Inflation, salary squeeze dims Labour Day festival

Inflation, salary squeeze dims Labour Day festival

Workers are facing their most painful squeeze in over a decade after a day in which the cost of living crisis escalated and employers warned of a longer freeze in pay increases.

Employers say real wages, adjusted for inflation, will take longer to recover from the pandemic-induced economic contraction in 2020.

This means that disposable incomes will fall in 2022 as rising inflation and tax increases hit families, posing a headache to the State ahead of Labour Day on Sunday.

Workers will be keen to see whether the State will buck the trend where it has failed to review minimum wages over the past four years amid a sharp jump in THE prices of essential items, including soap, cooking gas and fuel.

Kenya National Bureau of Statistics (KNBS) data released on Thursday show that inflation hit a seven-month high OF 6.74 percent in April, from 5.6 percent in March, straining household budgets at a time when average private-sector pay grew at the slowest pace in a decade.

The Federation of Kenya Employers (FKE) on Thursday said workers would normally get compensated for inflation when the productivity of companies starts growing faster than the cost of living measure.

FKE executive director Jacqueline Mugo, however, said productivity in Kenya was “not just low, but is actually decreasing”, citing findings of the 2022 Economic Position Paper on Wages by the Ministry of Labour.

“Until the global political developments affecting supply chains and the challenging situation for enterprises in Kenya improves, employers are not in a position to unilaterally increase wages in real terms,” Ms Mugo told the Business Daily on Thursday via WhatsApp.

“Employers in Kenya are struggling and still trying to grapple with the negative impact of the Covid-19 pandemic. The situation of companies is being worsened by the disruptions in the global supply chains as a result of the ongoing geopolitical conflicts.”

The prices of essential items, including soap, cooking gas and cooking oil as well as food items such as wheat flour and onions, have risen by up to 41 percent in the past year.

This has forced many households, especially in the low-income segment, to reduce their shopping basket in an environment where firms have frozen salaries as they recover from Covid-19 economic hardships.The rise in the cost of essential commodities could force workers to cut back on non-essential items such as beer and airtime, ultimately hurting firms like East Africa Breweries Limited (EABL) #ticker:EABL and Safaricom #ticker:SCOM […]

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