Hiring of 500 workers at KPA poses threat to profit

The employment of 500 workers on permanent basis by the ports authority will eat into the parastatal’s profits, officials warned on Sunday.

The Kenya Ports Authority (KPA) had about 3,128 workers on contract but through negotiations with the Dock Workers Union, the management was pushed into including part of the workforce into the permanent and pensionable bracket to avert a strike.

“At the moment our wage bill is around 66 per cent of the total revenue but with the increase in numbers, it might balloon to 70 per cent, a situation that does not augur well with the authority since there will be little surplus for investment,” said a senior official who declined to be named.

The official said that in 2009 when Mr Brown Ondego was the managing director, the wage bill was 45 per cent of the total revenue with about 5,000 workers.

But during Mr Abdalla Mwaruwa’s tenure more than 1,000 workers were employed on contract, further increasing expenditure on salaries.

“On average, we should spend only 30 per cent of our revenue on salaries, leaving the rest for investment such as equipment and development of other projects,” he added.

According to a bulletin that KPA released early this year, the authority’s total revenue for 2010 was Sh18.7 billion, while the expenditure for the same period was Sh14.5 billion.

Of the total revenue generated in 2010, KPA spent Sh11.2 billion on salaries but with the new wage bill, salaries will gobble up a whopping Sh13 billion, assuming that total revenue remains or exceeds Sh18.7 billion.

KPA managing director Gichiri Ndua last Friday told journalists the workforce was bigger than that of regional ports.

“Last year, the port of Durban (in South Africa) handled 37 million tonnes of cargo with a workforce of 4,250 while we did 19 million tonnes with 7,370 workers,” he said.

It is yet to be established how much loss KPA incurred in last Friday’s strike.