Central Organization of Trade Unions – Kenya (COTU-K)

March 2026

Preface

This economic paper marks a significant milestone in COTU‑Kenya’s commitment to decent work and social justice for Kenyan workers. As Secretary General, I introduce this analysis of labour market change from 2016 to 2026. The document represents the collective voice of over 50 affiliate unions and millions of workers, revealing universal challenges including precarious employment, stagnating real wages and a widening gap between minimum wage and living costs.

The paper’s preparation was collaborative. We extend gratitude to the Ministry of Labour and Social Protection for providing access to official statistics, the cooperation by employers, our development partners and the International Labour Organization for the normative framework guiding our advocacy. We also acknowledge the invaluable input from workers and their representatives across the private sector from large enterprises to the informal economy whose daily struggles and triumphs have given this paper authenticity.

I acknowledge the COTU‑K research team for synthesizing diverse data into a compelling evidence base. The policy recommendations – a 50% minimum wage increase, adoption of a living wage framework and structural reforms. This offers a pathway to fulfilling constitutional promises and ILO standards of promoting decent work and economic development as provided under SDG Goal 8. We invite all stakeholders to engage constructively in building a future where every Kenyan worker earns a living wage with dignity.

FRANCIS ATWOLI, EBS

SECRETARY GENERAL

Table of Contents

Preface. i

Executive Summary. iv

SECTION ONE: INTRODUCTION.. 1

1.1        Background.. 1

1.2        Rationale. 2

1.3        Objectives. 2

SECTION 2: OVERVIEW OF ECONOMIC PERFORMANCE.. 4

2.1 Global and Regional Economic Context. 4

2.2 Kenya’s Economic Performance (2016–2026). 4

2.3 Sectoral Contributions to GDP.. 5

2.4 Exchange Rate Stability. 6

2.5 Consumer Price Indices and Inflation Trends. 6

SECTION 3: LABOUR MARKET ANALYSIS.. 8

3.1 Formal vs. Informal Employment Trends (2016–2025). 8

3.2 Labour Force Characteristics. 8

3.3 Sectoral Employment Distribution.. 9

3.4 Role of Trade Unions. 9

3.4.1 Union Representation and Coverage. 9

3.4.2 Collective Bargaining Coverage. 9

3.4.3 Trade Union Challenges. 10

3.4.4 Union Achievements. 10

3.5 Sectoral Analysis. 10

3.5.1 Agriculture Sector. 10

3.5.2 Manufacturing Sector. 10

3.5.3 Commercial and Services Sector. 11

3.5.4 Hospitality Sector. 11

3.5.5 Transport and Logistics. 11

3.5.6 Betting and Gaming Sector. 12

3.5.7 Professional Services. 12

3.6 Evaluation of Wages, Working Conditions, and Employment Security. 12

3.6.1 Minimum Wage Trends. 12

3.6.2 Working Conditions Assessment. 13

3.7 Impact of Structural Changes. 13

3.7.1 Technology Adoption and Digitalization.. 13

3.7.2 Structural Adjustment Programmes. 13

3.7.3 COVID-19 Pandemic Impact 13

3.7.4 Climate Change Impact. 14

3.8 Workers’ Rights & Inequality. 14

SECTION 4: POLICY RECOMMENDATIONS – A LIVING WAGE AGENDA.. 16

4.1 Wage Increase Demand.. 16

4.2 Supporting Structural Reforms. 16

4.3 Conclusion.. 17

REFERENCES.. 18

Executive Summary

This economic paper, prepared by the Central Organization of Trade Unions – Kenya (COTU‑K), provides a comprehensive analysis of Kenya’s labour market performance over the decade 2016–2026. The analysis is uniquely informed by primary data collected directly from affiliate unions representing diverse sectors of the economy, while also incorporating perspectives from the Ministry of Labour and Social Protection, employers and from workers in the private and informal sectors.

