KEPSA opposes minimum wage increase

April 13, 2011

, NAIROBI, Kenya Apr 13 – The Kenya Private Sector Alliance (KEPSA) is opposing plans to increase the minimum wage for workers arguing it will not yield the intended results.

This follows an announcement by the Ministry of Labour that it could raise the minimum wage by 10 percent to cushion workers against soaring consumer goods prices.

KEPSA Chairman Eng Patrick Obath said the government ought to focus on improving the living standards of Kenyans by tackling issues that are driving the cost of living making life unbearable.

“It is quite right that various sectors are demanding a wage increase but really we should not be tackling the wages but the elements that drive the cost of living for Kenyans up,” Eng Obath said.

One element, KEPSA singled out for driving costs up was the recent introduction of price controls in the fuel market.

Eng Obath said the formula used to calculate the price of fuel had failed to take into account the purchasing power of those living in rural areas, a major factor in driving up commodity prices

“The cost of living there has gone up meaning the price of materials and products is going up. In a way by putting in price controls they have affected the cost of living that way,” he said.

His sentiments were echoed by the Kenya Association of Manufactures (KAM), which also opposed the move arguing it could lead to loss of jobs and implementation of a hiring freeze as companies cushion themselves from a harsh operating environment.

KAM Chief Executive Betty Maina said the government should instead develop ways of increasing consumers’ purchasing power without increasing wages.

Ms Maina said the current wages were comparatively higher than those paid in competing countries.

“It is not enough to just to talk about increased because we are already uncompetitive when you compare some of sectors like textile against the countries like Bangladesh and Cambodia where our wages are the highest and we are looking for the same markets,” Ms Maina said.

While ruling out the effects of inflation, Eng Obath urged the government to come up with innovative ways to capture runaway costs of basic commodities.

“Inflation is inevitable, but there are mechanisms the government can put in place to start reducing inflationary pressures on the country,” he said.

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