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Private sector salaries’ growth at 10-year low

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Private sector salaries’ growth at 10-year low


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Federation of Kenyan Employers Executive Director Jacqueline Mugo. FILE PHOTO | NMG

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Summary

  • Civil servants last got a pay raise in 2017, but have used the fat allowances to enlarge their take-home.
  • The SCR has moved to curb the perks in a bid to contain the ballooning public wage bill, which hit Sh694.05 billion from Sh669.55 billion in 2019.
  • With inflation averaging 5.4 percent last year, the workers’ purchasing power was eroded by the rise in the cost of living.

The average earnings for workers in the private sector grew at the slowest pace in a decade last year as pandemic-hit firms moved to slash salaries and adopt unpaid leave policies to contain costs.

Findings of the latest Economic Survey by the Kenya National Bureau of Statistics (KNBS) show companies raised average monthly pay by 3.82 percent to Sh67,490 in the year ended June 2020, a steep drop from the 8.16 percent raise to Sh65,006 the year before.

That was the slowest rise in earnings since 2011 when firms raised average pay by 3.48 percent, and nearly half the average 7.41 percent in a decade before last year.

Employers are warning it will take years for pay raises to return to pre-pandemic levels, with firms struggling with elevated costs largely due to uncertainties brought about by Covid-19.

The Federation of Kenya Employers (FKE) said persisting instability in global supply chains and increasing global oil prices had saddled firms with a high cost of materials and further raised the cost of operation.

“As early as 2015 the federation warned that the fundamentals in the labour market especially those touching on what should determine wage increments were weak,” FKE executive director Jacqueline Mugo told the Business Daily.

“The pandemic did not only accelerate an already worsening situation in the business operating environment, it also destabilised the equilibrium.”

Firms resorted to laying off workers, slashing salaries, and adopting unpaid leave policies to cut operating costs in April 2020 after public health authorities enforced business shutdowns and travel restrictions to contain the spread of the coronavirus.

The pay raise was even slower in the public sector where average monthly earnings were flat, edging up 1.38 percent to Sh65,378 compared with 7.94 percent to Sh64,486 in the year ended June 2019.

Overall, average monthly earnings rose 3.02 percent in the review period to Sh66,809 at a time the country’s economic output — technically known as gross domestic product (GDP) — shrank 0.31 percent, the first annual contraction since 1992 when it slid 0.8 percent.

Some 737,500 jobs were also lost in the year through June 2020 compared with the 847,100 created a year earlier.

“The slower growth in average earnings could be due to implementation of pay cuts by employers in response to the negative impact of the Covid-19 pandemic,” the KNBS wrote in the Economic Survey 2021.

While public sector workers— including civil servants, teachers, security officers, and county workers — were spared basic salary cuts, the Salaries and Remuneration Commission (SRC) intensified its clampdown on hefty allowances, whose number has shot up to 247 from 11 in 1999.

Civil servants last got a pay raise in 2017, but have used the fat allowances to enlarge their take-home.

The SCR has moved to curb the perks in a bid to contain the ballooning public wage bill, which hit Sh694.05 billion from Sh669.55 billion in 2019.

With inflation averaging 5.4 percent last year, the workers’ purchasing power was eroded by the rise in the cost of living.

KNBS analysis shows real monthly average earnings — which have factored in inflation — for public sector workers decreased 3.06 percent to Sh60,387, while private sector’s dropped 0.73 percent to Sh62,337.

“Pay raise in real terms will occur when the productivity of enterprises improves beyond the inflation,” Ms Mugo said. “The average labour productivity in Kenya remains low. This needs to change for the country to experience impactful pay rise.”

Earnings by employees in the hospitality and education sectors, which are yet to resume full operations, were the hardest hit by pay cuts as a result of Covid knocks.

Workers in accommodation and food service activities were the most affected by the Covid containment measures such as closure of bars and restricted operation of restaurants and hotels as well as a fall in tourists due to restricted domestic and international travels.

The report by the statistics office shows workers in hospitality suffered a 5.56 percent drop in average monthly earnings to Sh35,736 last year compared with a 4.45 percent rise to Sh37,839 a year earlier.

