Employers Warn Government Against Raising Minimum Salaries Ahead of Labour Day

The Federation of Kenya Employers has issued a formal caution to the government regarding potential plans to increase the statutory minimum wage during the upcoming Labour Day celebrations.

Speaking during the 37th annual general meeting of the Federation of Kenya Employers Rift Valley branch, Chief Executive Officer Jacqueline Mugo stated that businesses are currently grappling with an increasingly difficult economic landscape.

The employers' body is specifically urging the state to halt a proposed 7 per cent increase in minimum salaries. This comes as President Ruto is expected to address the nation on May 1, where wage directives are traditionally issued.

According to the federation, the private sector is already under significant pressure from high taxes and rising operating costs. For many enterprises, particularly small and medium-sized firms, further mandatory wage adjustments could trigger restructuring or total closures.

Jacqueline Mugo highlighted that the purchasing power of consumers has dipped, while the cost of doing business has climbed. These factors have created a volatile environment where firms are struggling to maintain current staffing levels without further financial burdens.

The federation also raised concerns regarding the potential alignment of agricultural sector wages with general minimum terms. They argue that such a move would drastically spike labour costs for agribusinesses, which are already facing cash flow hurdles due to delayed Value Added Tax refunds.

While the Central Organization of Trade Unions has historically pushed for double-digit increments to offset inflation, the employers' body maintains that any adjustment must follow strict legal frameworks.

In previous years, the government has implemented modest increases, such as the 6 per cent hike directed by President Ruto in 2024. However, the federation insists that these reviews must be mediated through the relevant Wages Councils rather than being issued as unilateral executive orders.

For the construction and infrastructure sectors, where labour remains a primary cost driver, these warnings carry particular weight. Contractors often operate on thin margins and fixed-price contracts that do not always account for sudden statutory wage spikes.

The federation emphasized that dialogue between the state, unions, and employers is the only way to ensure a balanced outcome. Without this tripartite consensus, the body warns that aggressive wage hikes intended to help workers may ironically lead to increased unemployment if businesses fail to absorb the costs.

As the country prepares for the national celebrations at Uhuru Gardens, the business community remains on edge, waiting to see if the government will heed these warnings or proceed with the populist move of a salary increment.