Viability of Increasing Minimum Wages in 2009 in Kenya

ISBN:

Call Number:

Keywords:

Abstract:

12.00

Normal
0

false
false
false

EN-US
X-NONE
X-NONE

MicrosoftInternetExplorer4

/* Style Definitions */
table.MsoNormalTable
{mso-style-name:"Table Normal";
mso-tstyle-rowband-size:0;
mso-tstyle-colband-size:0;
mso-style-noshow:yes;
mso-style-priority:99;
mso-style-qformat:yes;
mso-style-parent:"";
mso-padding-alt:0in 5.4pt 0in 5.4pt;
mso-para-margin-top:0in;
mso-para-margin-right:0in;
mso-para-margin-bottom:10.0pt;
mso-para-margin-left:0in;
line-height:115%;
mso-pagination:widow-orphan;
font-size:11.0pt;
font-family:"Calibri","sans-serif";
mso-ascii-font-family:Calibri;
mso-ascii-theme-font:minor-latin;
mso-fareast-font-family:"Times New Roman";
mso-fareast-theme-font:minor-fareast;
mso-hansi-font-family:Calibri;
mso-hansi-theme-font:minor-latin;}

This
study was commissioned by the Ministry of Labour to facilitate discussions at
the General Wages and Agricultural Wages Councils, which are key labour markets
institutions, established under section 43 of the Labour Institutions Act
(2007), to advice the Minister for Labour on minimum wage fixing. Policies to
set minimum wages are popular but contentious instruments. As suggested by many
scholars and practitioners, the main reason for instituting minimum wages is to
empower workers whose wages are constrained by the excessive market power of
employers. Kenya’s policy on minimum wage fixing dates back to 1932. Hitherto
the year 2007, minimum wages in Kenya have been revived upwards almost annually,
with the increases mostly announced during Labour Day. However, no minimum wage
increases were announced in 2007 and 2008 despite the relatively high levels of
inflation and comparatively high levels of economic growth of 6.4 and 7.1
percent realized in 2006 and 2007, respectively. While macroeconomics
fundamentals in 2008 and 2009 showed that Kenya’s economy may not be ready for
an upward adjustment of minimum wages in 2009, particularly in the face of subdued
economic growth in 2008, and economic meltdown or financial contagion from the industrialized
countries, the minimum wage workers have also continued to experience
considerable erosion in their purchasing powers, and hence ordinarily expected
a wage compensation at least to restore their lost purchasing powers. This
study aimed at assessing the viability of increasing minimum wages in 2009 and
to suggest the optimal rate of increase, it any. Using evaluative methodologies,
the study present three key scenarios, as explored in the paper, which were
important in arriving at the rates of increase of minimum wages in Kenya in
2009.