Casualization and Its Effects in Kenya

Impact of Labor Laws in Mitigating Effects of casualisation in Kenya Humphrey Mwangi  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   HD333-BOI-1413/2009 Franklin Mutwiri  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   HD333-BOI-1604/2009 Patrick Mutai  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   HD333-BOI-0087/2009 John Warihe  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   HD333-BOI-1268/2009 Susan Awuor  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   HD333-BOI-1222/2009 Mary Mumira  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   HD333-BOI-1246/2009 James Otunga  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   HD333-BOI-1421/2009 Kevin Kariuki  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   HD333-BOI-1249/2009 Jomo Kenyatta University of Agriculture and Technology CBD Campus Presented to E. O. Achoch Abstract This study explores and examines the actual impact of labor legislation in mitigating the disturbing issue of casualisation of work in Kenya. The increase in casualisation in the country is a subject of great controversy. Increasingly casual employees are filling positions that are permanent in nature. Behind employee vulnerability in the country is the high levels of unemployment and accompanying poverty. Poverty has bred a dangerous work environment where many desperate job seekers in the labor force are willing to take any job for survival purposes rather than dignity. This is a big challenge for trade unions in their pursuit to protect and advance workers’ rights and foster decent work conditions. The study attempts to cover the following as per the terms of reference: What exactly is casualisation of work, How wide spread is it in Kenya, What difference has new provision in labor legislation made on casuals according to gender, occupation, status etc, How Labor Laws Have Affected Aspects Of Casual Workers rights, do labor laws affect the family of casual workers communities and local stakeholders such as trade union and NGO’s and what are the views of employers’ in terms of impact of labor laws and casualisation of work and their sustainability. Keywords: Federation of Kenyan Employers, Standard Employment Regulation Impact of Labor Laws in Mitigating Effects of casualisation in Kenya Collins Dictionary defines casualisation as altering of working practices so that regular workers are re-employed on a casual or short-term basis. Casual employment is also referred in some literatures as â€Å"precariousness† a familiar term in employment (Burgess and Campbell 1998; Weller and Webber 2001; Hunter 2006). Precariousness is seen in terms of bundles of job characteristics to do with insecurity and poor quality of life. It is characterized with lack of regulatory protection and working time insecurity Casualisation of a workforce is therefore reduction in full or part time employees and their replacement with employees who are called in on an as-needed or casual basis. This can reduce the employees working conditions by reducing the commitment from the employer to them, and giving the employer opportunities to control them by reducing their hours. Casual workers can be more difficult for employers to manage as they have no guarantee of finding available employees at any time, but they have the advantage of only employing people when they have the work for them An elastic approach to casualisation refer to non-standard and non-permanent employment relationships such as temporary work, fixed term contracts, seasonal work and subcontracting or outsourcing. It is also important to make a further distinction between casuals that are employed directly by the company or those that are supplied through outsourcing and subcontracting arrangements. Typically support services such as cleaning and catering and in some cases transportation and distribution and security are subcontracted. According to Okougbo (2004) casualisation of work is characterized by demand for employment which is highly variable such as port work, farm work, farm migratory work and other jobs of unskilled intermittent nature. He further states that contract labor is a form of involuntary servitude for a period of time. Labor and service contracts are terms used by management to describe contract labor. Management sometimes refers to it as â€Å"body shop† or â€Å"direct hire† while other refer to contract labor as service providers. Neo-liberal market restructuring globally and in the region is the driving force behind the sharp increase in casualisation. Neo-liberalism seeks to deregulate markets including the labor market to increase labor flexibility. In short, employers want the freedom to pay low wage, change the number of workers and how and when work is conducted thus this is casualisation. According to the employment act (2007) If an employee works for a period or a number of continuous working days which amount in the aggregate to the equivalent of not less than one month, or performs work which can not reasonably be expected to be completed within a period, or a number of working days amounting in the aggregate to the equivalent of three months or more, then the contract of service of the casual employee shall be deemed to be one where wages are paid monthly and section 35 (1) (c) shall apply to that contract of service. Labor Relations Act which prescribes that casual worker should be employed permanently after three months of continuous work besides which employees are supposed to be provided with medical and housing benefits. The Act also stipulate that an employee whose contract of service has been converted in accordance with subsection (1) (Employment Act, 2007) and who works continuously for two months or more from the date of employment as a casual employee shall be entitled to such terms and conditions of service as he / she would have been entitled to under this Act (Employment Act, 2007) had he not initially been employed as a casual employee. These include:- †¢ Notice. Where the contract is to pay wages or salary periodically at intervals of or exceeding one month, a contract is terminable by either party at the end of the period of twenty-eight days next following the giving of notice in writing †¢ Working hours. An employer shall regulate the working hours of each employee in accordance with the provisions of this Act and any other written law. Rest period. According to the employment Act subsection (1), an employee shall be entitled to at least one rest day in every period of seven days. Annual leave. After every twelve consecutive months of service with his employer to not less than twenty-one working days of leave with full pay †¢ Maternity leave. A female employee shall be entitled to three months maternity