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Kenya Business News

Rising cost of living erodes workers’ incomes

By ALLAN ODHIAMBO of  Business Daily Africa

The disposable income of workers has been eroded by rapid inflation despite regular increases in salaries and allowances by employers.The Economic Survey 2012 shows that growth in annual real average wage and benefits has trailed inflation since 2008, meaning workers are increasing constrained to make ends meet.

“Most workers cannot make ends meet today. The problem is particularly big for the low cadre public service employees who have not had their salaries harmonized,” Mr Isaiah Kubai of the Central Organization of Trade Unions (Cotu) said.

The real average earnings stood at -8.1(negative) per cent in 2011 compared to 4.5 per cent in 2007.In contrast the cost of living spiraled to a high of 14 per cent in 2011 from a low of 4.3 per cent in 2007, implying wage increases below 14 per cent do not adequately insulate workers from the loss of purchasing power.

Wage increases in Kenya average between six and 10 per cent annually.

The disparity has forced the low cadre to cut back on consumption of basic goods and services while better paid ranks eat into their savings to maintain their standards of living.

“It explains why more workers are resorting to industrial strikes. They can barely survive,” Mr Kubai said.

Since late last year several groups including public university lecturers as well staff at Kenyatta —he country’s main referral hospital —have gone on strike demanding allowances and better pay.

Several private firms have also been hit by industrial actions.“The purchasing of Kenyan workers has been heavily eroded while the cost of living continues to hit the roof,” Tom Odege, the chairman of Union of Kenya Civil Servants said.

The Federation of Kenya Employers (FKE) has however objected to calls by unions for salary reviews, saying wages should not be indexed to inflation.

Finance minister Njeru Githae last month said higher public sector wages could derail government programmes in the face of the war in Somalia, costs of implementing the new constitution and preparing for general elections next year.

Kenya’s inflation outlook holds little joy for workers going by erratic increases in the cost of energy and unpredictable weather.

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