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How Uhuru Directive Will Lead To Job Losses

Kenyan employees are unhappy with President Uhuru Kenyatta’s decision to increase the statutory minimum wage by 12 per cent.

A section of employers have argued that the increase is unsustainable since the country is still recovering from the effects brought about by the COVID-19 pandemic.

Through the the Federation of Kenya Employers (FKE), the employers warned that the increment will result in low hiring and increased redundancies.

Speaking in a recent interview, FKE President Habil Olaka said companies will suffer a negative outlook on cashflows and financial positions due to a higher demand for a review of general wages.

“In the medium term, as enterprises readjust their operations to meet the increased payroll costs, we expect to see an increase in redundancies, increased automation and outsourcing, and depressed hiring,” Olaka said.

Speaking during the 2022 Labour Day celebrations, President Uhuru Kenyatta announced a 12 per cent increment in the minimum wage in Kenya effective May 1, 2022.

He expressed optimism about the Kenyan workforce, terming it as one of the best in Africa and the world

“I declare an increase of minimum wage by 12 per cent with effect from May 1, 2022. I call on the private sector, please let us work in the same spirit, let us all make the adjustments, that will sustain the wellness of our labour force, let us sacrifice a portion of our profit,” he said.

Adding;

“The World Bank has indicated that Kenya will have the best productive workforce by 2036 if we continue with the same trajectory.”

The minimum basic pay was last reviewed upwards in May 2018 at the rate of five percent.

 

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