The Central Bank of Kenya has hinted that the high unemployment rate in Kenya may be partly caused by staff unions’ insistence on raising the minimum wage.
CBK, in its recently released Agriculture Sector Survey covering the month of November, indicated that many large-scale agricultural firms were not keen on hiring more workers as a result.
According to the financial sector regulator, the employers had slowed down on hiring due to reduced income as a result of the battered economy.
“Regarding labour costs, the findings of the Survey showed that the push by staff unions for an increase in the minimum wage has also affected the hiring of workers given that the incomes have not grown to levels that can sustain regular waged labour for the entire season,” read the report in part.
The Central Bank Of Kenya
The sector also witnessed reduced activity after an intense impact influenced by high input prices, weather conditions, transport, pests and diseases, as well as labour costs.
Just like Agriculture, several other sectors including the media as well as manufacturing have seen unions demand decent wages for their staff members.
For instance, some white-collar and blue-collar businesses encountered go-slows, with unions insisting on pay rises for their members after President William Ruto introduced a slew of taxes denting payslips.
An employee earning Ksh100,000 gross salaries saw a Ksh3,000 decline in monthly earnings since some of the taxes took effect in July 2023. August served as the worst month for salaried individuals as the state backdated the housing levy, currently billed at 1.5 per cent per month.
The pressure is also expected to increase when other deductions, including contributions to the Social Health Insurance Fund, take effect.
Data by Statista indicates that the Agricultural sector is the biggest employer in Kenya accounting for 53.8 per cent of the country’s entire workforce followed by service providers at 38 per cent.
Over the recent years, the sector has suffered under a harsh economic downturn with factories in the horticulture and sugar industries shutting their doors.
Meanwhile, the unemployment rate has continued to soar to 5.85% in 2023 affecting more than 2 million individuals. In 2022, the minimum wage was raised to top Ksh15,000 but the number of individuals who lost jobs also increased.
Thousands of Kenyans turned up for 1,500 advertised jobs by the Kenya Association of Private Employment Agencies (KAPEA) on October 28, 2023.