FKE against minimum wage increase this year

April 22, 2016
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Mugo has also raised concerns over the celebratory mode of adjusting the minimum wages upward every Labour Day saying that it should be done with a clear policy that is sustainable/FILE
Mugo has also raised concerns over the celebratory mode of adjusting the minimum wages upward every Labour Day saying that it should be done with a clear policy that is sustainable/FILE
NAIROBI, Kenya, Apr 22 – The Federation of Kenya Employers has urged the government not to adjust the minimum wages upward this year, citing tough economic times.

The Federation’s Chief Executive Jacqueline Mugo says the government should not raise salaries so that businesses can also take a breather.

“About 18 public listed companies have announced profit warnings this is because the economy is not doing very well,” she cautioned.

Mugo has also raised concerns over the celebratory mode of adjusting the minimum wages upward every Labour Day saying that it should be done with a clear policy that is sustainable.

“This should be a very sober discussion that the trade unions, employers and the ministry of labour carryout not because it’s a labour day but because we have taken into account all the factors for wage determination, some of the factors include productivity, ability of our economy to create jobs, they include the impact of any wage increase on the ability of the informal sector to operate.”

“Every time we increase minimum wages, business has to pass that on to the consumer, a minimum wage increase does not necessarily translate into higher purchasing power. We need to look at the factors that are driving up the prices of basic commodities and address that,” she said.

She says Kenya is losing investments with multinationals opting to set up in other countries due to huge labour costs adding that Kenya has the highest cost of labour compared to other countries in the East African Community (EAC).

“Investors are now preferring other destinations to set base beside Kenya because it is easier to do business there due to low labour costs,” she explained.

Last year President Uhuru Kenyatta increased the minimum wage by 12 percent in response to the increased cost of living in the country.

“Let us appreciate and reward our workers because they are the ones behind the profits each company make,” he said at the time.

President Kenyatta said the clamour for increased pay should not only be pegged on the cost of living but also on the level of productivity of workers.

He appealed to workers both in the public and private sectors to double their productivity to boost economic growth and justify future pay increments.

Meanwhile, Mugo also announced the hosting of the first African Employers Summit in collaboration with Business Africa to focus in promoting business growth and entrepreneurship for job creation in the continent.

The summit to be held in May 2016 in Naivasha is a follow up to the roundtable held on March 18, 2013 on Sustaining Growth and Accelerating the Pace of Job Creation in Africa.

It is also a follow up to the symposium held in Casablanca, Morocco on November 25-26, 2013 on developing a job creation strategy for African countries – evidence and experience regarding sectoral strategies.

Key issues to be looked at include how African governments can tap and sustainably exploit the private sector’s ability to address high unemployment levels as well as the strategies needed for countries to embrace labour policies that will promote enterprise growth whilst also ensuring a ready market for the youth.

In Kenya the challenge of unemployment still persist with the overall unemployment at 12.7percent; however youth, who form 35 percent of the Kenyan population, have the highest unemployment rate of 67 percent.

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