Analysis Of Wages And Collective Bargaining Situation In Kenya By George Owidhi

CENTRAL ORGANIZATION OF TRADE UNIONS, KENYA SEPTEMBER 2016

1. INTRODUCTION AND BACKGROUND

1.1 Foundations for Collective Bargaining Agreements and Minimum Wages

Collective Bargaining Agreements (CBAs) and Minimum Wages (MWs) are anchored on the Wage guidelines in Kenya (Issued 1973, Revised 1994), the Constitution of Kenya (Republic of Kenya, 2010), the Labour Institutions Act (2007) Section 44 (5). There are also international legal instruments such as: the Minimum Wage Fixing Convention No. 131 of the ILO (1970), Article 23 (3) of the United Nations (UN) Universal Declaration on Human Rights as well as Goal 8 of the 2030 Global Sustainable Development Goals (SDGs) on employment and decent work and the attainment of high standards of living, high quality of life and wellbeing under Aspiration 1 of the African Union Agenda 2063.

In particular, Article 41 of the Constitution of Kenya (2010) grants every worker fair labour practices including fair remuneration as well as reasonable working conditions. Similarly, Article 43 confers workers social and economic security (Republic of Kenya, 2010).

Precisely, CBAs provide a credible platform to cement these foundations while the minimum wage laws provides a benchmark that ensures at least a fair minimum level of wages for workers.

1.2 A Brief Framework of the Industrial relations systems in Kenya

The Labour Institutions Act (2007) as amended lays an industrial relational framework involving the employer (or employer association) and the employee (or employee federations/the trade unions). This framework outlines institutions of social dialogue such as the National Labour Board, Employment and Labour Relations Court, the National Council for Occupational Safety and Health (NACOSH), Wages Councils such as the General Wages Council and the Agricultural Wages Council among other Alternative Dispute Resolution mechanisms.

Social dialogue occurs between the Trade Unions and Employers federations. In Kenya, most of the trade unions are affiliated to the Central Organization of Trade Unions- Kenya (COTU-K) while about five are affiliated to the Trade Union Congress of Kenya (TUC-Ke). On the other hand, the Federation of Kenya Employers (FKE) represents employers in both the private and public sectors. The social partners engage while fixing wages under the guidelines of the Labour Institutions Act (2007).

1.3 Rationale for Minimum wages and Collective Bargaining Analysis in Kenya.

CBAs negotiated between the trade unions and the employer’s representatives lay down the terms and conditions of employment including the benefits to the workers as well as the industrial relations mechanisms of engagement between the trade unions and the employer federations. In this regard, all the fundamental rights, obligations and benefits that the worker is liable to should be provided for in the CBAs and the minimum wage provisions.

However, several gaps still exist in the CBAs leading to breach of the fundamental rights and freedoms of the worker. Moreover, the establishment of the Salaries and Remuneration Commission (SRC) in 2010 has complicated the social dialogue process by putting up several constraints (presumed guidelines for negotiations and wage settings) that disrupt the normal negotiation processes.

This paper sought to provide the current situation of minimum wages and CBAs in Kenya. The analysis was based on a random sample of 23 CBAs of 23 unions (Affiliates of COTU (K) covering 10, 978 workers during the first quarters of 2014, 2015 and 2016.

1.4 Outline of the Report

This report is structured in four sections as follows: Section one introduces CBAs and Minimum Wages systems in Kenya while section two discusses the structures and trends of CBAs and MW systems. Section three presents the situational analysis of the Collective Bargaining Agreements while section four concludes the report.

2. STRUCTURE AND TRENDS OF MINIMUM WAGES AND COLLECTIVE BARGAINING SYSTEMS IN KENYA

Wages in Kenya are fixed at three levels: the minimum wages for the whole economy are set by the Wage Councils while the Collective Bargaining Agreements are used to set up wages in the private sector (usually above the wage council rates) and the Collective Bargaining and Administered approaches used to set wages in the public sector.

