Bank employees are set to receive a six percent raise on their salaries following a new agreement between the Banking, Insurance and Finance Union (BIFU) and the Kenya Bankers Association (KBA).
The new pay rise contained in a revised Collective Bargain Agreement (CBA) between the union and the banking sector employer will also see bank employees receive an enhanced medical cover for the 2019-2021 period.
The revised remuneration stands to benefit approximately 19,000 banking staff out of a total sum of 30,000 industry employees.
KBA has termed its deliberations with staff as pragmatic on the back of concerted efforts by banks to squeeze out efficiency including cost optimization efforts such as employee rationalization.
According to the Central Bank of Kenya’s (CBK) 2017 Banking Supervision report, banks lost a combined 8.3 percent of staff during the year having cut weight to fit through the ever fluid banking sector environment.
“This is an indicator of the consistent improvement in banks efficiency as a result of the review of banking models, automation of processes and a shift from brick and mortar to alternative digital channels,” noted the CBK.
The notable adoption of financial technologies (FinTech) including new know-your-customer procedures (KYC) and Artificial Intelligence has seen a high turnover of support and clerical staff from the banking sector.
At present, the average take home for employees in the finance and insurance sector is Ksh.76,409 per month or an equivalent Ksh.16,764 above the average wage per employee in the modern sector.
In spite of the notable industry turbulence, both the sectors’ employment and earnings have been on a growth trajectory having risen by 13.7 and 26.1 percent respectively between 2013 and 2018.
The Kenya Bankers Association has tied up the interest rate cap as a key factor in informing bank staffing even as they find the interest income holds to have eaten into the lenders output in 2017 at a rate of 1.4 percent of Gross Domestic Product (GDP).
While banks have been insistent on the creation of alternative job outlets, the combined strategy of opportunity maximization and risk minimizing has created the perfect storm to effectively blur the outlook for jobs in the sector.
Job losses from the enactment of the rate capping law have been estimated at 5,000.
Performance data from the 2018 provisional economic survey by the Kenya National Bureau of Statistics (KNBS) in the year to December 31, 2018 showed domestic credit growth at a lesser 4.6 percent as the government absorbed most of the credit in a 13.4 percent increase in government securities investments by the local lenders.
However, private sector credit during the year was at its worst having jumped by a mere 1.9 percent as interest earned from loans and advances fell by 1.7 percent.
Even so, banks earned a greater sum of Ksh.379.6 billion in net interest income.
At the same time, banks have benefited greatly from the improved supply of money in the economy as more than half of the bank’s assets now sit in cash and near cash items.