Tea prices are a challenge. FILE PHOTO | NMG Salaries and wages of tea and coffee workers have shot up by 36 percent in the last four years, increasing operating costs for agricultural firms in Kenya.
This follows the conclusion and signing of collective bargaining agreements (CBAs) that had been pending for the last four years to 2019, compelling firms to pay all the outstanding increases.
The additional costs come from the tea industry’s CBAs that have resulted in wage rise of seven percent for 2016, eight percent for both 2017 and 2018 and nine percent for last year.
The increases have effectively inflated payroll costs by a cumulative 36 percent for tea firms such as the Nairobi Securities Exchange-listed Sasini Tea, Williamson Tea, Kapchroua Tea and Kakuzi.
“This has resulted into a continued increase in the cost of production and compelled the company to employ technology in tea harvesting and other cost containment measures in operations and manage costs to enable sustainability,” Sasini says in its latest annual report.
The rise means that a worker who was taking home Sh30,000 at the beginning of 2016 will now be earning at least Sh40,800. This comes against a background of dwindling prices of tea in the export market.
UK-headquartered Camellia PLC, which owns Kakuzi and Eastern Produce Kenya, disclosed that it paid out £8 million (Sh1.06 billion) to settle outstanding CBAs in Kenya as well as West Bengal, India.
“Whilst the final settlement is subject to registration by the Minister of Labour in Kenya, we believe that this will occur in due course and we have, therefore, today paid the outstanding amounts,” Camellia said in its interim report.