Strikes by workers are on the rise once again with an eye on better perks to be in tandem with inflationary pressure at a time when the tight labour market has taken away some of the risks of walking off the job.
Health workers in Butere sub-county in Kakamega last week downed their tools over delayed salaries underlining the plight of staff at a time the rise in the cost of living is at a five-year high.
A similar situation is unravelling in Embu County where health worker appears to have gone on a go-slow over pay issues with Governor Cecily Mbarire issuing a warning to those absconding duty.
Workers and households are feeling the pinch of the high cost of living while earnings and job opportunities have remained largely static since the disruptions caused by the Covid-19 pandemic.
Inflation hit 8.5 per cent in August driven by high costs of fuel, electricity, and food hitting households with a biting cash crunch.
The government is also cash-strained and is barely getting by, and has cut back on “non-essential” programmes including the fuel, maize flour, and electricity subsidies that had been in place to soothe homes scorched by the high cost of living.
The August rate of inflation was the highest since June 2017 when it hit 9.21 per cent. Consumers on average spent 15.3 per cent more in the month on foodstuffs than a year ago, while transportation costs were up 7.6 per cent, according to the Kenya National Bureau of Statistics. The sharp rise in August inflation was linked to expensive maize flour, which cost 37.9 per cent more per kilogramme at Sh78.40 on average compared with last year, while the price for loose maize grain jumped 35.8 per cent to Sh74.19 on average.
Inflation rate is projected to climb even further this month after the State withdrew subsidies on electricity and petrol.
The Energy and Petroleum Regulatory Authority (Epra) increased the fuel cost component of the power bill by 46.6 percent for September, the highest in more than five years.
The regulator also raised fuel prices by up to 18 percent, with a litre of super petrol jumping by Sh20.18 to sell at Sh179.3, that of diesel from Sh140 to Sh165, and kerosene by 15.6 per cent to Sh147.94.
With this, public and private firms are projected to witness an upsurge in salary review demands even as the Economic Survey 2022 shows overall real average earnings of Kenyan workers – which measures the real value of their earnings given the prevailing inflation rates - decreased by 3.8 percent to Sh718,800 in 2021.
Real average earnings per annum in the private sector decreased by 3.8 percent to Sh720,400 in 2021 while in the public sector, it declined by 3.7 percent to Sh715,800 over the same period.
The government in May increased the minimum wage by 12 percent to cushion workers from the rising cost of living. This was the first in three years at a time sharp inflation has eroded the purchasing power of households. In the private sector, there is also building pressure for pay review as workers bear the brunt of inflationary pressure.
A monthly private sector performance index by Stanbic Bank showed that wages in the sector have risen for the sixth month in a row in August as workers petitioned for higher pay to help deal with rising inflation.
“Firms that saw an uptick [in pay] mostly attributed this to higher compensation offers due to the rising cost of living,” analysts at Stanbic Bank and American analytics firm, S&P Global, wrote in the PMI report for August. “Despite picking up slightly from July, however, the rate of staff wage inflation [in August] was only mild overall” Stanbic Bank Kenya’s Purchasing Managers Index (PMI).
Several firms are, however, feeling the pinch of inflation and have begun cutting back on jobs on low demand for produce.
Companies cut jobs
The Stanbic PMI for August showed that companies cut jobs for the third time in four months after inflation affected their operations.
This could trigger a fresh surge in startup businesses, reversing a slowdown in recent months after most companies absorbed more workers and restored salaries that had been chopped during the pandemic.
The latest report by the Registrar of Companies showed that new company and business registrations dropped 16 percent over the 12 months to June as more Kenyans who had rushed to entrepreneurship after job losses due to the Covid-19 pandemic returned to work.
The data shows that some 128,800 business names and private firms were registered in the year to June, down from 154,155 in a similar window of 2021 as the country’s economic growth re-energised from the easing of the Covid-19 pandemic stimulated job creation in the major sectors of the economy.
The pandemic accelerated an economic trend in which many Kenyans took to businesses to cover for jobs and earning losses—lifting the gig economy to new heights.
About 1.72 million workers lost their jobs within just the first three months of the pandemic between April and June of 2020 according to Kenya National Bureau of Statistics (KNBS) data, forcing them to turn to self-employment to make ends meet.
This saw business registrations at the Attorney-General’s office shoot up 21 per cent within just a year with a record 118,608 new businesses being registered by the end of June 2020 up from 98,302 a year earlier. Most of the new business logged were the registration of business names often by small informal traders such as retail shops, barber shops and salons, liquor stores, and others, and private companies.
Unlike a limited liability company, a business registered by name is not a separate legal entity from the owner but it allows individuals to trade legally.
A higher-than-expected 7.5 per cent economic growth last year saw the creation of about 926,000 new jobs easing the pressure on individuals to start their businesses to eke a living, according to KNBS.
The data by the statistics office shows the total employment outside small-scale agriculture and pastoralist activities grew by 5.3 per cent to hit 18.33 million last year up from 17.4 million driven by sharp growth in trade, manufacturing, tourism, construction, and transport.
This for the first time pushed Kenya’s employment above the pre-pandemic level of 18.14 million in 2019 before the pandemic wiped out nearly a million jobs on the back of trade and movement restrictions.
The highest proportion of the new jobs was created by the education sector which increased the level of employment in the sector to 609,200 following the resumption of learning in schools.
Manufacturing also enjoyed a good turnaround in fortunes with the sector adding 6.3 per cent more jobs bringing the number of workers in the sector to about 336,800.