Unmitigated tea pay raises bad for growth

The numerous ongoing court cases on proposed wage increments contained in various collective bargain agreements (CBAs) in the tea sub-sector, which mainly pit workers’ unions against tea companies, have produced predictable clashes.

Unions argue, among other things, that the wages are low while defenders of business, big and small, warn of dire consequences should there be increases.

True, workers look up to high end-earners in other professions and have high expectations but the companies say production is low.

At the other end of the rung, the tea sub-sector has among the best-remunerated labourers in Kenya.

The workers draw higher wages than their peers in other cash crop industries such as coffee and floriculture.

DAILY WAGES

According to newly published CBA statistics, tea workers get daily wages of about Sh450 compared to coffee (Sh422.50), floriculture (Sh315.97) and general agriculture (Sh269.40) — or Sh11,725, Sh10,985, Sh8,215.22 and Sh7,004.40 monthly, respectively.

Non-cash benefits include free housing, water, electricity, wood fuel and training. Their pay and working conditions are significantly above the agricultural workers’ norm.

Some labourers in Kericho earn two and a half times the statutory minimum agricultural income in Kenya.

ARBITRARY INCREASES

Despite these positives, the biggest fear is that arbitrary wage increases as advocated by the unions will lead to cataclysmic job losses and business closures and, ultimately, an economy in ashes.

Indeed, there is no question that proposed changes in the CBAs proposed by the workers’ representatives from 2014 will put the competitiveness of the local tea industry in jeopardy.

If employees who earn more than double the stipulated minimum wage are bumped up, it is likely to create a ripple effect on the entire pay grid, necessitating other increases that will ultimately make the sector unprofitable to investors.

Some context is in order, however.

SMOOTH OUT FLUCTUATIONS

International tea growers such as Unilever Tea pays tea pickers monthly, not on a daily basis, to help to smooth out daily fluctuations in picking rates and assure a better income.

It also provides access to housing and annual leave and transport allowances, as well as paternity and maternity leave, to staff and their families.

The wage gaps in the tea and other agricultural sectors could widen further when the pending 2016/17 and 2018/19 CBAs are concluded.

A cursory glance indicates that tea companies are not at peace, and the emerging structure of exaggerated tea wage structure could negatively affect the sub-sector.

These local barriers and fears are routinely part of the debate in global supply chains too — that rising wage levels will result in increased layoffs and reduced hours. It is the workers who ultimately lose from the uncertainty caused by the delay in implementation of CBAs.

It is important for unions to not focus on raising hopes of unrealistic settlements or justify their positions and blame employers when it is clear they should settle.

Prospects of a win-win wage settlement and long-term job security should not be sacrificed at the altar of short-term results that make the unions look good but cost jobs.

Mr Opiyo is a communications lecturer at Strathmore University. [email protected].