Teachers and other workers in private education facilities, including universities, also experienced a drop in average monthly pay, which was slashed 1.6 percent to Sh81,726., while the monthly payment for their counterparts in public institutions went up 2.46 percent to Sh60,792.84.

The learning institutions were shut from mid-March until October 2020 when phased reopening was allowed, but some higher education facilities are yet to resume in-person to date.

The findings of the Economic Survey 2021 show that workers hired to undertake professional, scientific, and technical activities in the public sector had the highest growth in earnings of 13.77 percent to Sh93,193 a month, while those offering the same services in private practice had a pay raise of 7.33 percent to Sh120,687.

Average monthly earnings for employees in the healthcare sector, the frontline warriors in the battle against the pandemic, went up 10.86 percent to Sh137,465 for those in public facilities and 8.48 percent to Sh87,737 for the private sector.

The Treasury has pledged to maintain a moratorium first issued in 2013 that froze new employment in government except for essential sectors such as security, education, and healthcare, in addition to stopping pay raises.

“The National Treasury advised the commission that due to the effects of Covid-19 on the performance of revenue and the expected slow economic recovery, it should consider postponing the review for the next two fiscal years (ending June 2023) until the economy improves,” SRC chairperson Lyn Mengich said in June.

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KQ resumes Mumbai flights after 4 months

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KQ resumes Mumbai flights after 4 months


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A Kenya Airways aircraft at JKIA. FILE PHOTO | NMG

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Summary

  • Kenya Airways will on Thursday resume flights to Mumbai, ending a four-month hiatus that was occasioned by increased cases of Covid-19 in the Asian state.
  • The airline in a notice to its customers yesterday said it will resume its operations on the route on September 16, 2021 with the first flight departing Jomo Kenyatta International Airport at 7am to arrive in Mumbai at 3:45 pm.

Kenya Airways #ticker:KQ will on Thursday resume flights to Mumbai, ending a four-month hiatus that was occasioned by increased cases of Covid-19 in the Asian state.

The airline in a notice to its customers Monday said it will resume its operations on the route on September 16, 2021 with the first flight departing Jomo Kenyatta International Airport at 7am to arrive in Mumbai at 3:45 pm.

The airline will then resume full operations on the route on September 20, flying three times per week on the Indian route, which is one of the most lucrative destinations on its network.

Passengers on the route will part with Sh46,000 ($419) for one-way air ticket on economy class seats from Nairobi to Mumbai- prices that are relatively the same compared to what it was charging before the Covid-19 pandemic.

“Welcome back onboard! Fly from Nairobi to Mumbai starting Thursday 16th September with normal schedules resuming from Monday 20th September 2021,” said the airline in a notice to its customers yesterday.

KQ Suspended passenger flights to and from Mumbai on April 30 until further notice, following a government directive on travel between India and Kenya due to a Covid-19 crisis in that country.

The airline said on Friday that passengers who had booked tickets after May 1, the date of the last flight from Mumbai to Nairobi, will have to change their plans.

Affected passengers, KQ said, could also take vouchers for the value of their fare for future travel within 12 months.

India has seen soaring infection rates in the recent days, since the discovery of a new virus variant. Last month, India put on lockdown one of the states following a spike in cases of Covid-19.

Other countries that have banned flights to India include France, the UK Bangladesh, Oman and Hong Kong that have banned travel to and from India or asked their nationals coming from the Asian country to isolate themselves in government-approved hotels.

India has so far detected 33,264,175 corona virus cases with the number of deaths hitting 442,874 as at September 13.

A large number of patients from Kenya also travel to India every year for specialised medical treatment, especially cancer care, helping to drive medical tourism in the densely populated country that boasts affordable and easily accessible healthcare.

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Lower import volumes push mitumba prices to new highs

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Lower import volumes push mitumba prices to new highs


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Man pulls a cart loaded with second-hand clothes at Gikomba Market in Nairobi. FILE PHOTO | NMG

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Summary

  • Traders paid Sh100,527 on average per tonne of the used clothes, popularly called mitumba, compared to Sh96,286 the previous year.
  • Kenya Bureau of Standards (Kebs) banned importation of the clothes from late March through mid-August in a bid to contain the spread of the life-threatening coronavirus infections.
  • Findings of the Economic Survey 2021 suggests dealers shipped in 121,778 tonnes of mitumba in 2020, a 34.02 percent fall compared with 2019 and the lowest volumes since 2015.

