Stop pay rises to curb inflation, firms advise

A lobby for the investors and business leaders wants employers and the government to freeze salaries for two years to check inflation and boost growth.

“We need to generate more income for the country for inflation to come down and the shilling to drop to between Sh80 and Sh85 to the dollar for the economy to start to grow,” the chairman of the Kenya Private Sector Alliance, Mr Patrick Obath, said.

The call comes as more unions threaten to call strikes to push for better pay. The wave of strikes started in September with teachers, followed by air traffic controllers, university lecturers and now doctors.

Employees of the Kenya Broadcasting Corporation, truck drivers and matatu owners have also threatened to go on strike, citing high cost of living.

Prices of essential commodities such as maize flour, sugar, soap, milk, cooking fat, gas, kerosene and petrol have more than doubled in the last 10 months. For instance, a 2kg packet of sugar retails at Sh375, up from Sh160 in January.

Difficult times

Mr Obath said the country was going through difficult times due to a weak shilling, increased inflation and high cost of living.

“There’s no direct fix. Strikes would only add to the problem as the economy is not growing while the amount of money the government or employers have is fixed. If people start demanding blanket wage increments, there is a big risk employers will start reducing workers,” Mr Obath said.

He said the government had limited options for raising more revenue and demanding higher salaries for public workers would only push up taxes.

“The answer is to freeze all wages for two years and let the economy begin to grow,” Mr Obath said.

But Consumers Federation of Kenya secretary-general Stephen Mutoro disagreed.

“People can’t live within their means (sic). Those employed could use Article 41 of the Constitution, which guarantees them right to good labour and to go on strike,” he said.

Kenya Healthcare Federation chief executive Amit Thakker blamed the doctors’ strike on lack of dialogue with the Medical Services ministry.

“It should be agreed how doctors who work for government and private sector should operate to avoid one being short-changed. What we should ask is, should we allow government doctors to work in private hospitals? What should be the structure of engagement?” Dr Thakker said.

Mr Gitau Githogo, an economist, blamed the unrest on high cost of living.

“When you have 10 to 20 per cent inflation, the cost of basic goods gets out of reach for many low income earners. The result is growing despair and calls for better pay,” Mr Githogo said.

He warned that the more the government gave in to workers’ demands, the more unions would push for boycotts.

“After the medical practitioners strike, we expect other sectors to follow suit,” he said. “Schools have also adjusted their fee structures upwards and so people will be unhappy to pay higher fees with the same salaries they have had for a long time. Labour unrest can only be quelled by bringing down the levels of inflation.”

Prof Michael Chege, an economist at the Ministry of Planning, said only robust growth would restore calm, adding, the government needs to attain a lower rate of inflation of about 7-9 per cent.

“Increasing salaries to quell the labour unrest could just be a short-term solution. A long-term solution has to be in line with international standards, but only when the rate of inflation has been contained and the government is making more money from higher levels of economic growth.”

Consumer Information Network chief executive Samuel Ochieng claimed the wage ceiling imposed by the World Bank and the International Monetary Fund had condemned public servants to poor pay.

“This forced the government to either pay less and employ more or pay more and employ less, which either way affects the health sector,” Mr Ochieng said.