As the umbrella body for 50 affiliate unions, COTU‑K’s mission is to champion a decent and sustainable work environment for all Kenyan workers. This document serves as a foundational tool to facilitate evidence‑based social dialogue among tripartite partners, promote the creation of productive and sustainable employment, guarantee rights at work, and enhance social protection.

Kenya’s economy has demonstrated resilience over the decade, with GDP growth averaging 5.2% and the Kenya shilling remaining relatively stable against major currencies (KNBS, 2025). However, the benefits of economic growth have not been equitably distributed. The analysis reveals a labour market at a crossroads, characterized by critical trends: casualization of labour, job insecurity, wage stagnation and erosion, a persistent living wage gap, and collective bargaining compliance challenges.

Based on the analysis, this paper proposes actionable, tripartite‑informed policy recommendations across five key areas: minimum and living wages, policy and enforcement, social dialogue and institutional reform, union capacity and skills development and data and research with special attention to the informal sector and private sector employment dynamics.

SECTION ONE: INTRODUCTION

1.1       Background

The Central Organization of Trade Unions Kenya (COTU‑K) is the National Labour Centre, mandated to be the voice of Kenyan workers. Established to champion the rights and interests of workers, COTU‑K’s mission is to develop a workforce that enjoys a decent work environment by promoting the creation of productive and sustainable employment opportunities, facilitating the achievement of workers’ rights, enhancing social protection and providing effective representation. As the umbrella body for 50 affiliate unions representing workers across all sectors of the Kenyan economy, COTU‑K plays a pivotal role in shaping labour market outcomes and advocating for policies that promote social justice and economic prosperity.

Trade unions are not merely social partners but are fundamental drivers of economic growth and stability. By advocating for fair wages, safe working conditions, and social dialogue, unions contribute to industrial harmony, which in turn creates a predictable and conducive environment for investment and productivity. A motivated, healthy, and fairly compensated workforce is more productive, reducing employee turnover and fostering innovation. Furthermore, collective bargaining ensures that a fair share of the economic value created by workers is returned to them as wages, strengthening local economies and reducing income inequality. The International Labour Organization (ILO) has consistently emphasized that freedom of association and the effective recognition of the right to collective bargaining are enabling rights that facilitate the realization of all other labour rights (ILO, 1998).

The private sector including both formal enterprises and the vast informal economy is the primary engine of employment in Kenya. While many private employers uphold fair labour practices, COTU‑K observes that profit‑driven pressures have increasingly led to casualization, outsourcing, and avoidance of social protection obligations. The informal sector (jua kali) employs nearly 80% of the workforce, yet these workers remain largely outside the protective umbrella of labour laws, collective bargaining, and social security. Their voices and struggles are central to this paper. COTU‑K therefore calls for a renewed social contract that holds all private sector actors accountable to decent work standards, while also providing pathways for informal workers to organise and access rights.

The Ministry of Labour and Social Protection serves as the government’s principal agency for labour market governance, policy formulation, and enforcement of labour laws. The Ministry’s mandate includes conducting labour inspections, mediating disputes, collecting labour market statistics, and advising the government on labour policy. The Ministry recognises its critical role in balancing the interests of workers and employers while promoting decent work for all Kenyans (Ministry of Labour, 2025a).

The International Labour Organization (ILO) provides the normative framework for labour market governance through its conventions, recommendations and supervisory mechanisms. Kenya has ratified 50 ILO conventions, including all eight fundamental conventions covering freedom of association, collective bargaining, elimination of forced labour, abolition of child labour, and elimination of discrimination in employment (ILO, 2025). The ILO’s Decent Work Agenda – comprising employment creation, social protection, rights at work, and social dialogue – provides the overarching framework for this paper. The 2024 ILO adoption of the living wage concept represents a significant evolution in global wage policy thinking and provides important guidance for national wage‑setting mechanisms (ILO, 2024).

