•This remuneration structure means that an average employee in Kenya will need to work for 26 years to earn what the CEO makes in a year.
•In 2023 the median worker was paid Sh305,843 of just about Sh3.7 million a month
Image: FILE
Chief executives officers of publicly traded companies are paid nearly 26.5 times what an average employee in the company earns, a new wage gap report for Kenya-listed firms has shown.
This is even as the gap between what CEOs are paid and those of workers widened by 23.4 per cent in 2023, offering insights into the extent of wage inequalities in Kenya's private sector.
This remuneration structure means that an average employee in Kenya will need to work for 26 years to earn what the CEO makes in a year.
Standard Investments Banks’ Executive Compensation Report, shows that in 2022 the top executives earned 21.5 of what the average employees earned.
“We note a widening of the pay gap – as reflected by the 23.4 per cent year-on-year growth in the median from 21.49 in 2022 to 26.52 in 2023.”
In 2023, the median worker was paid Sh305,843 or just about Sh3.7 million a month
Among the 16 listed companies, CEO to worker multiples in 2023 ranged from four times to 151 times.
According to the findings, over the past five years, employee pay has grown at a compound annual growth rate of 8.6 percent, reflecting a steady increase in compensation.
A significant correlation of 0.55 has been identified between trends in employee pay and return on equity, suggesting that shareholders are deriving substantial value from investments in human capital.
Moreover, there is a strong link between changes in pay and inflation trends, with a correlation of 0.97.
This indicates that employees are effectively maintaining their real wages, as annual changes in the Consumer Price Index (CPI) heavily influence pay reviews.
Using 2022 as a base year, staff numbers for the listed company increased by 4.8 per cent —a slower rate compared to the 5.6 per cent growth recorded in the previous year.
The annual median pay rose by 3 per cent, bringing the average monthly gross pay to approximately Sh305,843.12.
Four companies reported a decline in staff numbers, three of which were outside the financial services sector, likely due to cost-cutting measures amid a challenging operating environment.
In contrast, four companies achieved double-digit growth in staff numbers, primarily driven by business expansion.
In the banking sector, all banks, except Standard Chartered (StanChart), posted growth in staff numbers in 2023, averaging 5.7 per cent, compared to the non-banking sector's average growth of 3.7 per cent.
This increase is likely supported by the sector's strong topline performance and an expansion in branches to tap into the retail market.
The report now on its third edition based its findings on 16 select Kenyan-listed firms, domiciled in Kenya – accounting for 91.3 per cent of the bourse by market cap and 97.2 per cent of the second quarter of 2024 turnover.
The list comprised nine commercial banks, two FMCG players, one telco, an insurance firm, a cement manufacturer, an agricultural company, and a power generator.