Multiple strikes, drought spell doom for Jubilee amid re-election bid

What you need to know:

  • And with the State and labour unions appearing to pull vigorously in opposite directions, experts say the country is pushing itself to an economic disaster.
  • Should the government yield to demands by the country’s 5,000 doctors, it will have to cough up an additional Sh5.4 billion, on top of the Sh2.6 billion it pays them annually.
  • The Treasury says it will be careless to please all the trade unions.

The wave of strikes across the public sector in recent months has left the Jubilee administration struggling to cope as all the solutions have economic and political ramifications that could affect its fortunes in the upcoming elections.

With the polls just 189 days away, the government is already dealing with a biting drought, a near economic slow-down, allegations of corruption, a weakening shilling and a stock market decline.

A striking country is the last thing the Jubilee administration needs at this time when it is seeking re-election on August 8.

But what began as a downing of tools by doctors and nurses demanding higher pay last month is threatening to snowball into a major crisis as often happens when elections approach, with union after union threatening to go on strike or asking members to stop working all together.

Today, the doctors’ strike entered its 56th day, while the lecturers’ strike is on day 13.

And, from tomorrow (Monday), students from all public universities might begin the mass action they threatened last week if the government does not end the lecturers’ strike by the end of today.

Worse, the Kenya Union of Clinical Officers is also yet to effect its seven-day strike notice which expired last Tuesday.

It is believed they could down tools any time if their demand for promotions, better pay and improved allowances is not met.

If clinical officers and public university students make good their threats, the government will have in its hands a paralysis in two critical sectors of the economy, adding to an already overloaded tray of problems.

UHURU HAS FAILED

And with the State and labour unions appearing to pull vigorously in opposite directions, experts say the country is pushing itself to an economic disaster.

“When a union calls for a strike, apart from its members lowering their productivity during this period, other government employees, even though not on strike, adopt a wait-and-see attitude which negatively impacts total output of the economy,” says Dr Samuel Nyandemo of the University of Nairobi’s School of Economics.

“Remember, trade unions have realised that this is the most opportune time to be heard by the government because we are approaching the election; so I don’t think anyone will back down,” he says.

Hospitals are already paralysed, patients are dying and others are being forced to sell their property to afford expensive treatment in private hospitals.

And there is no learning in public universities, all because of demands for better pay.

But unlike the private sector where employment and wages are determined by profits, the number of people employed by the government and their earnings depends on two key factors.

These are the ability of a particular ministry to compete for higher budgetary allocations, and the power of trade unions.

Because the government has to perform a delicate balancing act to make sure everyone is somewhat happy, it has to make both political and economic decisions when faced with industrial action like now.

The Central Organisation of Trade Unions (Cotu) says the government has failed.

“I don’t know who is advising the government on labour. Labour in any country is the key to economic growth and no country can spur itself to growth without using its manpower properly,” says Secretary-General Francis Atwoli.

He adds: “Any negotiation between an employee and an employer is always in good faith. But with things the way they are now, there is a vacuum of leadership somewhere.”

COSTLY PAY DEALS
President Uhuru Kenyatta and his Deputy William Ruto have largely given the industrial action a hands-off approach, leaving the situation to be handled by their cabinet secretaries and the courts, but with little success.

All the striking unions want full implementation of their various collective bargaining agreements (CBAs) with the government before their members go back to work.

This is how the government got nurses to return to work last month after the Ministry of Health and the Kenya National Union of Nurses signed a Sh7 billion agreement that will see nurses receive allowances of between Sh15,000 and Sh20,000, depending on their job groups.

An identical overture to doctors by President Kenyatta two weeks ago — offering them Sh4 billion instead of the Sh8 billion they are demanding — failed, leading to the current standoff despite the courts ordering the Kenya Medical Practitioners, Pharmacists and Dentists' Union to call off the strike.

Similarly, a court order issued days to the strike by university employees was obeyed only by the Kenya Union of Domestic, Hotels, Educational Institutions, Hospitals and Allied Workers Union (Kudheiha).