1.2       Rationale

Quality of jobs in Kenya is under systematic threat from casualization, outsourcing, technological disruption and a legislative framework that has not kept pace with changing forms of work. The data from COTU-K’s affiliates provides irrefutable evidence that for the majority of workers, the promise of decent work remains unfulfilled. The most urgent and fundamental challenge is the inadequacy of wages. The minimum wage is not a living wage, and the gap between the two is widening, pushing millions of working Kenyans deeper into poverty (KNBS, 2025c).

For union members, this translates into:

1. Inability to meet basic needs despite full-time employment
2. Increasing precarity and job insecurity
3. Erosion of collective bargaining gains through inflation and non-compliance
4. Exclusion from social protection for those in non-standard employment
5. Generational poverty traps for youth entering the labour market

1.3       Objectives

The objectives of this paper are:

1. To comprehensively document the transformation of Kenya’s labour market over the decade 2016–2026, based on primary data from affiliate unions and secondary data from sector performances and tripartite partners.
2. To identify and rank decent work deficits across sectors, with particular focus on job security, wages, working conditions and social protection.
3. To evaluate minimum wage trends, collective bargaining outcomes, and the gap between current wages and living wage requirements.
4. To identify legislative, enforcement, and institutional barriers preventing the achievement of decent work.
5. To develop actionable policy recommendations grounded in tripartite perspectives and international standards.
6. To provide a common evidence base for tripartite partners to engage in constructive dialogue on wage policy and labour market governance.
7. To build a compelling case for shifting from a minimum wage framework to a living wage framework as the foundation for Kenyan wage policy.

SECTION 2: OVERVIEW OF ECONOMIC PERFORMANCE

2.1 Global and Regional Economic Context

The global economic landscape over the decade 2016–2026 has been characterized by significant volatility and structural transformation. According to the Institute of Chartered Accountants in England and Wales (ICAEW), African economies have demonstrated resilience, with average growth exceeding 4% over the period. This growth has been driven by diversification, infrastructure investment, and increasing integration into global value chains (ICAEW, 2025).

The ICAEW has specifically highlighted Kenya’s economic prospects, predicting growth of approximately 6% between 2017 and 2020 and sustained growth thereafter. Kenya’s diversified economic outlook and lower dependence on commodity exports compared to many African peers have contributed to this positive trajectory (ICAEW, 2021).

The global economy has faced multiple shocks over the decade, including the COVID-19 pandemic (2020–2021), supply chain disruptions, geopolitical tensions, and climate-related challenges. These shocks have had significant implications for labour markets worldwide, accelerating trends towards digitalization, automation, and flexible work arrangements. The ILO’s World Employment and Social Outlook reports have documented a global trend towards increasing precariousness in employment, with growth in non-standard forms of work outpacing growth in standard employment relationships (ILO, 2021).

Regional economic integration has advanced through the African Continental Free Trade Area (AfCFTA), which became operational in 2021. The AfCFTA creates a continental market of 1.4 billion people with a combined GDP of over US$3.4 trillion, offering significant opportunities for trade, investment, and job creation (AfCFTA, 2025). However, realizing these opportunities requires addressing infrastructure deficits, harmonizing regulatory frameworks, and ensuring that trade liberalization is accompanied by measures to protect workers’ rights and promote decent work.

The East African Community (EAC) has continued to deepen regional integration, with progress on the Customs Union, Common Market Protocol, and Monetary Union. However, non-tariff barriers, regulatory inconsistencies, and infrastructure constraints continue to impede the free movement of goods, services, labour, and capital within the region (EAC, 2025).

2.2 Kenya’s Economic Performance (2016–2026)

Kenya’s economy has demonstrated remarkable resilience over the decade 2016–2026, weathering global shocks while maintaining positive growth trajectories. According to the Kenya National Bureau of Statistics (KNBS), GDP growth has averaged 5.2% over the period, with sectoral performance varying significantly as shown in Table 1 (KNBS, 2025b).

