What the 5% Labour Day increase on minimum wage means

The government on Tuesday announced a five percent increase on the minimum wage for Kenyan workers.

President Uhuru Kenyatta, in his Labour Day speech read by Labour Cabinet Secretary Ukur Yatani, said the increment had been made in view of the current inflation rate.

“In recognition of the good work done by our workers and cognisant of the rate of inflation of 4.8% this year I hereby declare a corresponding increase of 5% on the minimum wage,” the statement read.

The increment will apply to workers who earn between Ksh.6, 415 and Ksh.29, 169 in various locations according to the 2017 regulation of wages order.

This essentially means no one in Kenya should earn less than Ksh.6,415 which is the minimum wage for unskilled employees.

On Monday, the Kenya Association of Manufacturers (KAM) had sounded a warning against an increase of the minimum wage, saying such a pronouncement would be a big blow to the industry.

KAM argued that instead of increasing the minimum wage, the government should consider raising the minimum taxable pay, reduction of VAT on essential commodities as well as continued exemption of overtime and bonuses paid to low income earners.

“A ceremonial wage increase will not help us to tackle the subject of poverty eradication in a sustainable way,” said Ms. Wakiaga in a statement.

KAM chief executive Phyllis Wakiaga said an increase in the minimum wage will be costly for industry players who are still reeling from the setbacks suffered during last year prolonged electioneering period.