2.1 Structure of minimum wages in Kenya

Minimum wages in Kenya are set up by the Wages Councils. Kenya has 17 wage councils out of which only two, the General Wages Council and the Agricultural Wages Council are currently operational. As a result the wages set by the General Wages Council serves all the non- agricultural sectors while those set by the Agricultural Council cover all the agricultural workers. In essence, the steps involved in setting up minimum wages involves the proposals by the Central Planning and Monitoring Unit (CPMU) of the Ministry of Labour, the set levels by the wage councils and the final decision by the Cabinet Secretary for Labour, which is gazetted.

2.2 Structure of Collective Bargaining Agreements in Kenya

CBA in Kenya is a key industrial relations tool through which employers and workers’ representatives negotiate the terms and conditions of employment. The regulations of the CBAs are laid down in the Industrial Relations Charter released in 1957 and revised in 1984, the constitution and the labour laws in Kenya. The CBA negotiations are guided by the wage guidelines 2005 which sets the duration of the CBA to be revised only once in every 24 months. It is noteworthy that a CBA only becomes enforceable when it is registered with the Employment and Labour Relations Court.

CBAs are negotiated either at enterprise or sectorial levels. In case the parties agree, the CBA is registered with the Employment and Labour Relations Court. If not, the matter is reported to the Cabinet Secretary for Labour who appoints a Conciliator. Incase reconciliation succeeds, the CBA is concluded, otherwise it is referred to the Employment and Labour Relations Court for adjudication.

Table: Summary of Minimum wages and CBAs coverage in Kenya for the period 2011-2013.

YEAR CBAs MINIMUM WAGES (KSH. PER MONTH)
  MIN CBA WAGE WORKERS COVERED AGRICULT. SECTOR MAJOR TOWNS MUNICIPALITIES
2010 21,277 1,01,282 4,483 10,606 9,836
2011 26,134 96,614 5,044 11,911 11,066
2012 27,104 76.0001 6,239 13,471 12,515
2013 31,989 38,011 6,503 15,375 14,264

3. ANALYSIS OF THE CURRENT SITUATION OF MINIMUM WAGES AND COLLECTIVE BARGAINING AGREEMENTS IN KENYA

3.1. Working Hours per Week

The results show that on average, 52 per cent of the workers work for 45 hours a week, 22 per cent work for 40 hours a week while 26 per cent work for varied hours including 42, 44, 46, 48 and 50 hours. Others work in two shifts while other work in three shifts depending on the nature of the work. It is noteworthy that Section 27 of the employment Act 2007 allows the employer to regulate the working hours depending on the nature of the work so long as the employees are allowed one rest day in a period of 7 days.

3.2 Minimum Wages

The latest minimum wages order of 2015 states the lowest minimum earning (by general workers) of Kshs. 6,752 (USD 67.52) per month and the highest (by cashiers, Grade I workers, etc) at Kshs. 24,719 (USD 247.19) per month. The results show that the lowest CBA wage earner has a basic salary of Kshs. 6000 (USD 60) (e.g. a general workers) while the highest earns Kshs. 64,092 (USD 640.92). Moreover, 26 per cent of the workers basic pay is less than Kshs. 10,000 (USD 100), 57 per cent range between Kshs. 10,000 (USD 100) and Kshs. 20,000 (USD 200), 13 per cent earn between Kshs. 20,000 (USD 200) and Kshs. 30,000, while only 4 per cent earn above Kshs. 30,000 (USD 300) in basic salary.

3.3 Annual Salary Increase

The General wages order 2015 gave an increase of 12.5 per cent in salaries while in 2016, there was no salary increases. This notwithstanding, in the period under review, the lowest annual increase was 4.5 per cent while the highest increase was 20.14 per cent per annum. On average, the wages were increased by 9.76 per cent per annum.

3.4 House Allowance

The study shows that on average, house allowance is provided to the workers at 27.8 per cent of the Basic salary or Kshs. 8,471 whichever is higher. The study shows that the lowest house allowance provided during the period under review was 15 per cent of the basic salary or Kshs. 1,600 (USD 16) whichever is higher. The CBA with the highest hose allowance was at 50 per cent of the Basic salary or Kshs. 48,322 (USD 483.22) whichever is higher. It is noteworthy to point out that section 31 of the employment Act 2007 states that the employer should provide reasonable housing to the employees.