Lecturers who have since defied the order insist they will not return to work until their demands for a 300 per cent pay rise are met.

“We will go on strike even if it is for a whole year until the government takes us seriously,” says Universities Academic Staff Union Secretary-General Constantine Wasonga.

Doctors, too, whose extension of a suspended jail sentence ends on Tuesday following a temporary reprieve by Industrial Court Judge Justice Hellen Wasilwa on Thursday, have changed tack and now want Health CS Cleopa Mailu to withdraw from the talks.

“President Kenyatta has the will to end this strike, but we cannot negotiate with Dr Mailu since he has partisan interests,” says the medical union.

Should the government yield to demands by the country’s 5,000 doctors, it will have to cough up an additional Sh5.4 billion, on top of the Sh2.6 billion it pays them annually.

Also, the government would have to pay Sh3.9 billion to university workers, which is the second half of their 2013 CBA, which the unions say has not been paid so far.

HUGE WAGE BILL
Add to this the Sh54 billion agreed between teachers and the State — which was to be paid in four years, starting from the next budget cycle.

Clearly, the government’s wage bill in the coming financial year could increase dramatically.

The Treasury, which has already factored in the Sh4 billion it offered doctors in the supplementary budget set to be introduced to Parliament on Tuesday, says it will be careless to please all the trade unions.

“If we pay all the demands, we will either have to tax Kenyans more, borrow more or reduce development ... and what will be left of us?” Treasury Cabinet Secretary Henry Rotich asks.

By the end of the current financial year on June 30, the State might have spent Sh692 billion on wages to pay its 700,000 workers, a 10 per cent rise from the Sh627 billion it paid in the 2015/2016 financial year.

According to the Salaries and Remuneration Commission, the government’s wage bill has grown by 49 per cent in the past five years, from Sh464 billion in 2012 to the current Sh673 billion.

In 2013, the wage bill rose to Sh521 billion, then to Sh568 billion in 2014 and Sh627 billion in 2015.

Ms Sarah Serem, the SRC chairperson, attributes this rise to a bloated public service and the accompanying bureaucracy arising from devolution.

The government has 6,444 positions — from governors and their deputies, to members of parliament, members of county assemblies, and female representatives.

“When rolling out devolution, we hoped that with investment to counties, revenues would increase. But this is happening at a slower pace than expected,” says Ms Serem.

“As things stand, if the government yields to pressure, we would be adding a fixed cost to expenditure without knowing where to raise the money.

"So if there is anything to be offered, the truth of the matter is the wage bill is already too high,” she says.

According to the International Monetary Fund, government wage bill should be 10 per cent of GDP in advanced economies and 7½ per cent of GDP in low-income developing countries, with emerging market economies lying in between.
BUDGET DEFICIT
Consequently, the wage bill as a share of total government spending is higher — at 27 per cent in emerging and developing markets, compared with 24 per cent in advanced economies.

In Kenya, the wage bill to revenue ratio is about 53 per cent, way above the desired level of not more than 35 per cent.

Additionally, the wage bill to GDP ratio — which is the total amount of money paid out to government employees as a percentage of the total value of goods and services produced in a particular year — is currently 13.2 per cent, the highest in East Africa.

By comparison, Tanzania’s public sector wage bill to GDP ratio is 8.1 per cent, Uganda and Rwanda are at 3.9 per cent, and Burundi is at 11.3 per cent.

A huge government and strong trade unions has left the Treasury hard-pressed to raise money to finance government spending, which is currently skewed to recurrent expenditure amid revenue shortfalls.

Two weeks ago the government announced it was borrowing Sh105 billion to plug a budget deficit in the current financial year.

Dr Nyandemo says the government should tread carefully when dealing with striking unions despite the elections being around the corner.

“It would be suicidal to allow our wage bill to be bloated,” he says. “Since the government does not have the money, the only option would be to borrow.

"A rise in borrowing could trigger higher interest rates and reduced demand for borrowing from the private sector, stunting growth,” he says.