Kenya’s main trade union has suspended nationwide strike plans over pay demands, a move welcomed by industry leaders who fear further wage hikes would dent competitiveness and threaten economic growth.
The Central Organisation of Trade Unions (COTU) said it would put on ice the action due to have started on Wednesday to allow for further negotiations on that day after government opened the door to more talks.
COTU says low income families are feeling the squeeze across east Africa, where rocketing food and fuel prices have propelled the rate of inflation into double digits, sparking deadly riots in Uganda and widespread discontent in neighbouring Kenya, Reuters reports.
COTU this month demanded a 60 percent pay hike for its 1.5 million members and a 10 percent rise for other workers, rejecting government plans to raise the minimum wage by 12.5 percent.
“The strike is only on hold pending the outcome of the meeting with government on Wednesday. If talks collapse we shall immediately announce our next course of action,” George Muchai, COTU’s deputy secretary general, told Reuters on Sunday.
“The demand for 60 a percent pay rise remains our position going into the meeting and we expect the government to negotiate based on what we have asked for.”
Any eventual industrial action could bring the flower- and tea-exporting nation, with a vibrant tourism industry and a regional financial hub to a standstill, damaging growth prospects for sub-Sahara’s fourth biggest economy.
WORKERS STRETCHED TO LIMIT
COTU boss Francis Atwoli has said the gap between rich and poor is widening, and warned this could trigger unrest.
Betty Maina, chief executive officer of the industry group Kenya Association of Manufacturers, said businesses would have to pass on the costs of wage increases to consumers at home and abroad, hurting their competitiveness.
“I don’t think government can give any more. Already the 12.5 percent increase will hit exporters. The only reason they are OK at the moment is because of the exchange rate,” Maina told Reuters.
The Kenyan shilling hit an all-time low on May 18, making the country’s goods relatively cheaper for importers to buy.
The Treasury may also struggle to dig much deeper into its pockets after the ministry of planning slashed its growth forecast for 2011 because of high global commodity prices.
COTU however said it remained steadfast in its demands.
“You can only stretch a rubber band to a certain limit before it breaks. Workers in Kenya, like the rest of the world, are no different,” Muchai said.