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Inflation, Stagnant Wages Left Workers Poorer in 2017



Kenyan workers’ take-home pay fell below the cost of living in 2017, weakening consumer purchasing power in an economy that grew at the slowest pace since 2012, according to the 2018 Economic Survey report released yesterday.

Formal sector employees took a pay cut of 2.9 per cent last year when their wages are adjusted for inflation, leaving them in a worse financial position compared to previous years.
This was the first time in five years that real wages dropped.

“Real average earnings declined by 2.9 per cent compared to an increase of 0.1 per cent in 2016, mainly due to the increase in inflation,” says the Economic Survey 2018 report.
Inflation-adjusted pay is technically known as real wage and is ordinarily taken as the best indicator of the workers’ ability to purchase goods and services based on prevailing prices. The survey also found that the economy defied a tough political climate and environmental challenges to mint 110,000 new formal sector jobs in 2017.

The purchasing power erosion came in the middle of an economic slowdown that saw growth decelerate to a five-year low rate of 4.9 per cent from 5.9 per cent in 2016.
Kenya’s average real wage slipped to Sh30,750 per month, or Sh369,004 yearly, down from Sh31,664, according to the survey by the Kenya National Bureau of Statistics (KNBS).
Culled from Business Daily.