The latest report on wage disparities among Kenyan-listed companies reveals that the remuneration of Chief Executives has surged to nearly 26.5 times that of the average employee. This figure underscores a widening income gap, which expanded by 23.4% in 2023, shedding light on the persistent inequality within Kenya’s private sector.
According to the report, an ordinary employee in Kenya would need to work for 26 years to match the annual earnings of a CEO. The Executive Compensation Report by Standard Investments Bank indicates that in 2022, top executives were earning 21.5 times more than their average employees.
The report observed a notable increase in the wage gap, with a 23.4% year-on-year rise in the median disparity, from 21.49 in 2022 to 26.52 in 2023. It also highlighted that half of the companies surveyed showed an increase in their pay gaps, while the other half saw a reduction. Co-operative Bank led with the widest gap, while BAT maintained the smallest disparity for three consecutive years.
Among the 16 listed companies analyzed in 2023, the CEO-to-employee pay ratios varied significantly, ranging from four times to as high as 151 times.
Over the past five years, employee compensation has grown at a compound annual growth rate of 8.6%, reflecting a consistent upward trend. The study found a strong correlation (0.55) between employee pay trends and return on equity, suggesting that shareholders are gaining significant value from investments in human capital. Additionally, the data showed a robust link (0.97 correlation) between changes in pay and inflation trends, indicating that employee wages are effectively keeping pace with inflation, as reflected in the Consumer Price Index (CPI) adjustments.
Using 2022 as a benchmark, the number of staff employed by the listed companies grew by 4.8%, a slower pace compared to the 5.6% increase seen in the previous year. The median annual salary rose by 3%.
However, four companies reported a reduction in their workforce, three of which were outside the financial services sector, possibly due to cost-cutting measures in response to a challenging economic environment. Conversely, four other companies achieved double-digit growth in their staff numbers, primarily driven by business expansion.
The banking sector, in particular, saw growth in staff numbers across all banks except Standard Chartered (StanChart), with an average increase of 5.7% compared to the non-banking sector’s 3.7% growth. This growth was likely bolstered by the sector’s strong revenue performance and branch expansions aimed at capturing the retail market.
Now in its third edition, the report’s findings are based on data from 16 select Kenyan-listed companies, which together represent 91.3% of the market capitalization and 97.2% of the total turnover for the second quarter of 2024. The analyzed firms included nine commercial banks, two fast-moving consumer goods companies, one telecommunications firm, an insurance company, a cement manufacturer, an agricultural firm, and a power generator.
| GDP (nominal) | Capital | Head of State | Head of Government | GDP (nominal) per capita | GDP (PPP) | GDP (PPP) | GDP (PPP) per capita |
|---|---|---|---|---|---|---|---|
| Kenya | Nairobi | William Ruto | William Ruto | 112.749 | 2.188 | 338.964 | 6.577 |
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