Table 1: GDP Growth Trends (2016–2026)

Year	GDP Growth (%)	Key Drivers
2016	5.9	Services, construction
2017	4.8	Drought, election uncertainty
2018	6.3	Recovery, services, manufacturing
2019	5.4	Services, agriculture
2020	-0.3	COVID-19 pandemic
2021	7.5	Post-pandemic recovery
2022	5.5	Services, manufacturing
2023	5.6	Agriculture recovery
2024	5.3	Services, manufacturing
2025	5.4	Diversified growth
2026*	5.5	Projected

Source: Kenya National Bureau of Statistics, Economic Surveys (2017–2026)

2.3 Sectoral Contributions to GDP

Kenya’s economic structure is characterized by a diverse mix of sectors, each contributing uniquely to output, employment and export earnings (KNBS, 2025d).

1. The services sector remains the primary driver of the economy, contributing approximately 60–65% of GDP. Key sub-sectors include financial services (banking, insurance and mobile money such as M-Pesa), ICT, transport and logistics, tourism, education and real estate. Growth is driven by digital innovation, urbanization and a rising middle class. The sector is also the largest source of formal employment, while absorbing significant informal labour.
2. The agricultural sector contributes approximately 20–25% of GDP and remains the backbone of the economy. Activities include crop farming (tea, coffee, horticulture, and staple foods), livestock production, fisheries, and forestry. While its GDP share has declined relative to services, agriculture still employs over 40% of the labour force and is critical for exports and food security. However, productivity is constrained by climate change, land tenure challenges, and low technology adoption (KIPPRA, 2025).
3. The industrial sector contributes approximately 15–20% of GDP, comprising manufacturing, construction and utilities. Manufacturing (8–10%) includes agro-processing, textiles, food and beverages, pharmaceuticals, and construction materials, but faces high production costs and import competition. Construction has expanded due to infrastructure and housing investments, while utilities (energy and water) support economic activity, with growing emphasis on renewable energy.
4. Mining and extractives contribute less than 1% of GDP but show emerging potential in minerals such as soda ash, limestone, and titanium, alongside ongoing oil exploration.
5. The informal sector (Jua Kali) cuts across all sectors and dominates employment, accounting for the majority of jobs. It provides livelihoods and supports entrepreneurship but is characterized by low wages, limited social protection, and precarious working conditions (KNBS, 2025c).

2.4 Exchange Rate Stability

The Kenya shilling has remained relatively stable against major currencies over the decade, supported by strong fiscal and monetary policy measures. The Central Bank of Kenya has maintained an exchange rate of approximately 103–129 shillings to the US dollar, underpinned by (CBK, 2025):

1. Strong remittance inflows from the Kenyan diaspora averaging US$3–4 billion annually
2. Diversification of exports including horticulture, tea, and services
3. Improved tourism earnings
4. Access to international capital markets
5. Prudent monetary policy focused on price stability

The stability of the exchange rate has contributed to macroeconomic stability, providing a predictable environment for business planning and investment.

2.5 Consumer Price Indices and Inflation Trends

Over the decade 2016–2026, Kenya experienced sustained inflationary pressures that have persistently eroded workers’ purchasing power. The Consumer Price Index (CPI), which measures changes in the price of a fixed basket of household goods and services, rose from a baseline of 100.0 in 2016 to a projected 169.6 in 2026. This represents a cumulative inflation rate of 63.3% over the period (KNBS, 2026).

