If you triple the wages of workers, the prices of produce will shoot up and Kenya will lose its markets abroad, thus having the opposite effect from what was intended”
On the face of it, the Labour Institutions (Amendment) Bill, 2011, seems deceptively harmless. Its principal objective is to amend the Labour Institutions Act, 2007 “so as to increase minimum wages for certain categories of workers in the private sector.
The Bill introduces a new Sixth Schedule, which proposes to raise the minimum wages of workers in the agricultural and floriculture sectors by almost 170 per cent.
Apparently, Mr Mututho is part of the ever-widening circle of legislators who view the economic process exclusively from the standpoint of workers as opposed to that of producers, without which there would be no need for those workers in the first place.
Not recognising all the principal components of the agricultural production process, the Bill is likely to lead to massive lay-offs in both the agricultural and floricultural sectors and lead to the loss of our major export markets in Europe. Take the flower-producing sector, which dominates Mr Mututho’s Naivasha Constituency. If you triple the workers’ wages, the prices of these flowers on the European market will jump to a level where they will be uncompetitive against those from other African countries.
As a result, the big flower producers in Naivasha will lay off thousands of workers in a bid to stay globally competitive. The reforms will then end up having exactly the opposite effect from that intended.
So? If Mr Mututho’s recommendations are passed by Parliament, there is no way Kenyan flowers will compete effectively on the world market. It will simply price itself out of that market, leading to the loss of thousands of jobs.
If we had a Ministry of Employment and the ideological underpinnings that come with it, Mr Mututho would presumably have been acquainted with these possible outcomes, and their consequences long before this Bill was drafted.
Do the lower grade workers in the agricultural and floricultural industries deserve a wage increase? Obviously, they do. Anyone who knows the conditions under which they work and live clearly understands that. However, the problem with this Bill is three-fold.
First, the percentage increase is so high that many employers would rather shut down operations than pay. Second, this problem cannot be sorted out by laws passed by Parliament in Nairobi without the co-operation of the employers. And, third, this Bill threatens to destroy our European markets, with the concomitant loss of thousands of jobs.