EDITORIAL: Wage rise must follow health of the economy

Adjustment of minimum wages must respect the general health of the economy. FILE PHOTO | NMG 

By EDITORIAL

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Summary

• Last week, Cotu asked for a 30 per cent rise in minimum wages for 2018 to be added on the 18 per cent increase awarded in 2017.
• The Kenya Association of Manufacturers (KAM) has warned of massive job losses should state further tinker with production cost in favour of workers.
• Minimum wage should be based on measurable outputs. Instead of just throwing out figures, Cotu must show employers how they arrive at such demands.

It has almost become a tradition that days before the May Day celebrations, the Kenyan trade unions must engage in war of words with employers.

This usually begins with the Central Organisation of Trade Unions (Cotu) proposing what employers regard as an outrageous percentage for annual minimum wage increment. This year is no different.

Last week, Cotu asked for a 30 per cent rise in minimum wages for 2018 to be added on the 18 per cent increase awarded in 2017.

The employers have opposed calls for another hefty pay rise. The Kenya Association of Manufacturers (KAM) has warned of massive job losses should state further tinker with production cost in favour of workers. That showdown is unhelpful.

The employer-worker relationship doesn’t have to be adversarial. Employees form an important cog in the success of a business.  While a happy workforce may not always translate to improved bottom lines, firms have everything to lose by keeping a disillusioned staff.

A symbiotic relationship guided by realities of the moment is therefore imperative. First, it is unfair for employers to dismiss minimum wages as ceremonial.

READ: Employers say rise in minimum wage pushing them out of Kenya

Every single cent added on the payslip counts for households. The annual adjustments should aim at helping workers to maintain their purchasing power as inflation and family size erode earnings.

And lest we forget, minimum wage guidelines are known to have helped workers get reasonable pay in sectors where absence of unions would have condemned them to subhuman living conditions.

Second, minimum wage should be based on measurable outputs. Instead of just throwing out figures, Cotu must show employers how they arrive at such demands.

Will a 30 per cent pay rise lead to an increase in productivity by at least the same margin, for instance? It should otherwise be foolhardy to reward employees today if that leads to the firm’s premature death tomorrow. 

Above all, adjustment of minimum wages must respect the general health of the economy. This year’s award must respect the fact that economy is just emerging from a year of prolonged electioneering, one which grew at a five-year low 4.9 per cent, and produced record profit warnings from established manufacturers.