Although labor relations in Kenya are generally sound and the Kenyan labor market is more flexible than that of most African countries, a package of five new labor laws enacted just weeks before the December 2007 election represents to employers a difficult and costly turn of events. The practical implications of a number of new worker-friendly provisions, including increased allowances for leave and disability, remain highly contested. Employers’ vigorous opposition to the laws has resulted in ambiguity in whether, when, and how the laws are to take effect. Already, certain aspects of the new law have been invalidated in Kenya’s High Court. Although the first quarter of 2009 has shown some resolution of these issues, prolonged ambiguity, along with sluggish implementation of those aspects of the law that are uncontested, undermines both employer and worker confidence in the labor law regime.
Indeed, Kenya faces a number of challenges that go beyond the issues examined by Doing Business, which looks exclusively at the ease with which workers can be hired and fired and other specific indications of labor-market flexibility. The fact that the vast majority of Kenyans do not work for formally registered companies (75 percent are employed in agriculture, mostly informally), means that the regime of new labor laws has, and will have, little practical application to them. But all enterprises, whether formal or informal, face the central challenge of the quality, responsiveness, and readiness of the Kenyan workforce. All levels of Kenya’s educational system should be more responsive to the shifting needs of both the public and private sectors. The arrival of an undersea fiber-optic cable to East Africa this year will present a rapid increase in the use of broadband technology as a mechanism for doing business, and the opportunities it presents include the rapid development of business process outsourcing as a major new service industry.
The BizCLIR indicator scores illustrate the major points detailed in this chapter: Although the new labor legislation is better than average, both implementing and supporting institutions need to do more to improve the relationship between workers and their employers.
The information provided on this Web site is not official U.S. Government information and does not necessarily represent the views or positions of the U.S. Agency for International Development or the U.S. Government.
