74pc of salaried Kenyans earn less than Sh50,000
Survey inds that the ranks of this cadre of workers have been growing in recent years
Three-quarters of all Kenyans working in the formal sector are on a monthly salary of below Sh50,000, the latest wage distribution data shows.
The Kenya National Bureau of Statistics (KNBS) says that the number of people in the bottom wage bracket (earning below Sh20,000 a month) stood at 1.9 million at the end of 2017 and was mainly made up of minimum wage workers such as house servants, drivers, secretaries and low-ranking teachers and police officers.
The ranks of the typical Kenyan employee, who is paid between
Sh20,000 and Sh29,999 per month, stood at 964,943 or 36 per cent of the 2.6 million salaried workers.
The low-paid workers’ segment also includes the 749,344 with incomes of between Sh30,000 and Sh49,999 who are considered on the lower middle class earnings threshold.
This group has expanded its ranks the most in the past five years, adding 95,664 members or a compound annual growth rate of 2.7 per cent over the period. The 1.9 million workers are the most critical for the economy, accounting for a large share of aggregate demand for goods and services.
Most of these employees spend the bulk of their income on basic necessities such as food, housing, clothing, education and minor discretionary items such as entertainment.
Higher-income households tend to save more of their earnings while also spending on luxury items such as cars and holidays.
The KNBS Statistical Abstract shows that those paid between Sh50,000 and Sh99,999 per month form the next largest segment with a population of 601,507.
This category includes most entry-level jobs for university graduates in diverse sectors such as banking, manufacturing, telecommunications as well as the civil service.
They form the majority of the middle class whose growth has sparked a consumerism culture as seen by the expansion of global luxury goods brands, including purveyors of premium alcohol, cars, clothing and smartphones.
Their ranks have grown by 81,853 members over the past five years, a growth rate of 2.9 per cent compounded annually.
Those earning Sh100,000 or more also grew at an almost similar rate to reach 76,804 last year, having added 10,261 members in the same period.
Workers in this top income club include professionals with several years of experience, State officers, managers and individuals with one or more postgraduate qualifications.
Most of the individuals in this bracket earn millions of shillings per year and represent the rich and upper middle classes.
At a minimum of Sh100,000, their pay is nearly seven times the gross monthly per capita income of Sh14,508.
The super-rich are also members of this club but they make most of their money from non-labour sources such as dividends, interest, royalties and capital gains.
Only 23,639 employees are paid below the per capita income level of Sh9,999 or less, partly due to the raising of the minimum wage over the years.
Cashiers, drivers and clerks, for instance, have seen their pay set above Sh19,000 by law.
The 2.6 million workers in the formal sector shared total wage earnings of Sh1.8 trillion last year, up from Sh1.6 trillion distributed to 2.5 million employees in 2016.
The private sector doled out the biggest pay cheque of Sh1.2 trillion last year or 70 per cent of the total wage earnings, underlining the critical role of companies in creating and sustaining employment opportunities.
Scores of businesses, including banks and manufacturers, have laid off thousands of workers in the past one year, citing unfavourable policies and rising cost of doing business, among other factors.
Within the private sector, local firms had the largest payroll of Sh438.5 billion, followed by foreign companies (Sh162.1 billion).
The government paid its workers a total of Sh549.1 billion, with most of the money gobbled up by teachers at Sh180.9 billion, followed by county governments (Sh110 billion) and national government (Sh107.9 billion).
The actual labour earnings across the country is unclear, with most Kenyans employed in the informal agricultural sector.
Earnings in informal sector, rural small-scale agriculture and pastoralists activities are excluded” KNBS | REPORT
Lecturers, tutors and teachers dominate the list of formal employees who earn above Sh100,000 per month, official statistics show, reflecting their negotiating power.
Workers in the education sector who earned in this pay bracket increased by 805 to 17,001 in 2017 compared to a year earlier, data released by the Kenya National Bureau of Statistics (KNBS) on Wednesday indicate.
That is an equivalent of 22.13 percent of the 76,804 formal employees who were paid in the upwards of Sh100,000 in 2017.
Overall, only 2.89 percent of the country’s 2,656,553 workforce in formal employment were in that pay category. Employees in the education sector made up a third of the additional 2,511 workers who joined the Sh100,000 or more monthly pay club in 2017.
Teachers and lecturers have a strong negotiating power for a pay increment, through the Collective Bargaining Agreement (CBA) with their employers.
Teachers, through their union, signed a CBA on October 20, 2016 with the Teachers Service Commission (TSC), giving them a cumulative pay rise of Sh54 billion to be implemented in four years from July 2017.
The KNBS says in the Statistical Abstract 2018 the income include basic salary, cost of living allowances, profit bonus, together with the value of rations and free board, and an estimate of the employer's contribution towards housing.
“Earnings as shown in this section are lower than the estimate
Construction and manufacturing were also among key economic sectors which witnessed a rise
of factor income going to employees because they exclude pensions, employers’ contributions to the National Social Security Fund or private provident funds and personal emoluments for the armed forces,” the statistics office says.
“Earnings in informal sector, rural small scale agriculture and pastoralists activities are excluded.”
The KNBS data is collected at the end of each financial year ending June largely through enumeration of employees and self-employed persons.
The number of workers in financial services pocketing more than Sh100,000 nonetheless fell by 147 to 11,459 last year compared with 2016.
A similar trend was witnessed in agriculture where top-earning employees dropped by a further 40 to 2,892. This means agricultural workers in this category have nearly halved compared to 5,433 in 2015 amid rising mechanisation and digitalisation of farm operations.
The number of employees in the wholesale and retail trade, repair of motor vehicles and motorcycles whose pay was within this pay category rose by 244 to 10,504 workers.
Construction and manufacturing were also among key economic sectors which witnessed a rise of 142 and 51 to 4,840 and 6,034 employees, respectively.
CIVIL SERVICE Workers in a Ministry of Lands office.