Cash crunch puts Ruto in a catch-22 on salaries pledge

Labour Day

A woman does her shopping at Chieni Supermarket in Nyeri town last month. Kenyans are grappling with a high cost of living brought about by the prolonged drought and supply chain disruptions due to the conflict in Ukraine, among other factors.

Photo credit: Joseph Kanyi | Nation Media Group

President William Ruto is under pressure to implement a pay rise for thousands of government workers who are under pressure from the high living costs, a key pre-election promise that he made and is struggling to make good on against a cash crunch that has caused civil service salary delays.

As workers mark Labour Day today, unions are lobbying for a general pay rise for all cadres, rather than the traditional minimum wage raise they have advocated for in the past, arguing that salaries have stagnated as living costs have soared.

The Teachers Service Commission (TSC) is seeking Sh56 billion to increase teachers’ salaries. The Union of Kenya Civil Servants has also demanded a pay rise for its members, while Dr Ruto had promised police officers improved pay within 100 days of being elected to office.

Better wages

And as workers look up to the President to announce better wages during today’s Labour Day celebrations, he is alive to the impact that would have on the runaway public wage bill at a time the government is delaying paying salaries to offset debts amid revenue shortfalls.

Workers have appealed to the President, who the Central Organisation of Trade Unions (Cotu) has indicated accepted to preside over this year’s International Labour Day celebrations, to consider raising wages for all categories of workers, as opposed to only increasing the minimum wage as has been done in previous years.

Cotu Secretary-General Francis Atwoli said workers have raised several issues with the President concerning the economic situation after months of hardships underlined by a high cost of living for households.

“Equally, we have requested the government that, if it is to make any increase, it should not always be on minimum wage, but general wage increase. Any percentage [of a raise] that can cover everybody, every working man and woman in this country ... that is what we [are asking for from] the government,” Mr Atwoli said.

He said among issues the organisation had raised with the government include the impact of the Russia-Ukraine war on the cost of living, forex challenges that have raised commodity prices and the general economic downturn.

Economic performance

“Prior to inviting him, we had also raised several issues concerning our economy. Our economic troubles are shared across the globe; it’s not only Kenyans who are feeling the pinch. The Russia-Ukraine war has affected economic performance all over the world and Kenya is not an exception,” he said.

The government, however, remained mum on whether it would yield to workers’ request for a salary increase.

Contacted to respond on whether the government had plans to raise the minimum wage for workers this year, Labour Cabinet Secretary (CS) Florence Bore simply replied “noted” to the queries, but did not provide a comprehensive response.

The government last year raised the minimum wage by 12 per cent to Sh15,201, after a four-year stagnation when the lowest paid workers earned Sh13,572.

Over the past seven years, Kenya’s minimum wage has increased by 17.6 per cent, despite the annual cost of living rising speedily.

Agricultural productivity

It has especially more pronounced ever since the Covid-19 pandemic struck, disrupting global supply chains, as well as with the eruption of climate change related disasters that have affected agricultural productivity.

This means that, while commodity prices are rising rapidly, workers’ incomes are unable to catch up, leaving many struggling economically.

“The effectiveness of the minimum wage depends on factors including the extent to which they afford protection to all workers in an employment relationship, including women and youth and migrant workers, regardless of their contractual arrangements,” Mr Atwoli said.

But steering a government that has already failed to pay civil servants for the first time in history, unable to disburse funds to counties on time, recording below-target revenues and facing a heavy public debt burden, President Ruto will be in a tight corner, to manage expectations amid a reality of workers who are struggling because their purchasing power has been eroded by the high cost of living.

While the Federation of Kenya Employers (FKE) has not voiced its opinion on the matter, it has also been complaining of a new burden following the implementation of the new National Social Security Fund (NSSF) law that raised both employees and employers’ pension contributions by up to 80 per cent. FKE has complained their members will be struggling with low profit margins.

Behind schedule

Talks to renegotiate the 2021-2025 Collective Bargaining Agreement (CBA) for teachers are behind schedule as they had initially been planned for January.

Last December at the close of 62nd Kenya National Union of Teachers (Knut) annual delegates conference in Kisumu, teachers resolved to press for 60 per cent salary increment.

If implemented, the increment will see the highest paid teacher in Grade D5 take home Sh252,249 up from Sh157,656, while the lowest paid teacher in Grade B5 will benefit from a pay increase from Sh27, 196 to Sh43,192. Most of Knut members are P1 teachers in Grade B5.

Knut Secretary-General Collins Oyuu has said teachers’ pay was last reviewed in 2017, as the CBA they signed in 2021 did not reflect a pay rise because the government had insisted that it was broke.

“There was an agreement that we would revisit the CBA signed after one year. Teachers have not been compensated for a rise in cost of living since July 1, 2017. Due to this fact, we have made a demand for a 60 per cent salary increment across the board,” Mr Oyuu has said.

And, last month, TSC Chief Executive Officer Nancy Macharia lobbied Parliament to support the commission’s request for a Sh14 billion allocation every year over the next four years to cater for a pay rise for teachers. Dr Macharia told MPs that, although trade unions signed the 2021-2025 CBA, it had no monetary value hence the need for a salary review.

Will not yield

“The commission negotiated a non-monetary 2021-2025 CBA with the teacher unions pursuant to the advisory from the Salaries Review Commission. It was agreed that the CBA be reviewed mid-term if the economic situation would improve in the country,” Dr Macharia told members of the National Assembly Education and Research Committee.

“The commission would wish to review the 2021-2025 CBA, more specifically the salary component, with an aim to motivate teachers under the employment of the commission,” she added.

But as a pointer the government will not yield to the 60 per cent pay rise demanded by teachers, Education Cabinet Secretary Ezekiel Machogu has cited the prevailing harsh economic climate to urge union leaders to make “realistic” demands.

"I am informed that you have already raised concerns about inflation and your 2021-2025 CBA, which did not have a monetary component. I call upon your leaders to be realistic and ensure that all deliberations have the learners’ interests at heart. You should bear in mind that our economy is currently in dire straits. I’m sure we will reach an agreement and move on as a country,” he told the Knut meeting last year.

Knut is also demanding compensation for primary school teachers who have been helping to teach in junior secondary schools (JSS).

Mr Oyuu had told Nation that thousands of their members have already been allocated lessons and TSC should compensate them.

In February, TSC hired 10,000 teachers and 20,000 interns to JSS but, with more than 23,000 public schools, most institutions received only one teacher or two.

And in the public service, the clamour for a salary review is also gathering steam. Union of Kenya Civil Servants Secretary-General Tom Odege has demanded that the government reviews the salaries and allowances for all workers citing the high cost of living.

Mr Odege, who is also the Nyatike MP, has pressed for better terms of employment for his union’s members as he warned government about salary delays.

"We are not going to work in this country as maids who are paid based on [the whims of] their employer. We must demand for our pay and the government should prepare for a mega strike in July," Mr Odege said.