1. Adams Barasa Central Organization of Trade Unions (Kenya) Decent Work Approach V Global Wage Trends and Role of Collective Bargaining in Shaping Wage Policies Focus on Global Supply Chains and Export Processing Zones-The Productivity Question

2. Outline 2 Introduction Global Wage Trends Role of Collective Bargaining Collective Bargaining in GSCs and EPZs The Productivity Question

3. Introduction

4. The Concept of Decent Work Wages as defined by ILO are remuneration or earnings which are payable in virtue of a written or unwritten contract of employment by an employer to an employed person The concept of wages excludes earnings of self-employed workers It is only applicable to wage earners Wage earners account for about 86% of the employed population in advanced economies This proportion falls to about 35% in Asia and less than 30% in Africa The proportion of women in wage employment in Africa is considerably low, at less than 30% 4

5. Global Wage Trends

6. Global real wage growth dropped sharply during the crisis in 2008 and 2009 It recovered somehow in 2010 but decelerated again Average monthly real wages grew globally by 2% in 2013 This was down from 2.2% in 2012 The wages are yet to rebound to pre-crisis rates of about 3% growth in 2006 and 2007 Real wages grew by about 4% in the Middle East in 2014 This was due to strong wage growth in Saudi Arabia However, the real wage growth in Africa was less than 1% This means that the workers in Africa continued to earn depressed wages 6

7. Global Wage Trends... 7

8. The illustrations in the Figure shows the annual average global real wage growth It shows that globally, real wages grew by between 3.1% in 2007 and 1% in 2011 The growth in real wages declined from 2.8% per annum in 2006 to 2% in 2013 If the effect of China is removed, this declines to a reduction in real wage growth from 2.1% in 2006 to 1.1% in 2013 This shows that workers have not realized meaningful improvement in growth in real wages 8

9. Average Real Wage Growth in Africa Average real wage growth in Africa decelerated from a high of 5.8% in 2010 to a low of -5.5% in 2011! This represents a decline of 11.3% percentage points in one year! In 2006, the average real wage growth was 1.3% This closed to 0.9% in 2013 This trend still confirms the worsening situation of wages in Africa 9

10. Average Real Wage Growth in Africa... 10

11. Role of Collective Bargaining

12. Collective Bargaining Principles: Case of Kenya Collective Bargaining is applicable in almost all countries It is grounded on ILO Convention No. 98 of 1949: Right to Organize and Collective Bargaining Kenya, for example, ratified this Convention in January 1964 The same is domesticated through the Constitution, Labour Laws and Industrial Relations Charter (1984) The Constitution: Article 41(2c) accords every worker the right to form, join or participate in programmes and activities of a trade union of choice Article 41(5) accords trade unions the right to engage in collective bargaining Industrial Relations Charter defines boundaries for trade union organization and recruitment Labour Laws defines fundamental freedoms and rights are work 12

13. Role of Collective Bargaining in Promoting Decent Work Global Apparel Value Chains and EPZs Collective Bargaining is applicable in most countries in Africa However, most Global Apparel Value Chains and firms in EPZs tend to restrict it They resist unionization and collective bargaining Some countries outlaws unions in EPZs In the absence of unions, most Global Apparel Value Chains and firms in EPZs resort to payment of minimum wages But minimum wages are also low in most countries Worse still, is that African countries lack the requisite capacity to enforce compliance with minimum wage standards 13

14. Trends in Labour Inspectorate Staff/Employment Ratio in Kenya YearEmployment (‘000s)Labour Inspectorate Staff (No.) Labour Inspectorate Staff/ Employment Ratio FormalInformalTotalFormalInformalTotal 20001 695.44 256.45 951.8115 14 743 37 01251 755 20011 677.14 732.76 409.8115 14 583 41 15455 737 20021 699.75 167.16 866.8116 14 653 44 54459 197 20031 727.35 598.47 325.7117 14 763 47 85062 613 20041 764.76 233.87 998.5117 15 083 53 28068 363 20051 811.66 693.48 505.0112 16 175 59 76375 938 20061 857.67 135.88 993.4107 17 361 66 69084 050 20071 909.87 501.69 478.9104 18 363 72 13191 143 20081 943.58 002.79 946.293 20 898 86 051106 948 20091 959.08 744.110 703.196 20 406 91 084111 491 20102 016.29 440.911 457.193 21 680 101 515123 195 20112 084.110 032.112 116.290 23 157 111 468134 624 20122 155.810 626.312 782.190 23 953 118 070142 023 20132 265.711 259.113 524.887 26 043 129 145155 457 14

15. Trends in Labour Inspectorate Staff/Employment Ratio in Kenya... According to the ILO, the capacity to enforce statutory regulations such as minimum wages is measured by the ratio of labour inspectorate staff to total employment ILO’s ratio is 1 labour inspectorate staff for every 40,000 employees i.e ( a ratio of 1: 40,000) The Table presents the following facts about Kenya: Formal employment grew from 1.7 million in 2000 to 2.3 million in 2013 Informal employment moved from 4.3 million in 2000 to 11.3 million in 2013 Total employment grew from 6 million in 2000 to 13.5 million in 2013 Labour inspectorate staff declined from 115 in 2000 to 87 in 2013 15

16. Trends in Labour Inspectorate Staff/Employment Ratio in Kenya... The decline in the number of labour inspectorate staff compared to growth in employment meant that: In the formal sector Labour inspectorate staff to employment ratio increased from 1: 14,743 in 2000 to 1: 26,043 in 2013 In the informal sector: Labour inspectorate staff to employment ratio increased from 1: 37,012 in 2000 to 1: 129,145 in 2013 In the whole economy Labour inspectorate staff to employment ratio increased from 1: 51,755 in 2000 to 1: 155,457 in 2013 The implication is that overburdened labour inspectors cannot do programmatic inspections to ensure compliance with statutory regulations! 16

17. The Productivity Question

18. State of Productivity 18 Productivity is one of the factors considered in wage adjustments However, its application is limited particularly in Africa The key issues are: No universally acceptable measure of productivity exists There is no credible data for measurement of productivity Governments do not provide productivity indicators to aid collective bargaining and negotiations Most employers have a perception and belief that the productivity of workers is low or even negative There is no agreed approach for compensating workers on productivity Employers are reluctant to share the gains from productivity yet to genuine productivity movement can succeed if the gains are not shared equitably!

19. You Thank