leave with full pay. The female employee shall have the right to return to the job which she held immediately prior to her maternity leave or to a reasonably suitable job on terms and conditions no t less favorable than those which would have applied had she not been on maternity leave. A male employer shall be entitled to two weeks paternity leave with full pay. †¢ Sick leave. After two consecutive months of service with his employer, an employee shall be entitled to sick leave of not less than seven days with full pay and thereafter to sick leave of seven days with half pay. †¢ Medical attention. Subject to subsection (2), an employer shall ensure the provision sufficient and of proper medicine for his employees during illness and if possible, medical attendance during serious illness. †¢ Service pay. The casual shall be entitled to service pay for every year worked, the terms of which shall be fixed. The wage bill in the private sector, a key driver of household consumption, is increasingly dipping as most employers opt for casual workers to cushion themselves against a harsh business environment. Despite stiff regulations introduced last year to protect casual workers from exploitation, thus making hiring of such employees expensive, Government statistics (GOK, 2006) show that casual employment grew by 13 per cent last year compared to a five per cent growth in 2007. Comparatively, the levels of regular employment dipped 2. 9 per cent in 2008, reflecting employers' preference of hiring casuals during the period, says the 2009 Economic Survey (GOK 2009). Casual workers accounted for 32 per cent of total wage employment. As a result of this preference, the private sector wage bill grew by a measly 10 per cent, compared to a 14. 6 per cent rise in 2007. This is attributed to increased use of casual laborers whose pay is usually lower than that of regular employees. The economy is also gradually sliding into a largely casual employment which could have dire implications in the already turbulent labor market,. This would reduce domestic consumption as households will have less to spend, thus reducing demand in the productive sectors and hampering poverty eradication. The Enactment of the Employment Act by Kenyan parliament roots for better protection of casual laborers by making it mandatory for employers to remit statutory deductions to the National Social Security Fund (NSSF) and the National Hospital Insurance Fund (NHIF). Previously, casual and contract workers – who constitute the majority of Kenyan workforce and include house-helps, watchmen, matatu touts and building and construction workers did not qualify for most of the benefits that are available to permanent employees. There is also a bigger risk of lay -offs for casual workers to escape the statutory contributions. The greatest impact that the new laws have had in the labor market is to push employers towards outsourcing the services of workers they would ordinarily employ as casuals to cut costs. This had negatively affected the job market in that companies cannot absorb more jobs and worse still, they have to cut their marketing and advertising budgets to cope. Casual employment remains the cheapest way of engaging workers, especially so at these hard economic times when employers focus is on taming labor costs. But the flipside is that we might end up with lower revenues from income tax if the labor market was to be largely made up of casuals. The purchasing power for families will also reduce drastically. Hired on short-term contracts, casual workers strive to fulfill production quotas for long working hours under poor working conditions and low wages, often without maternity or sick leave, housing and medical allowances. Most of them are denied right to join trade unions and basic services like water while some are victims of reported sexual harassment at the work place. They face stiff penalties for mistakes, work while sitting or standing for between eight and twelve hours daily, with only a forty five minute break in between, in order to beat the quota set by supervisors Kugler et al (2003). Their daily pay is between Sh120 and Sh160 but a percentage is deducted ostensibly for social security or hospital insurance contributions, which rarely benefit them (GOK, 2003). Casual labor market is perpetuated by lack of any permanent, on-going attachment between employer and worker (Ralph C. 1960). Where this condition exists and where entry of worker is easy due to low skill requirements and the absence of institutional barriers, the labor market is likely to accumulate a chronic surplus of supply. The resultant highly competitive market is conducive to corrupt hiring practice and a wide variety of other social evils. Casual workers provide cover at short notice for the absence of permanent staff. Some may belong to an area â€Å"pool† of relief workers who are contracted when work becomes available. The key characteristics of a casual worker are; †¢ They are offered work for a specific day or session only †¢ They have no right to be offered work beyond that day or session There is no regularity of work. It is characterized with lack of regulatory protection and working-time insecurity (Tham, 2007). In contrast to standard employment, there’s little right to protection against unfair dismissal and no right to notice in case of dismissal (O’Donnell, 2004). As a result casual tends to have even less employment security than fixed term employees since they can be dismissed with ease at almost any time. This greatly affects their financial proposition as they are not sure of their fate-they literally live a day at a time. Most dramatically, casual employment is exempted from almost all rights and benefits that have come to be attached to â€Å"permanent† contracts. These include such basic entitlements as annual leave, sick leave and payment for public holidays (Watson et al, 2003). The main attribute is a simple entitlement to wage enhanced in some cases by so called casual loading on the hourly rate of pay. Precariousness has several dimensions but ultimately two of which impact greatly on casual labor rights. These include; †¢ Lack of regulatory protection Working-time insecurity Other critical dimensions may include low and irregular earnings and employment insecurity which statues are overwhelmingly silent on. Statutory regulations has played only a limited role in establishing a standard employment regulation (SER) through the provision of dynamic standards to support a platform of â€Å"decent† work (Cooney et al, 2006). However, it is a complicated and layered system leaving sizeable gaps as a result of poor coverage, poor enforcement and exemptions. The award system provides a large array of rights and entitlements for employees but these are generally