Improved output can beat Covid-19

The Labour Ministry, Federation of Kenya Employers and Central Organisation of Trade Unions need to strategise beyond their just-concluded Memorandum of Unions to cushion workers in the wake of the Covid-19 pandemic.

This is if the country is to bounce back to a 6.1 per cent economic growth next year as predicted by the International Monetary Fund (IMF).

For starters, manufacturers of consumer products who source their raw materials locally would, for example, be expected to pay a fair price for the same and better salaries to their employees.

The employees, on their part, would be expected to raise their productivity to avoid a situation whereby higher salaries lead to increased inflationary pressure on the economy, which would be counter-productive.

The role of government in this new brave world would be, first, to encourage manufacturers to upgrade their plants and to give their employees time-out to attend classes that would equip them with new skills-set. This could include tax rebates and guaranteed bank credits to import the technology required.

Centres of excellence

Needless to say, the government would have to offer the necessary courses in the training centres set up for the purpose, but which are currently hardly utilised.

The appalling neglect of what were supposed to be centres of excellence has resulted in the productivity of the local labour force being ranked lower than that of Kenya’s counterparts in the East African region.

According to a World Bank report, the average output of Kenyan workers stood at $3,400 (Sh360,400) in 2014 compared to Ethiopia’s $5,000 (Sh530,000) and $3,800 (Sh402,800) for Uganda.

“Set in international comparison, GDP per employed person is lower in Kenya than in many African peers and has been increasing at a slower rate than in other countries, both poorer (Ethiopia) and richer (Ghana and Burkina Faso),” said the report.

What is worse, as exposed by the outbreak of Covid-19, the low wages offer little or no security as the employees live from hand to mouth, making it impossible to save for a rainy day.

The low rate of savings also explains the country’s dependency on loans borrowed from global markets or the so-called development partners.

The foreign loans are a particular concern because the principal and interest increase whenever the global economy comes under stress, as is happening due to the pandemic.

The only way out of the vicious cycle seems to be for Kenya to increase its productivity at the farm-gate level, on the factory floor and in offices across the country.

[Mbatau wa Ngai, nmbatau@gmail.com]