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

Business Daily (Kenya) - - FRONT PAGE - Vic­tor Juma [email protected]­tion­media.com

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.

--FILE

CIVIL SER­VICE Work­ers in a Min­istry of Lands of­fice.

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