The average price of a tonne of second-hand clothing items imported into the country crossed the Sh100,000 mark for the first time last year on reduced volumes in the wake of safety protocols and guidelines to curb spread of coronavirus.

Traders paid Sh100,527 on average per tonne of the used clothes, popularly called mitumba, compared to Sh96,286 the previous year.

Kenya Bureau of Standards (Kebs) banned importation of the clothes from late March through mid-August in a bid to contain the spread of the life-threatening coronavirus infections.

Findings of the Economic Survey 2021 suggests dealers shipped in 121,778 tonnes of mitumba in 2020, a 34.02 percent fall compared with 2019 and the lowest volumes since 2015.

Last year’s drop was the first dip since 2011 when 76,533 tonnes were shipped in compared with 80,423 tonnes the previous year, the official data collated by the Kenya National Bureau of Statistics (KNBS) shows.

The import bill for the merchandise amounted to Sh12.24 billion, a drop of 31.11 percent, or Sh5.53 billion, year-on-year.

TIn imposing the temporary ban on used clothes, Kebs had applied a standard which prohibits buying second-hand clothes from countries experiencing epidemics to ensure disease-causing microorganisms are not imported into Kenya.

Higher quality and relatively lower prices for mitumba has continued to drive demand for used clothes at expense of locally-made products amid higher margins enjoyed by traders largely operating in informal markets.

The lucrative second-hand clothing market has seen traders from China —a key source market for the merchandise —open shops in Gikomba, Kenya’s largest informal market for mitumba, in recent years to cash in rising demand.

Earnings from exports of articles of apparel and clothing accessories fell 5.32 percent to Sh32.92 billion last year compared with 2019, data indicates.

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Court backs Atwoli union in horticulture membership feud

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Court backs Atwoli union in horticulture membership feud


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Cotu boss Francis Atwoli. FILE PHOTO | NMG

Summary

  • A trade union that is led by the long-serving Central Organisation of Trade Unions (Cotu) boss Francis Atwoli has survived an attempt to stop it from representing over 60,000 workers in the horticulture industry.
  • Newly registered Kenya Export, Floriculture, Horticulture, and Allied Workers Union (Kefhau) had filed as a case in the Employment and Labour seeking to bar the Atwoli-led Kenya Plantation and Agricultural Workers Union (KPAWU) from representing workers in the industry.

A trade union that is led by the long-serving Central Organisation of Trade Unions (Cotu) boss Francis Atwoli has survived an attempt to stop it from representing over 60,000 workers in the horticulture industry.

Newly registered Kenya Export, Floriculture, Horticulture, and Allied Workers Union (Kefhau) had filed as a case in the Employment and Labour seeking to bar the Atwoli-led Kenya Plantation and Agricultural Workers Union (KPAWU) from representing workers in the industry.

Mr Atwoli is the secretary-general of KPAWU. The rival union claimed KPAWU had encroached on its area of workers’ representation.

Justice James Rika, however, dismissed the claim and ruled that the dispute should have been taken through conciliation, and was therefore presented in court prematurely.

He also stated that Kefhau must go beyond its registration and recruit sufficient members from the employers, to be granted recognition and organisational rights.

“Registration on its own, does not afford the claimant (Kefhau) recognition. Until there is proof that Kefhau has satisfied Section 54 of the Labour Relations Act, the status quo must be maintained,” said the judge.

“Kefhau must recruit at least 50 percent plus one, of the unionisable employees in the floriculture and horticulture industry, members of the Agricultural Employers Association to be considered for recognition,” he stated.

He noted that there is a Recognition Agreement and CBA, binding Mr Atwoli’s union and Agricultural Employers Association, affecting 73 Flower Growers Group of employers, and over 60,000 employees.

“It is objectionable for Kefhau to be allowed organisational rights, and the legitimacy to receive trade union dues and agency fees, from over 60,000 employees, just on the strength of registration as a trade union,” said the judge.

Kefhau wanted the court to declare that it is the sole trade union, which is allowed by its constitution to carry out activities in the export floriculture and vegetable industry, and an order restraining Mr Atwoli’s from representing workers in that area.

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