Kenyan employers have warned against another Labour Day minimum
wage increase, arguing that such a move will hurt an economy that is
just beginning to recover from last year’s battering.
The
Kenya Association of Manufacturers (KAM) said the industry is yet to
pick pace following last year’s setbacks, including high inflation
rates, drought and prolonged electioneering.
KAM
chief executive Phyllis Wakiaga said a pronouncement to increase the
minimum wage during Tuesday’s Labour Day celebrations would be a big
blow to the industry, with possible negative impacts on the livelihoods
of workers.
“A ceremonial wage
increase will not help us to tackle the subject of poverty eradication
in a sustainable way,” Ms Wakiaga said in a statement.
The
Labour Day wage increment has become one of the biggest challenges to
industry in Kenya, especially because it is not linked to productivity
improvement.
KAM argues that
instead of increasing wages, the government should opt for an increase
in the minimum taxable pay and continued exemption of overtime and
bonuses paid to low income earners.
VAT REDUCTION
KAM
also wants the government to considers a reduction of VAT on items such
as milk, sugar, salt, rice, tea leaves, wheat, beans, cooking oil and
paraffin.
“If the cost of these
products come down, citizens are able to save substantial amounts of
money to afford other basic amenities,” Ms Wakiaga said, adding that
escalating cost of labour will only push businesses to taking drastic
actions, including job cuts and relocating operations to other countries
to remain afloat.
Her remarks
come in the wake of an impending increase in statutory deductions burden
as Parliament reviews the rules governing monthly contributions to the
National Hospital Insurance Fund (NHIF) to include employers.
Doubling
the Sh1,700 that top contributors make to the NHIF ranks high on the
list of targeted outcomes of ongoing review of the NHIF Act.
If
the amendments are adopted by Parliament, workers will continue paying
the same amounts but their employers will have to match their
contributions.
STAGNATION
Ms
Wakiaga noted the unpredictable regulatory regime had hampered growth
in the labour-intensive industry, leading to its stagnation.
“Along
with an unpredictable regulatory regime, business growth and expansion
have been hampered by high and multiple taxation, high costs of energy,
scarcity of the technical skills and the high cost of labour,” she said.
The
association also said President Kenyatta’s Big Four Agenda has singled
out manufacturing as one of the key drivers of economic growth and to
achieve this growth, the sector has to grow at 36 per cent every year.
Last
week, UK agriculture multinational James Finlay announced plans to stop
flower production on its Kericho farms, thrusting some 2,000 workers
into a future without jobs.
Last
year, President Uhuru Kenyatta directed that the minimum wage for
Kenyan workers be raised by 18 per cent after a two-year freeze.
PROFIT WARNINGS
Kenya’s
economy sunk to a five-year low of 4.9 per cent in 2017 as over a
dozen Nairobi Securities Exchange-listed firms issued profit warnings,
highlighting the worst corporate earnings season.
Meanwhile, the Trade Unions Congress has said it will boycott today’s Labour Day celebrations.
The
union’s national executive committee said the government has failed to
meaningfully engage the Universities Academic Staff Union and the Kenya
Universities Staff Union, which are its affiliates.
Allowed to attend
“Consequently,
no member or official of the Trade Unions Congress of Kenya is allowed
to attend, represent or speak on its behalf,” read the statement issued
by Tom Odege, TUC-Ke chairman.
He
said the association supports the lecturers’ strike, but called on the
parties to engage and move with speed to end the impasse.
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