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Review Wage Policy To Reflect Economic Reality

By Jaindi Kisero, The Nation (Nairobi), 30 April 2000

Nairobi - Tomorrow is Labour Day and as usual, the Minister for Labour might announce increases in minimum wages for all urban areas in Kenya. It is the government's way of paying tribute to the working class.

Yet the evidence is that this annual ritual of announcing the minimum wages during Labour Day celebrations neither mean much to workers, nor make economic sense.

Indeed, it is baffling that the government persists in cherishing the notion that a few bureaucrats sitting on their comfortable armchairs in Nairobi can have the wisdom to set wages for all towns in Kenya - from Migori in South Nyanza, to Kwale in the Coast Province.

Minimum wages have very little relevance to the common urban dweller in Kenya. As a matter of fact, the wages paid by employers are, in most cases, much higher than the set minimum wages. For example, while the monthly minimum wage for Nairobi and Mombasa is currently set at Sh2,886, the average wage in the city, according to government statistics, is Sh4,538.

In many cases, many employers, especially those of domestic workers and househelps, are not even aware that they risk prosecution when they pay their workers below the minimum wage. Even though the evidence is anecdotal, many domestic workers in smaller towns are paid way below the minimum wage, mainly because most minimum wage earners do not have unions to represent them.

Is it not surprising that almost every wage earner in Nairobi and Mombasa can afford to employ a househelp, when highly-placed corporate executives in Europe can hardly afford to employ domestic servants? Is this phenomenon not a clear sign that the minimum wages set by the State are honoured more in breach than in practice and that the execution of the minimum wage policy by the Ministry of Labour is weak and ineffective?

As we celebrate Labour Day tomorrow, we surely need to open debate on the minimum wage to determine whether or not it is still serving any useful purpose. Furthermore, this country needs to rethink its wage policies and to change them to reflect the changing economic realities.

The policy of "growth through wage restraint" can no longer work in a context where the government is liberalising other factors of production and allowing employers to retrench workers and institute redundancies at their whim and fancy.

We need to re-examine the policy of growth through wage restraint against the prevailing economic environment.

The starting point should be a thorough review of the function and place of the so called wage guidelines which are the most important instruments which the State uses to control wages.

These guidelines, formulated by the Wages Advisory Board, are enforced on collective bargaining agreements through the rulings of the Industrial Court.

In fact, in matters of wages and salaries, the Industrial Court is usually bound by the guidelines. In spite of their importance, the wage guidelines are issued irregularly, the prevailing ones having been issued in 1994.

We have had a wages policy which has allowed wage freezes of low cadre workers, while permitting increases in pay and benefits for managers in the name of attracting skilled personnel.

Secondly, our wages' policy has failed to address the broader goal of equitable distribution of income.

Thirdly, it has allowed employers to pursue remuneration policies which undermine the principle of equity.

Another important issue which requires reflection as we celebrate this year's Labour Day is the issue of retrenchment in the civil service. We need to open debate on this matter because we are clearly moving into a situation where the public service is being designed, organised and managed in the same manner that a private company is run.

Our planners appear to be blindly pre-occuppied with the idea of reducing and controlling personnel spending. Granted, we cannot just allow spending on staff to outstrip spending on the very services which that staff should deliver.

We cannot employ doctors, nurses teachers and policemen when there are no resources to buy medicines, textbooks, and patrol vehicles, let alone when there is no money to build schools and clinics.

But we must also agree that the control of spending and personnel should be driven and informed by a desire by the government to optimally use all factors at its disposal including human resources. We should not just dogmatically pursue the notion of a "lean state" as if it was a universal truth.

If these issues are not discussed widely, the temptation to apply corporate stereotypes within the public service will overwhelm us and cause us to primarily regard the people working for the State as a liability rather than a resource.

Presently, it is clear that the policy of retrenchment is not informed by the government's desire to improve service delivery to the people and to extend services to more Kenyans. It is primarily informed by fiscal pressures - the need to trim the budget. As government planners continue to crunch the data on the size of the government's workforce and spell figures to justify cuts and controls of personnel spending, they should not forget that behind the statistics are human beings who have social needs that must be met.

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