By John Ikani
The Federation of Kenya Employers (FKE) has expressed strong opposition to President Uhuru Kenyatta’s 12% increase in minimum wage.
Kenyatta on May 1st, announced the minimum wage increment during the Labour Day celebrations on May 1, 2022 and directed all employers to pay workers a minimum wage of 12% more starting the end of May 2022.
Mr Uhuru, in his speech at the event said the increment was due to the current rise in inflation in prices of consumer goods.
A release from the president’s office quoted him as saying “There is a compelling case to review the minimum wage so as to cushion our workers against further erosion of their purchasing power”.
The 12% increase meant workers earning a minimum wage of KSh 13,500 would earn KSh 15,201.65.
But reacting to the move via a statement made available by their President, Habil Olaka the FKE warned that the move will lead to heightened industrial action and decrease employability.
According to the employers, the economy is still recovering from COVID-19 shocks and the minimum wage increase could sink businesses still readjusting.
“For most sectors except for finance and insurance, they are just recovering from the COVID-19 pandemic. In the medium term, as enterprises readjust their operations to meet the increased payroll costs, we expect to see an increase in redundancies, automation, outsourcing and depressed hirings,” the statement read in part.
The employers urged the government to increase the upper limit of the lower income tax bracket to KSh 35,000 from the current KSh 24,000.
“This is an alternative that would have sufficed in increasing Kenyans’ purchasing power and cushion the enterprises. The government should also increase tax relief to KSh 3,500,” noted FKE
Kenyans have recently been faced with a rise in the cost of consumer products including cooking gas, fuel and other consumer services as a result of the crisis between Russia and Ukraine that began this year.
The African nation gets a sizable amount of its food imports from the warring countries.