President William Ruto is caught between a rock and a hard place as workers seek a 23 percent rise in minimum wage amid resistance from employers.
Ahead of Friday’s Labour Day celebrations, the Central Organisation of Trade Unions (Cotu-K) was lobbying for what would be the largest single-year wage increase since 2017, citing the rising cost of living. Employers, however, argue that elevated operating expenses have eroded their capacity to raise pay.
The President, who approved a six percent minimum wage increase in May 2024, now faces a delicate choice to side with workers, back employers, or strike a middle ground by approving a more modest adjustment that tempers both sides’ demands.
The stakes are high for Dr Ruto, with Friday’s fete coming against a backdrop of rising political rhetoric.
Many of the President’s critics argue that workers’ welfare has deteriorated under his administration due to new or enhanced compulsory deductions for social healthcare, affordable housing and retirement savings.
All of the last three double-digit increases in the minimum wage have coincided with election cycles (2013, 2017 and 2022), underlining the political sensitivity of the pay policy.
Trade unions are pushing for pay rises to improve workers’ welfare, but the Federation of Kenya Employers (FKE) has opposed the move, urging the State to first fix structural challenges in the economy, including delays in processing tax refunds and settling bills when firms trade with government entities.
Cotu-K secretary-general Francis Atwoli wants to back the rise in minimum wage with better collective bargaining agreements (CBAs) that will also uplift the living standards of workers.
He said a coordinated push on minimum wage and CBAs offers a better pathway to improving workers’ living standards and narrowing income inequalities in the labour market.
‘We have negotiated for a wage increase and some unions are in the process of revisiting CBAs to cushion workers from economic shocks such as fuel prices. We are calling for a 23 percent increase in salaries during this year’s Labour Day,’ said Mr Atwoli.
In 2022, the veteran trade unionist had pushed for a 23.4 percent rise but got about half at 12 percent amid outcry from the FKE.
The employers’ lobby argues that many of its members are struggling and addressing challenges in the business environment will enable businesses to grow and sustainably absorb a higher wage bill.
‘As the Federation of Kenya Employers, we are aware that minimum wages were last reviewed two years ago, but we are also aware that businesses are struggling, and we will be appealing to the government to balance the interest of businesses and the interest of employers,’ said Jacqueline Mugo, the chief executive at FKE.
‘Of great concern to the Federation is the proposal to match the minimum terms and conditions of service in the agricultural sector to those that fall under what we call the general wages council.’
In 2013, then newly elected President Uhuru Kenyatta announced a 13 percent rise in minimum wages barely a month after taking office, before freezing adjustments for three years.
Mr Kenyatta returned to the lever in 2017 with an 18 percent increment in the run-up to his re-election bid, followed by a further five percent increase in 2018.
Wages then remained unchanged until 2022, when he approved a 12 percent rise as succession politics gathered pace.
President Ruto made his first minimum wage adjustment in 2024, approving a six percent increase that raised monthly pay for low-income workers by between Sh486.59 and Sh2,058.18. There was no adjustment last year.
Attention is now turning to whether the President will sanction another rise.
In Nairobi, the minimum wage for househelps is Sh16,113, night watchmen (Sh17,976), drivers (21,748), clerks (Sh24,818) and cashiers (Sh36,330).
Enforcing the minimum wage has been problematic to the government despite the law having a jail term of up to two years for those in breach or a fine of Sh100, 000 for every case.
The Labour Day celebration comes on the back of newly released Kenya National Bureau of Statistics (KNBS) data showing inflation ticked up to 5.6 percent in April, the highest since March 2024, from 4.4 percent in the prior month. The spike in inflation reflects the impact of higher fuel prices amid the Middle East conflict.
A sustained rise in the cost of goods and services at a faster pace than last year could cut workers’ purchasing power unless salaries are increased to beat inflation.
Last year, real wages-earnings adjusted for inflation-grew by 2.0 percent, marking the first time in six years for growth in workers’ earnings to surpass inflation. Real wages had fallen for five consecutive years, including a 0.3 percent shrinkage in 2024.
The positive growth, however, masks the impact of increased statutory deductions — including contributions to the Social Health Insurance Fund (SHIF), housing levy and enhanced remittances to the National Social Security Fund (NSSF) — that ate into employees’ payslips for the better part of last year.
This is because the KNBS uses gross income rather than take-home pay that hits workers’ accounts to compute real wages. However, much slower growth in consumer prices, the main factor that erodes the purchasing power of money, helped push real wages into positive territory for the first time since 2020.
The positive real wages came in a year when the economic growth slowed to 4.6 percent, little changed from 2024’s 4.7 percent, pulled down by reduced activity in the agriculture sector. The statistics office on Wednesday forecast GDP growth of 4.9 percent in 2026, but it said sub-Saharan Africa remained highly vulnerable to shocks caused by the US-Israeli war against Iran.
The growth in real wages saw monthly real earnings for a regularly paid worker or wage employee increase marginally to Sh56,566 last year from Sh55,450 in 2024.
The earnings are, however, still lower than in 2020, when they stood at Sh62,256. This means workers’ earnings have suffered an erosion of Sh5,690 compared to six years ago.
Public employees continued to bear the brunt of the high cost of living, with their real wages falling further to Sh50,041 last year from Sh51,191.67 in 2024.