Table 2: Kenya Consumer Price Indices and Inflation Trends (January 2016 – February 2026)

Year	Annual Inflation (%)	CPI Index (2016 = 100)	Key Drivers
2016	6.3	100.0	Food prices, energy
2017	8.0	108.0	Drought, election uncertainty
2018	4.7	113.1	Improved harvests, stable energy
2019	5.2	119.0	Food price volatility
2020	5.3	125.3	COVID-19 disruptions
2021	5.4	132.1	Supply chain pressures
2022	7.6	142.2	Global energy crisis, food prices
2023	4.6	148.7	Monetary policy tightening
2024	3.8	154.4	Stable food and fuel
2025	4.6	161.5	Moderate increases
2026*	5.0	169.6	Recovering demand, fiscal measures

Source: Kenya National Bureau of Statistics, Consumer Price Index Reports (2017–2026)

Inflation peaked during the 2017 drought (8.0%) and the 2022 global energy crisis (7.6%). The COVID-19 pandemic and subsequent recovery added to price instability, while food prices driven by recurrent droughts, supply chain disruptions and high input costs remained the single largest contributor to inflation throughout the decade. Energy costs, exchange rate pass-through and fiscal policy changes (including the Housing Levy and VAT adjustments) further amplified price pressures.

The cumulative effect on workers has been severe. While the nominal minimum wage increased by 30.1% between 2016 and 2025, cumulative inflation over the same period reached 55.5%, leaving real wage growth at just 0.6% (see Section 5.6.1). The projected inflation for 2026 widens this gap further. This persistent erosion of purchasing power underscores the urgent need for a wage-setting framework that not only compensates for past inflation but also progressively closes the gap between current wages and the cost of a decent standard of living, a gap that can only be bridged by moving from a minimum wage to a living wage.

SECTION 3: LABOUR MARKET ANALYSIS

The Kenyan labour market has undergone significant transformation over the decade, characterised by a dramatic shift away from permanent employment towards casual, temporary and outsourced arrangements.

3.1 Formal vs. Informal Employment Trends (2016–2025)

Table 3: Formal and Informal Employment Trends

Indicator	2016	2020	2025	Change (2016–2025)
Permanent employment share	42.3%	36.8%	31.7%	-10.6 ppt
Temporary/casual employment share	24.1%	29.4%	35.8%	+11.7 ppt
Informal sector share	74.2%	76.5%	78.6%	+4.4 ppt
Formal sector employment (millions)	2.8	3.1	3.4	+0.6 million
Informal sector employment (millions)	12.1	13.8	15.7	+3.6 million

Sources: KNBS Labour Force Surveys (2017, 2021, 2026); Economic Surveys (various years)

The table illustrates a profound restructuring of Kenya’s labour market between 2016 and 2025. Permanent employment share declined sharply from 42.3% to 31.7% (-10.6 percentage points), while temporary/casual employment rose from 24.1% to 35.8% (+11.7 ppt). The informal sector’s share increased from 74.2% to 78.6% (+4.4 ppt). In absolute terms, formal sector employment grew by 0.6 million, but informal sector employment expanded by 3.6 million, indicating that most new jobs were created in the informal economy or in casualised formal arrangements. This structural shift toward precarious work underscores the growing decent work deficit and reinforces the urgent need for wage protections and social security extensions that cover all workers regardless of contract type (KNBS, 2025c; ILO, 2021).

3.2 Labour Force Characteristics

1. Labour force grew from approximately 19 million in 2016 to 24 million in 2025 (2.6% average annual growth) (KNBS, 2025c)
2. 80% of population under 35 years (KNBS, 2025d)
3. Labour force participation increased from 67% to 71% (KNBS, 2025c)
4. Skills mismatch persists, with employers reporting difficulty finding workers with required competencies (FKE, 2025c)

3.3 Sectoral Employment Distribution

1. Agriculture remains the largest employer (over 40% of labour force) (KNBS, 2025c)
2. Services sector employment has grown significantly (particularly ICT, finance, hospitality)
3. Manufacturing employment has stagnated at 8–10% of total employment
4. Construction employment has grown but remains volatile

3.4 Role of Trade Unions

Trade unions have played a critical role in addressing labour market trends through collective bargaining, advocacy and social dialogue. COTU‑K’s affiliate unions have successfully organised workers across diverse sectors, securing recognition agreements and collective bargaining agreements (CBAs) that have improved wages and working conditions. However, coverage remains uneven, with the informal sector and many small private enterprises largely untouched by union representation.

