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January 18, 2019

Employers lobby oppose five per cent minimum wage raise

Domestic workers match past the dias during labour day celebrations at Uhuru Park on May 1, 2018 /JACK OWUOR
Domestic workers match past the dias during labour day celebrations at Uhuru Park on May 1, 2018 /JACK OWUOR

The Federation of Kenya Employers has rubbished the five per cent boost to the minimum wage, saying theywere not consulted.

They accused government of riding on Labour Day’s celebratory mood to slap employers with an additional wage bill, violating wage setting guidelines.

In a joint statement read by FKE executive director Jacqueline Mugo, the federation said employers might relocate to neighbouring countries with low labour costs.

“Increasing the cost of labour means adding operational costs and reduced revenue. Companies may be tempted to relocate to countries where labour costs are lower by more than half that of Kenya," said FKE.

The government’s decision to increase the minimum wage by five per cent early this month was in bad faith, considering that President Uhuru Kenyatta had raised the wage by 17 per cent the previous year.

“We did not expect any further wage adjustment till the year 2019 at the earliest. The government must adhere to the wage setting guidelines to bring stability to the sector,” the statement read in part

The federation  used its  annual general meeting  graced by Labour cabinet secretary Ukur Yatani yesterday to convey disappointment in government for introducing changes to laws in the labour sector through the Statute Law (Miscellaneous Amendments Bill) without consultations.

The Aden Duale-sponsored bill, for instance, wants NHIF levy for employees raised and matched by  employers monthly. This will see top earners’ NHIF contribution raised from the current Sh1700.

“Whereas we support the noble idea of universal healthcare for all Kenyans, we are concerned with the proposed healthcare levy to be paid to NHIF by employers."

“The introduction of the levy will lead to the increase in labour costs in the country and therefore, lead to possible job losses, as the employers will aggressively adopt technological measures that will replace workers through automation and outsourcing," FKE said.

Employers are also opposed to the introduction of a Housing Fund that will see employees contribute five per cent of their monthly income, with employers matching the contributions to the scheme.

FKE is also condemned the proposed changes to existing legislations on NSSF, HELB Act 1995, and NHIF to remove key stakeholders and social partners from the boards of directors.

FKE and Cotu (K) nominate representatives to the boards to safeguard the interest of employers and workers. The proposed amendments will weaken the role of social partners in the management of the NSSF. 

The labour sector boards are tripartite in nature. It is therefore expected that Kenya will honour and align herself to these requirements.

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