Thinning payslip, strife as workers mark Labour Day
The government has been raiding formal workers' salaries to pay for its growing expenditure.
What you need to know:
- KNBS data shows that workers under the TSC had their real salaries reduce by 8.2 per cent between 2020 and 2022.
The 15 million informally employed workers are not faring any better.
The salary is stuck at the same line, taxes, the housing burden, rent, electricity bill, fuel, health and education keep increasing.
A teacher who earned a monthly salary of Sh56,092 in 2020 was earning Sh51,475 by 2022, while a county worker who earned Sh72,044 in 2018 took home a monthly salary of Sh58,399 in 2022.
The teacher lost Sh4,617 in monthly spending power during the two-year period, and the county worker lost a fifth (Sh13,645) of it during the four years. And the situation has gotten even worse, with new taxes and levies introduced last year.
These are not abstract figures, it is the reality for the two categories of workers, and a representation of the general state of Kenyan workers—their lives continue to get harder with increasing taxes and levies, amid a rising cost of living—as the world commemorates Labour Day today.
On average, while salaries for the more than three million formally employed Kenyans have increased by Sh11,369 monthly between 2018 and 2022, new deductions on the payslip and rising cost of living has seen what employees actually take home reduce by Sh3,467; from an average monthly salary of Sh61,535 to Sh58,068, data by the Kenya National Bureau of Statistics (KNBS) shows.
“The Sh50,000 of today is not necessarily the Sh50,000 of 2021. All these are the pressures which the employee of today is facing. The salary is stuck at the same line, taxes, the housing burden, rent, electricity bill, fuel, health and education keep increasing,” said Mr James Shikwati, the Founding Director at Inter-Region Economic Network, a research firm.
Revenue-raising measures
KNBS data shows that workers under the Teachers Service Commission—mostly teachers—had their real salaries reduce by 8.2 per cent between 2020 and 2022, county government workers by 20 per cent between 2018 and 2022, while salaries of those in parastatals dropped by 16.7 per cent over the same period.
The 15 million informally employed workers are not faring any better.
But the bigger problem is that both the employer and the worker are hurting, and the government—pressured to service debt and unwilling to explore alternative revenue-raising measures—continues to raid the payroll for additional monies.
“From the perspective of employees, we’ve seen reduced disposable incomes because people don’t have money to purchase basic commodities, which is leading to low morale and productivity. There have been a lot of stress and strains not just at the workplace but also where employees live and this is finding its way into the workplace,” observed Federation of Kenya Employers (FKE) Executive Director Jacqueline Mugo.
She noted that new taxes and levies have not only affected workers’ take-home pay, but also businesses payrolls and overall operating costs, causing massive layoffs and preventing investors from putting their money in the economy. This is despite many of the businesses not having restored workers to full salaries after slashing them during the Covid-19 pandemic period.
The FKE had in November last year indicated that more than 70,000 formal jobs were lost between November 2022 and October 2023.
“The situation must be worse than what was at that time. That 70,000 was an indicative figure, we hadn’t completed the survey and the ones who hadn’t laid off people were thinking of it. We are in the process of another survey that will show higher numbers.
“The cost-cutting measures that businesses have had to put in place are aimed at keeping enterprises alive and functional, keeping people in employment ... ” Ms Mugo said.
As Central Organisation of Trade Unions Secretary-General Francis Atwoli on Monday made final touches for the Labour Day national celebrations at Uhuru Gardens, he was cognisant of the state of life of the Kenyan worker.
“We are holding Labour Day celebrations when we have had a very difficult time in our country, particularly issues related to spurring our economic growth and skyrocketing cost of living,” he said.
Collective bargaining agreements
Mr Atwoli noted that employers are increasingly becoming unable to implement collective bargaining agreements, even as he challenged the government to crack down on big enterprises that are avoiding to pay taxes and burdening the taxpayer.
With both sides of the labour market struggling, tensions are rising, with an ongoing strike in the health sector and a plan by government to transition all public servants from permanent to contract terms to save on costs.
As workers oppose plans by employers both in the public and private sectors to progressively eliminate permanent employment in favour of short-term contracts, employers appear determined to make the change.
“Businesses are looking at flexibility, the ability to determine how many staff you need based on the demand from consumers and fluctuations. It’s a reflection of shifting labour market dynamics and an effort by enterprises to optimise,” Ms Mugo said.
“There is nothing wrong with a contract as long as it is well stipulated and takes care of the employees’ interests, pension,” said Council of Governors chair of the Human Resource Committee Governor Mutahi Kahiga.
It is still not clear what the impact of transitioning to short-term contracts would be for the public and private sectors, but the reality is that more than 80 per cent of Kenya’s labour force is in the informal sector, according to KNBS data.
Mr Shikwati summarised this mix of labour force as a combination of first-world and stone age, with the latter (informal sector) overpowering the modern one by far.
What all the players in Kenya’s labour market agree on is that it is not sustainable for the government to continue targeting only the formally employed for its growing spending needs.
“Things would be easier if the government motivated everybody to be productive ... They tax you but the only thing you can see is government administrators bullying you with modern machines, but they are not ready to bully you with service,” Mr Shikwati said.
