Labour Day charade as workers left empty-handed amid taxing policies

The fact that workers left Uhuru Gardens empty-handed on Labour Day is already well acknowledged. It does not help that President William Ruto missed the opportunity to conclusively address the ongoing labour dispute between the government and healthcare workers. In turn, the labour unions arrived at the negotiations with a begging bowl, placing their fate solely in the hands of what the government was willing to offer. Ironically, even the six per cent pay raise offered was subject to the discretion of a committee to be convened by the Labour Cabinet Secretary.

One might have expected that such a weighty matter, given its importance to the lowly paid cadre of workers and its implications for employers, would have been negotiated beforehand. The President should have issued it as an Executive order, ensuring that the modest increment would be reflected in employees’ payroll from May onwards.

However, this article is about the superficial reference to the core issues that should define Labour Day. In essence, the President’s speech drifted into justifying the still unpopular affordable housing programme, engaging in tribal politics, and popularity contests. While this may have been unintended, this year’s Labour Day celebrations raise pertinent questions: First, what is the role of labour unions in national development? Second, why is the country still grappling with labour productivity six decades into its independence? And third, what are the reasons behind the emerging trends aimed at controlling leadership within union ranks, such as the proposed term limits?

The role of unions in labour economics and national development is widely acknowledged. Capitalism itself does not inherently oppose the unionisation of workers. However, governments may not always be as receptive to the unionisation of workers, perhaps due to the potent political power that comes with unions. For instance, in Kenya, influential leaders like Tom Mboya have emerged from labour unions. Unions have served as launching pads for numerous political careers, including those of current Members of Parliament and County Assemblies.

Michael B. Dompierre (1986), in a paper on the role of unions in Africa published by the Institute of Developing Economies, documents the rapid growth of labour unions in the region during the 1970s and 1980s. This growth occurred despite several attempts by many African governments to restrict and suppress union power. Dompierre explains that unions possess the ability to leverage their political power to achieve economic objectives and either support or oppose legislation based on how it serves their interests and those of their members.

Formidable KNUT

Unions also influence the allocation of resources within the economy or among competing needs and users. Consider the Kenyan case: it is widely recognized that unions have often leveraged their membership numbers to peddle political influence and sometimes to serve the selfish economic interests of their leaders among politicians. For example, the once formidable Kenya National Union of Teachers effectively utilized its membership numbers to negotiate salary and benefits increments with successive administrations. Consequently, it’s not surprising that the Jubilee administration sought and ultimately succeeded in dismantling it from within its ranks.

The disputed Collective Bargaining Agreement (CBA) between the government and doctors was also negotiated around the campaign period in 2017. While the Kenya Kwanza administration has attempted to distance itself from this CBA, it fails to acknowledge the reality that the economic objectives of unions include job protection and employment rights for members. Dompierre argues that unions exist to advocate for policies and practices that prevent unjust dismissals, support fair and transparent hiring processes, and address issues related to layoffs, downsizing, or restructuring.

The International Labour Organization (ILO), in a paper presented at their worker’s symposium in Geneva in October 2005, highlights the role of labour unions in the global economy and the fight against poverty. These roles include serving as vehicles for poverty eradication, promoting decent work, ensuring equitable income distribution, advancing gender equality, fostering safe workplaces, advocating for quality public services, advocating for universal social protection, upholding worker rights, and contributing to the attainment of development goals such as the Sustainable Development Goals.

In a separate paper published by the ILO in 2019, Jelle Visser explores the shifting dynamics that challenge labour unions. He argues that the world of work is evolving rapidly, placing unions on the precipice. This shift is driven by factors such as declines in manufacturing jobs, the rise of non-standard and flexible work arrangements, the persistent growth of the informal economy, changes in employment regulations and behaviour, and limitations and violations of trade union rights. As a result, unionisation is declining in many countries. However, according to Visser, the major challenges for unions are twofold: the digital economy and its transformative impact on jobs and employment, and the social divide between workers with stable, well-paying jobs and those with precarious, poorly paid, or no employment at all.

Turning to the last two questions regarding low labour productivity and leadership failures among unions, there appears to be a tacit alliance between top union leaders and the authorities. Just days before Labour Day, the nurses’ union took to Afya House with banners, calling out their national chairman, who had used their platform to pursue an elective position under the ruling party. Many employees have been left perplexed by how labour unions either withdrew cases or remained silent on highly controversial taxes such as the Housing Levy and the impending Social Health Insurance Fund. It’s unsurprising that these two levies, along with the President’s dismissal of the ‘Zakayo’ label, took center stage at the celebrations despite their unpopularity among workers.

Consider, for instance, the issue of doctors demanding a minimum allowance of Sh206,000, as previously negotiated for medical interns. How can anyone reconcile the rhetoric of living within our means concerning doctors’ welfare on one hand, while on the other hand, there are extravagant Executive indulgences such as the Chief Administrative Secretaries? Rumours of a new presidential jet, alongside multimillion renovations and lavish travel convoys, overshadow any notion of living within our means.

Taxation burden

How are struggling workers supposed to reconcile the boasts of a flourishing economy when it’s time to applaud leadership prowess, yet the same economy is labeled as underperforming when discussing the burdens of taxation and socio-economic welfare? Can these two narratives coexist in the same breath? How can workers be expected to remain productive when they bear the brunt of taxes, with a large chunk lining private pockets instead of being allocated to education, healthcare, public infrastructure, disaster mitigation, such as ongoing flood relief, and security, among other vital sectors?

John Pencavel, in a paper on the role of trade unions in fostering economic development published by the World Bank in 2013, argues about the potential negative effects of unions in developing economies. According to this paper, the structure of economies in these countries may not be conducive to sustaining high levels of unionism like those seen in industrialized countries. In such economies, the majority of workers covered by CBAs are likely to be employed by the State or large private sector employers.

In these settings, States often adopt either patronage regimes or obstructionist ones. Patronage regimes are common in regions like Africa, Bangladesh, India, and the West Indies, while obstructionist regimes are prevalent in Southeast Asia and North Africa. In both types of regimes, Pencavel argues that unions tend to become highly politicized.

Hence, it would not be far-fetched to speculate about what may have occurred behind the scenes to transform a solemn Workers’ Day into a spectacle for highly unpopular policies and taxes. But, despite this, it is unwise for the President to contemptuously dismiss the ‘Zakayo’ tag. Kenyan workers have shown resilience and are more than capable of rising to the occasion, as demonstrated in pivotal moments like December 2002.