3.5 Gratuity Provision

The results have shown that 56.5 per cent of the employees are registered either in Provident funds or Pension schemes through which they access their gratuity. On the other hand, 43.5 per cent of the workers have a varied gratuity provisions which range from 15 per cent to 27 per cent of their basic salaries.

3.6 Medical Allowance

While 78 per cent of the CBAs have adapted section 34 of the employment Act 2007, which states that, the employer should take reasonable steps to provide for sufficient and proper medical attention to employees. On the other hand, 22 per cent of the CBAs provide a range of insurance schemes to cover the workers. The results show that the medical coverage (either outpatient, inpatient of both) ranges between Kshs. 60,000 (USD 600) to Kshs. 500,000 (USD 5000) per year.

3.7 Leave Travelling and Safari Allowance

The results show that 87 per cent of the CBAs provide monetary leave travelling allowances ranging between Kshs. 1500 (USD 15) to Kshs. 24000 (USD 240) per month while 13 per cent offer various percentages of the basic salaries as allowances. These are 100 per cent, 15 per cent as well as 12 per cent of the basic salary.

For those CBAs that provide for safari allowance (72 per cent), the allowance varies, the lowest being Kshs. 700 (USD 7) while the highest is Kshs. 4,500 (USD 45) per month.

3.8 HIV/AIDS

Most of the Collective Bargaining Agreements have clauses that protect workers against violations on the basis of their HIV/AIDS status. This is drawn from employment Act 2007 Section 5 (3) which stipulates that a worker should not be discriminated against on the basis of HIV/AIDS. This discrimination should not be on promotion, recruitment, training or any other terms and conditions of employment

3.9 Sick and Annual Leave

Various CBAs give different durations for their employees as either annual leave or sick leave. For instance, the lowest sick leave from the reviewed CBAs is 30 days while the highest is 180 days. The average leave days is however 59. On the other hand, the lowest annual leave is provided for 24 days while the highest is 36 days. The average annual leave is however 26 days from the CBAs studied.

4. CONCLUSION AND RECOMMENDATIONS

This analysis reveals the current situation of Minimum Wages and Collective Bargaining Agreements in Kenya. It has shown the gaps that the current CBAs have as well as the differences in terms of clause provisions. Notably, with the high costs of living, reduction in welfare and labour market challenges including rampant retrenchment, growing seasonality of jobs as well as increasing job insecurity, effective and efficient labour relations provide a path worth following.

In this regard, the study recommends the following:

  • That minimum wage based wages and CBA based wages be set at levels that are at least as much as the basic need of the worker. The current poverty line is at $2USD per day.
  • That minimum wage revision should be adjusted upwards in accordance to the rise in cost of living as provided for in the wage guidelines 2005.
  • That the CBAs provide the most appropriate framework to address existing decent work deficits in the labour market
  • That the CBAs should include issues of Gender and women issues; job security and skills training as some of the fundamental emerging issues that affect the work place. In particular, with the increasing seasonality of jobs, a clause on job security is highly recommended.
  • That in order to realize decent work for all, the conditions of service as cemented in the CBAs should be uniform across the sectors and the unions as provided in the labour laws without discrimination.

REFERENCES

International Labour Organization (2003). Protection of Wages: Standards and Safeguards relating to the Payment of Labour Remuneration, International Labour Conference, 91st Session, Geneva.

Republic of Kenya (1973). “Wage Guidelines”. Nairobi: Ministry of Finance.

Republic of Kenya (2005). “Wage Guidelines”. Nairobi: Ministry of Finance.

Republic of Kenya (2015). “Minimum wages (amendment) order 2015”. Nairobi. Ministry of Labour.

Republic. of Kenya (2007). Vision 2030 Strategy for National Transformation: Accelerating Equitable Economic and Social Development for a Prosperous Kenya. Nairobi: Government Printer.

Republic of Kenya (2010). The Constitution of Kenya, 2010. Nairobi: Government Printer.

Taryn V and Lora S. (2012). “ Per diem policy analysis toolkit” Anti-Corruption Resource Center. U4.Issue No.8

The African Union Commission (2015). “The First Ten Year implementation plan 2014-2023”. AU Agenda 2063.