Kenyan employers through the Federation of Kenya Employers(FKE) have expressed their displeasure with President Uhuru Kenyatta’s move of increasing the statutory minimum wage by 12 per cent.
The FKE issuing a statement said the increment is unsustainable since the country is evidently just recovering from the rough economic terrain of the post-covid-19 epidemic.
This new directive according to the FKE might result in tougher consequences that include low hiring and an increase in redundancies through the coming months as they raise questions as to why the government had not reviewed the minimum wage for years in spite of a rise in the cost of living.
Despite the increase having being termed by the president as “an appreciation to workers for their critical contribution to the economy during the pandemic”, the FKE president Habil Olaka said this would cause a negative outlook on cash flows and financial positions due to a higher demand for a review of general wages and collective bargaining agreements.
The federation also called on the government to raise the upper limit of the lower income tax bracket from sh24,000 to sh35,000 per month and increase the tax relief to sh3,500 per month.
“This would have had a greater positive impact in increasing people’s purchasing power while cushioning enterprises,” FKE said.
KNBS Economic Survey 2022 released on Thursday indicated that inflation rose to a four-year high of 6.1 percent in 2021 up from 5.4 percent the previous year.
Which turned out the highest cost of living recorded in the country since 2017 when it hit eight percent. Ever since the minimum basic pay having had the last review upwards in May 2018 at a rate of 5%.
The president ordering the wage modification said, “In full appreciation of the critical contribution of workers to the economy [and] following the recommendation of various stakeholders… we find that there is a compelling case to review the minimum wages so as to cushion our workers against further erosion of their purchasing power, while also guaranteeing the competitiveness of our economy.”