Kenya’s Workers Might Not Benefit Much From a Minimum Wage Hike
Kenya’s largest trade union federation hailed an executive order issued earlier this month by President Uhuru Kenyatta that increased the monthly minimum wage by 12 percent. The Central Organization of Trade Unions called the directive “a great win for Kenyans” during a period of economic hardship brought about by the coronavirus pandemic, high inflation and a rise in fuel prices.
Kenyatta made the announcement during a Labor Day celebration on May 1, saying that higher wages would cushion workers against the erosion of their purchasing power and enhance Kenya’s economic productivity. He further described the increase as “an appreciation to workers for their critical contribution to the economy during the pandemic,” calling Kenyan workers “the backbone of our economy and our way of life.”
Kenya’s minimum wage was last reviewed in 2018, and COTU had pushed for a 26 percent increase that was roundly opposed by business groups in the country. The 12 percent increase raises the minimum wage from 13,500 Kenyan shillings, or approximately $116, to 15,201.64, or approximately $130, effective from May 1.
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Citizens in Kenya and other countries in the broader region are grappling with a surge in prices of essential commodities, aggravated by supply chain disruptions amid the war in Ukraine and uncertainties in global financial markets. Inflation in Kenya hit a seven-month high of 6.47 percent in April, up from 5.56 percent in March and 5.76 percent in April 2021, according to the latest data from the country’s statistics office.
The indirect effect from Russia’s invasion of Ukraine is worsening an ongoing food and security crisis in parts of East Africa, with the World Food Programme projecting that Kenya, Ethiopia, Somalia, Sudan and South Sudan will be the hardest hit. The Horn of Africa region is also experiencing its worst drought in four decades, with temperatures soaring to record highs mostly due to climate change. And in Kenya, drought had already caused a major slump in crop production, with millions in the country facing the risk of acute hunger.
For Kenya as well as its neighbors, the threat of food insecurity is a question not of future speculation, but of present degree. In recent weeks, Kenyans have also had to endure a major fuel shortage, which the government blamed on oil distributors who export fuel intended for domestic use.
The combination of all these factors explains the support for the increase in the minimum wage. But many Kenyans are skeptical that the rise in wages will trickle down significantly, as its application varies according to occupation and location. In essence, workers in urban areas and large cities like Nairobi, Mombasa and Kisumu are more likely to benefit from a pay raise than their peers in rural communities.
And while Kenya had one of the highest minimum wages in the East African region even before Kenyatta’s May 1 directive, the vast majority of Kenya’s labor market is unlikely to benefit from the latest pay hike because of its minimum wage laws, which only cover employees who work in the formal sector. Kenya has a vast informal sector that is considered by many to be among the largest in Africa, and guidelines stipulated in formal employment regulations are weakly enforced. In addition, some economists argue that an increase in the minimum wage could be counterproductive, as higher production costs may force businesses to hire fewer workers.
But the minimum wage increase appears to have enough popular and political support to resist any opposition from the business community, in part because it has been perfectly timed in terms of public opinion. Kenya’s economy contracted for the first time in nearly three decades last year. The cost of living has been rising steadily for many years, and millions of Kenyans have been negatively affected by the pandemic. And while Kenya’s economy has been projected to grow this year, inflation and the rising cost of living means that those macroeconomic gains may not be broad and inclusive.
More broadly, given the size of Kenya’s economy, its strategic importance as a regional commercial hub and the Democratic Republic of Congo’s recent accession to the East African Community, whatever happens in Kenya will almost certainly not stay there. Kenyan companies, which were some of the biggest cheerleaders for Congo’s EAC membership, have a large footprint there and across the broader region, and the domestic economy will certainly affect their fortunes elsewhere, much as it will affect Kenya’s neighbors.
Perhaps most importantly, Kenya’s upcoming general election gives the wage increase added significance, given that the polls are expected to be closely contested. It seems safe to assume that this likely will not be the last domestic policy intervention on the economic front ahead of the voting in Kenya, as well as elsewhere across Africa for as long as the current twin crises last.
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Civil Society Watch
A group of African faith leaders has called for more vaccine equity and more local control for low and middle-income countries over the supply of coronavirus vaccines, tests and treatments. Thabo Makgoba, the archbishop of the Anglican archdiocese of Cape Town, made the call at a meeting of faith leaders on the sidelines of a virtual global summit on the coronavirus pandemic co-hosted by the United States, Senegal, Belize, Germany and Indonesia.
The summit was also addressed yesterday by U.S. President Joe Biden, South African President Cyril Ramaphosa and Senegalese President Macky Sall.
Civil society activists across the world are advocating for a temporary waiver of intellectual property rights on coronavirus vaccines, but many others argue that even that measure is now inadequate to address Africa’s low vaccination rates. They also want waivers to cover new anti-viral drugs that can be used to treat at-risk patients if administered early enough.
Ghana has signed a memorandum of understanding with Afrochella to strengthen their existing partnership and promote the country’s tourism potential. The agreement, signed by Ghana’s minister of tourism, arts and culture, will allow the ministry and Afrochella to work together to raise the number of annual visitors to Ghana and increase its revenue base from the tourism sector. In recent years, Ghana has put increased emphasis on building cultural and people-to-people links with the African diaspora, culminating in 2019’s Year of Return, which commemorated the 400th anniversary of the arrival of the first enslaved Africans to Jamestown, Virginia.
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Chris O. Ogunmodede is an associate editor with World Politics Review. His coverage of African politics, international relations and security has appeared in War on The Rocks, Mail & Guardian, The Republic, Africa is a Country and other publications. Follow him on Twitter at @Illustrious_Cee.