3.4.1 Union Representation and Coverage

Kenya’s trade union landscape remains relatively limited in scope. Overall union density is estimated at about 9–10% of employees, while collective bargaining agreements cover roughly 9–24% of formal wage workers. However, when the large informal economy is considered, total workforce coverage falls to approximately 3–4%. This reflects structural constraints associated with informality and labour market segmentation, despite protections under the Labour Relations Act and representation through the Central Organization of Trade Unions (COTU-K, 2023; ILOSTAT, 2022; Kenya National Bureau of Statistics, 2023).

3.4.2 Collective Bargaining Coverage

1. Collective bargaining coverage estimated at 15–20% of formal sector workers (FKE, 2025a)
2. CBAs cover wages, working conditions, social security, and other employment terms
3. Significant variation across sectors, with manufacturing and commercial sectors having higher coverage

3.4.3 Trade Union Challenges

1. Limited financial resources identified as greatest internal barrier (92% of unions) (COTU-K, 2026)
2. Difficulty engaging youth (42%)
3. Member apathy (33%)
4. Outdated organizing methods (25%)
5. Anti-union employer practices (25%)

3.4.4 Union Achievements

1. Secured wage increases through CBAs ranging from 5–28% across sectors (COTU-K, 2026)
2. Expanded representation to new sectors including betting/gaming
3. Progressive CBA clauses on climate change, sexual harassment, and disability
4. Tripartite engagement through National Labour Board and Wages Councils

3.5 Sectoral Analysis

3.5.1 Agriculture Sector

The sector has shown significant recovery over the decade, with negotiated wage increases of 15–28% in CBAs (COTU-K, 2026). Key issues include:

• Seasonal employment patterns affecting job security
• Occupational safety and health hazards from machinery and chemicals
• Low compliance with minimum wage provisions (40% violation rate) (Ministry of Labour, 2025c)
•  Low youth representation (around 20%) and moderate women representation (28%).

3.5.2 Manufacturing Sector

Manufacturing has demonstrated consistent wage growth (4–19%) supported by export demand (COTU-K, 2026). Key issues include:

• High union density (88–94% recognition to CBA conversion)
• Occupational safety and health as primary concern (glass workers rank OSH as top deficit) (COTU-K, 2026)
• Outsourcing of non-core functions (security, cleaning, catering)
• Gender imbalance (2–5% women representation)
• Youth representation ranging from 38–66%

3.5.3 Commercial and Services Sector

The commercial and services sector shows wide variation in wage increases (5–20%), reflecting diverse enterprise performance (COTU-K, 2026). Key issues include:

• High women representation (40–66%)
• Job insecurity as primary deficit
• Excessive working hours (second-ranked deficit)
• Low compliance in cleaning and garbage collection services
• Outsourcing as major threat to job security

3.5.4 Hospitality Sector

Hospitality workers face significant decent work deficits (COTU-K, 2026):

• Casualization as dominant trend (event-based, seasonal employment)
• Excessive working hours with inadequate compensation
• Low compliance with minimum wage (42% violation rate) (Ministry of Labour, 2025c)
• Women-dominated sector (66%)
• Youth representation at 25%

3.5.5 Transport and Logistics

Transport workers face unique challenges (COTU-K, 2026):

• Long and irregular hours
• Occupational safety and health risks (road accidents)
• Gender discrimination ranked as major issue (RAWU)
• Compliance challenges with CBAs (RAWU reports low compliance)
• Youth representation at 43–44%

3.5.6 Betting and Gaming Sector

The betting and gaming industry represents the new economy challenges (COTU-K, 2026):

• Platform-based work with algorithmic management
• Casualized, transient nature of work (potential membership 5,000, actual 420)
• Wide variation in wage increases (3.5–27.7% by job grade)
• Youth-dominated sector (60%)
• Grievances include unfair dismissals, victimization, and strict compliance targets

