than Sh100,000 per month in the year – meaning the economy added only 2,495 workers to the category of high income earners.

At this rate, the economy’s creation of high paying jobs, 96 per cent of which came from the education sector, was one fifth less than 2015, according to the Kenya National Bureau of Statistics’ (KNBS) wages data.

In 2015, the number of Kenyans earning more than Sh100,000 a month stood at 71,798, after some 3,122 employees moved up the pay ladder to join the special class.

Human resource experts said the 2016 slowdown reflected the cooling of economic activity that saw many firms freeze hiring as others retrenched senior managers to reduce costs.

“Companies have not been hiring, especially senior managers, citing harsh economic conditions that have only been exacerbated by political tension in an election year,” said Perminus Wainaina, managing director at Corporate Staffing Services (CSS), a human resource consultancy.

CSS recruits employees on need basis, mostly executives, for corporations like Nivea, Weetabix, Hass Consult, Davis & Shirtliff and Car & General.

Mr Wainaina said bigger salaries, especially in the corporate sector, are usually pegged on performance and come with higher responsibilities.

Employees got a paltry 0.1 per cent growth in average take-home pay in the financial year ended June 30, 2017 after adjusting for inflation.

Male workers comprised 63 per cent (47,139) of the 74,293 formal sector employees earning more than Sh100,000 with women accounting for the remaining 27,154.

Education

Education remained the sector with the highest number of those earning Sh100,000 and above, followed by financial services sector and wholesale and retail trade in third place.

The booming real estate sector had the least number of employees (126) earning more than Sh100,000 a month.

The education sector had 16,196 workers in the elite category, having minted 2,387 jobs that paid more than Sh100,000.

The number mostly represents lecturers, senior administrators and headteachers, who form the top layer of the sector’s 524,606 workforce.

This means the education sector alone accounted for 96 per cent of the 2,495 new jobs that paid a monthly income in excess of Sh100,000.

Experts said the sector, especially tertiary institutions, has continued to create demand for lecturers and managers as more Kenyans flock back to school for better qualifications.

“But then again, most schools and tertiary institutions are government-run and we have been seeing pay rises to honour CBAs (collective bargaining agreements),” said Mr Wainaina.

Kenya had a total of 2.6 million formal sector workers last year or 300,000 more than it had in 2013.

High cost of living

The KNBS data shows that slightly over a quarter of the workforce earns less than Sh25,000 a month, making settlement of household bills a tricky balancing act, especially in cities such as Nairobi, Mombasa and Nakuru where the cost of housing and commuting is high.

The report also shows that more than half of formal sector workers (64 per cent) are living on low wages of between Sh20,000 and Sh49,000 that have barely increased in the past 10 years, weakening their purchasing power.

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Ordinarily, the rule of the thumb in the labour market is that the more advanced and highly marketable skills an employee possesses, the higher the remuneration.

The financial health of companies, the economy’s performance, cost of living and targets met or missed are yet other determinants of wages in any given year.

Mr Wainaina said most recruiting firms are now keen on soft skills, over and above a candidates’ qualifications, which have proven key to improving the bottom line.

“This is the reason you find very young people in senior management positions, handsomely on the strength of such soft skills such as leadership, networking, communication and personal branding,” he said.

The list of marketable professions in demand in corporate Kenya today includes digital marketing, cybercrime security, supply chain management and tax accounting, all of which pay well.

“Companies have expressed a lot of interest in such skills,” said Mr Wainaina, whose company also consults for AAR Insurance, Muthaiga Country Club and UN.

On the flipside, the list of saturated professions with likely less pay, includes general accounting, general IT and sales and marketing.

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