confined to full time permanent (standard) employees (Campbell, 2004). These clauses permit casual employment under certain limitations and then specify that casual workers are exempted from most rights entitlements starting with employment protections such as rights to notice and compensation for dismissal. This lack of regulatory protection is not confined to non-standard work. It can also apply to parts of standard workforce where gaps in protection have been eroded. Standardized working time arrangements are central to SER. Deviations from the norms centered on working hours involves; †¢ irregular work hour both in number and timing †¢ overly short †¢ overly long These represent a much change in present period, drains employees, control over work and sponsoring increased working-time insecurity. Another central feature of casual employment is the ability of employers to determine the number and timing of hours and to alter these at short notice. Casuals appears here as easily available, easily deployed in workplace and then easily disposable (Walsh et al, 1999). Negotiation of working hours is commonly a rather fraught process in which workers are often reluctant to refuse shifts-even at short notice and even at inconvenient times-for fear of jeopardizing future offers (Pocock et al, 2004). According to Barone (2001) there do exists various institutional arrangements that can provide employment protection; the private market, labor legislation, collective bargaining arrangements and contractual provisions. Some forms of de facto regulations are also likely to be adopted even in the absence of legislation simply because both workers and firms can derive advantages from long-term employment relations (OECD,1999). This is invariably averse to employment protection legislation which has of recent days been seen to shut its doors on plight of casuals (Kugler et al,2003). Employer’s opinion on casualisation can also be deduced from Federation of Kenyan Employers which is a registered umbrella body of employers in Kenya. FKE has duties such as; to encourage the principle of sound industrial relations and observance of fair labor practices as well as to promote sound management practices amongst employers through training, research and consultancy services and adoption of best practices. FKE was established in January 1969 in response to the activities of the then-Kenya Federation of Labor, which had unified the trade union movement into a single entity. The employers felt they needed an organization that could represent them on major social and economic issues. Since then, the Federation has gained considerable strength and power. It started as a body with only 161 employers; today it represents about 3,000. On the thorny issue of casual labor, the group has few real answers. Since a large number of Kenya's industries are seasonal in nature, like agriculture, hotels, restaurants, plantations and other related businesses, it is very difficult to eliminate casual labor entirely. According to the employment act (2007) cap 35 (a) casual staff can be employed by a company if the contract will not exceed the three month agreement for casual staffing stipulated by the labor law. If there is to be a continuation of the person in the position beyond the three month agreement, the employer is expected to give a contract letter to the individual stipulating the terms of employment. Accordingly FKE (2007) casualisation is rife in the country; but most of the companies perpetuating the offence are not mainly its members, so this has limited what the organization can do about it. However, many employers argue that due to economic hardship not only witnessed in Kenya but globally, they are forced to employ their workers as casuals because they will not afford to sustain them  in the long run. Many companies usually have periods of booming and recessions in there businesses and such will determine employment of staff. Some industrial companies employ workers as casual for two months then they relieve them of their duties and hire new staffs. The treatment of â€Å"casuals,† says COTU Secretary-General, Francis Atwoli (2009), â€Å"has haunted the trade union movement for many years and is a throwback to the colonial era when workers were classified as casual people†. Atwoli believes the Kenyan labor movement could be strengthened if the casuals were allowed to unionize. To this end, COTU is now negotiating with the government to organize casual workers regardless of their salaries. COTU also wants all casual workers to become eligible for the benefits that permanent workers get: worker's compensation, housing and pensions. The COTU secretary-general recently flayed FKE for advocating that the government should institute more controls on wages. Atwoli sees such a move as an obstacle to expansion in industry. He argues that if workers are poorly paid, their purchasing power will remain low and they will not be able to afford manufactured goods. This will keep manufacturers from expanding and new jobs will remain an unfulfilled goal. Observers in business circles think investors view low wages with mixed emotions: while some foreign investors look at low wages as a sure means of maximizing profits, others see them as a sure way of reducing purchasing power in the market which could subsequently mean low sales. On the other hand, government economists argue that it is better to maintain low wages that the national economy can support rather than high wages that will lead to high inflation. FKE argues that â€Å"In raising minimum wages they are guided by certain factors like the ability of the economy,†Ã‚   To sustain any level of minimum wages, FKE says, other factors come into play like the level of unemployment in the country as well as the ability of the small employers to pay. FKE believes that COTU has to be realistic in its approach to the whole issue but FKE is studying COTU's demands. However, it should be noted all players i. e. the government, FKE and COTU concurs that unionizing casuals may be essential to safeguard the gains of all Kenyan workers. Low wages and limited benefits make casuals an attractive proposition for companies trying to cut costs. Discussion The exploding population will only exacerbate the situation as more and more workers enter a work market incapable of keeping pace with this growth. As the population growth continues to outpace the growth of jobs, employers will have increasing leverage to demand concessions from both workers and their unions. Kenya's labor movement must somehow address these issues if it is to continue to make progress on worker's rights. References Campell, 1 (2004) ‘Casual work and casaulisation: how does Australia Compare’? 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