3.5.7 Professional Services

Veterinary professionals face unique challenges (COTU-K, 2026):

• Low compliance with labour laws
• No recognition agreements or CBAs
• Difficulty organizing in dispersed employment settings
• Youth representation at 56%
• Excessive working hours ranked as top deficit

3.6 Evaluation of Wages, Working Conditions, and Employment Security

3.6.1 Minimum Wage Trends

Table 5: Minimum Wage Trends (2016–2025)

Year	Monthly Minimum Wage (KSh)	Wage Increase	Inflation (Annual)
2017	12,926.55	18%	8.0%
2022	15,201.65	12%	7.6%
2024	16,113.75	6%	3.8%

Sources: Republic of Kenya, Regulation of Wages Orders (various years); KNBS Consumer Price Index Reports (various years)

Between 2016 and 2024, the government ordered three minimum wage increases; 2017 (18%), 2022 (12%) & 2024 (6%). Over the same period, cumulative inflation (2016–2025) reached 55.5%. As a result, the real purchasing power of the minimum wage has declined by approximately 5.4% since 2016. In other words, a worker earning the minimum wage today can buy less than they could nearly a decade ago.

3.6.2 Working Conditions Assessment

• Excessive Working Hours: Ranked second most severe deficit; 12-hour shifts common in security, hospitality, and transport sectors (COTU-K, 2026)
• Occupational Safety and Health: Significant hazards in construction (847 accidents, 43 fatalities), manufacturing (623 accidents, 27 fatalities), and agriculture (512 accidents, 31 fatalities) (Ministry of Labour, 2025b)
• Social Protection Coverage: Only 20.6% of labour force covered by NSSF; informal workers largely excluded (NSSF, 2025; KNBS, 2025c)
• Compliance: Only 47% of establishments fully comply with minimum wage provisions; hospitality and construction have highest violation rates (42%) (Ministry of Labour, 2025c)

3.7 Impact of Structural Changes

3.7.1 Technology Adoption and Digitalization

• Automation identified as threat to job security by 42% of unions (COTU-K, 2026)
• Platform economy growth: 150,000–200,000 Kenyans engaged in platform work (ILO, 2021)
• Algorithmic management creates new challenges for labour rights
• Digital divide affects workers’ ability to access new opportunities

3.7.2 Structural Adjustment Programmes

• Public sector reforms affecting employment in state-owned enterprises
• Liberalization of sectors affecting employment patterns
• Fiscal consolidation measures impacting public sector wages and employment (World Bank, 2025)

3.7.3 COVID-19 Pandemic Impact

• 2020 GDP contraction of -0.3% (KNBS, 2021)
• Mass retrenchment in corporate sector
• Acceleration of digitalization and automation trends
• Increased informalization and casualization

3.7.4 Climate Change Impact

• Agricultural productivity reduced by 15–20% (KIPPRA, 2025)
• Food price inflation affecting real wages
• Just transition concerns in traditional industries
• KUPRIPUPA includes climate change as decent work issue in CBAs (COTU-K, 2026)

3.8 Workers’ Rights & Inequality

Table 7: Summary of Workers’ Rights and Inequality Indicators

Indicator	Key Findings
Income Distribution	Labour share of national income declined from 42% (2016) to 38% (2025); capital share rose correspondingly despite productivity gains, indicating weakened worker bargaining power (KNBS, 2025d; KIPPRA, 2025).
Wage vs. Economic Growth	GDP per capita grew 2.8% annually, while real wages grew only 0.06% annually—macroeconomic expansion has not translated into broad-based living standard improvements (KNBS, 2025c; KNBS, 2025b).
Wage Inequality	CEO-to-worker pay ratio stands at 50:1 in large corporations; gender pay gap persists (women earn 70–85% of men’s wages for comparable work); finance sector wages are four times those in agriculture (FKE, 2025a; KNBS, 2025c).
Minimum Wage Gap	Minimum wage covers only 30–40% of living wage requirements, leaving minimum wage workers unable to meet basic needs and trapped in poverty (COTU-K, 2025; KNBS, 2025a).
Gender Inequality	Women concentrated in lower-paying sectors and informal work; union representation varies widely—from 66% in KUDHEIHA to 2% in KEWU—reflecting occupational segregation and leadership barriers (COTU-K, 2026; KNBS, 2025c).
Informal Economy	Informal sector employs 78.6% of workers but lacks a legal framework for unionization, leaving most without social protection or enforceable labour standards. Organizing is hindered by fragmented workplaces (KNBS, 2025c; ILO, 2021).
Occupational Safety & Health	Construction, manufacturing, and agriculture report hundreds of annual accidents and fatalities; psychosocial risks (intimidation, financial insecurity) also prevalent (Ministry of Labour, 2025b).
Enforcement Capacity	Only 342 labour inspectors for 1.2 million establishments; limited budget and under-reporting mean OSH violations and labour rights abuses largely go unchecked (Ministry of Labour, 2025c).

SECTION 4: POLICY RECOMMENDATIONS – A LIVING WAGE AGENDA

The central demand is a substantial increase in the minimum wage to begin closing the gap between legal minimums and actual living costs. Based on the data: minimum wage covers only 30–40% of a living wage; living wage gaps range from 106% in rural areas to 227% in Nairobi; and real wages have stagnated over a decade with cumulative inflation of 55.5%. COTU‑K calls for an immediate 50% increase in the national minimum wage, to be phased in over two years, followed by annual automatic adjustments linked to inflation and productivity.

4.1 Wage Increase Demand

Demand	Justification (Data)
Immediate 23% increase in the national minimum wage	• Minimum wage covers only 30–40% of living wage requirements for a family of four with Living wage gap standing at; Nairobi 167–227%, Mombasa 155–206%, rural 106–158%. • Real wage growth 2016–2025: only +24% cumulative; inflation 55.5% eroded purchasing power. • Labour’s share of GDP fell from 42% to 38% while capital share rose; productivity gains not shared.

4.2 Supporting Structural Reforms

Reform Area	Proposed Action
Living wage as policy goal	Amend the Labour Institutions Act to mandate living wage benchmarks based on ILO Convention C131 (ILO, 1970).
Evidence‑based wage setting	Strengthen Wages Councils with tripartite oversight; annual wage adjustments using CPI + productivity.
Gig & platform workers	Amend the Employment Act to create an “independent worker” category with minimum wage and organising rights, consistent with ILO Recommendation 198 (ILO, 1982).
Outsourcing regulation	Introduce joint employer liability to prevent wage evasion through subcontracting.
Social protection floor	Extend NSSF and health coverage to informal and platform workers; raise PAYE threshold to exempt minimum wage earners.
Enforcement	Increase labour inspectors from 342 to 1,000; raise penalties for wage theft to KSh 500,000 or a percentage of underpayment (Ministry of Labour, 2025c).
Fast‑track wage theft court	Create a specialised division in the Employment and Labour Relations Court with simplified procedures.
Tripartite social dialogue	Institutionalize quarterly National Labour Board meetings; review the SRC’s role to respect collective bargaining.
Private sector accountability	Mandate that all private enterprises, regardless of size, register with the National Labour Board and comply with annual wage and working condition declarations.
Informal sector organising	Allocate resources to support “jua kali” workers’ cooperatives and unions; pilot mobile‑based collective bargaining platforms.

4.3 Conclusion

The current minimum wage is a poverty wage. A 23% increase, backed by structural reforms, would begin restoring the purchasing power lost over the last decade and move Kenya toward a living wage economy. Tripartite social dialogue including genuine representation of informal and private sector workers remains the mechanism to achieve this sustainably. COTU‑K calls on the government and all employers to embrace this living wage agenda without delay.

.

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Prepared by:

Agnes Mukami Murithi

COTU(K).