1

08Fall

Series1,Report10

February,2017

Preparedfor:TheGlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwiththeISEALAllianceandRichardAnkerandMarthaAnker

PhotoCourtesyofFairtradeInternationalandPhotographerMalinOlofsson

LivingWageReportKenyaWithafocusonruralMountKenyaAreaContextProvidedinHorticultureIndustryJune2015–withupdatetoOctober2016RichardAnkerandMarthaAnker

2

ACKNOWLEDGEMENTS

WewouldliketoespeciallythankPerisKahurewhowasthelocalresearcherwithwhomwecollaborated.Shewasresponsibleforcollectingthelocaldataforfoodpricesandhousingcostsaswellasthepostcheckinformationonhealthcareandschoolcosts.Perisdidanexcellentjobandprovidedmanyvaluableinsights.WewouldalsoliketothankZacheryKiareandWilbertFlintermanofFairtradeInternationalfortheirusualunflaggingsupport.Inaddition,ZachwashisusualsourceofwisdomandcommonsenseaboutKenya.

08Fall

3

ACKNOWLEDGEMENTS...........................................................................................................2

INTRODUCTION......................................................................................................................5

1. Background.....................................................................................................................5

2. LivingWageEstimate.......................................................................................................7

3. IntroductiontoLivingWage.............................................................................................7

4. HowOurLivingWagesforKenyawereEstimated............................................................8

COSTOFABASICBUTDECENTLIFEFORAWORKERANDTHEIRFAMILY...............................10

5. Foodcosts.....................................................................................................................105.1GeneralPrinciplesUsedtoDevelopModelDiet..........................................................................105.2ModelDietUsedtoEstimateFoodCostsforLivingWage...........................................................115.3FoodPrices...................................................................................................................................14

6. CostofHousingforWorkersinRuralMountKenyaArea...............................................156.1StandardforBasicAcceptableHousing......................................................................................156.2RentforBasicAcceptableHousing..............................................................................................166.3UserCostofOwnedHouseinRuralMountKenyaArea..............................................................17

6.3.1Servicelifeofanacceptablehouse.......................................................................................................186.3.2Maintenanceandrepaircosts..............................................................................................................196.3.3Estimatingusercostofownedhouseusingaboveinformation...........................................................196.3.4Summaryofcostofrentalorrentalequivalentusercostofownedhouse.........................................19

6.4UtilitiesCosts...............................................................................................................................196.4.1Cookingfuel..........................................................................................................................................206.4.2Lightingandelectricity..........................................................................................................................206.4.3Water....................................................................................................................................................20

6.5Summaryofhousingcosts...........................................................................................................21

7. Non-foodandNon-housing(NFNH)Costs......................................................................217.1Whetherfundsincludedinpreliminaryestimateofnon-foodnon-housingcostsforhealthcareandeducationaresufficient......................................................................................................22

7.1.1Healthcare............................................................................................................................................227.1.2Education..............................................................................................................................................23

8. Marginabovecostofabasicqualitylifetohelpenablesustainability...........................24

LIVINGWAGEFORWORKERS...............................................................................................26

9. FamilySizeNeedingtobeSupportedbyLivingWage.....................................................26

10.NumberofFull-timeWorkersinFamilyProvidingSupport.............................................26

11.Mandatorydeductionsfrompay....................................................................................28

ESTIMATINGGAPSBETWEENLIVINGWAGEANDPREVAILINGWAGES.................................29

4

12. PrevailingWagesinIndustryofFocusandOtherIndicators.........................................29

13. Conclusions.................................................................................................................32

BIBLIOGRAPHY.....................................................................................................................36

ANNEXES..............................................................................................................................43

AnnexA.Oursynopsisofbenefitsincollectivebargainingagreement(CBA)betweenAgriculturalEmployers’AssociationandKenyaPlantationandAgriculturalWorkers’Unionfor2013-2015............................................................................................................................43

AnnexB.FloricultureCBAbasicwage,cashallowances,andsomebenefits,1997-2015........46

AnnexC:UpdateonKenyaflowerfarmwagesandnewcollectivebargainingagreement(CBA)for2015-2017signedOctober21,2016................................................................................51

5

LivingWageEstimatesKenyaWithfocusonruralMountKenyaAreaContextProvidedintheHorticultureSectorINTRODUCTION

1. BACKGROUNDThisreportestimatesalivingwagefortheruralMountKenyaareaforJune2015.ThelivingwageestimatedinthisreportwefeelcanbeviewedasusefulforruralKenya,sincepricesintheruralMountKenyaareaarereasonablyrepresentativeofpricesinruralKenyaasawholeaccordingtotheKenyaNationalBureauofStatistics(KNBS)2007BasicReportonWell-being.TheKNBSruralpricedeflatorforruralCentralProvince(0.98),whereMountKenyaislocated,wasonlyslightlybelowaverage(i.e.slightlybelow1.00)forruralKenya.TheruralpricedeflatorforCentralProvincewasverysimilartothoseforRiftValleyProvince(0.98),WesternProvince(0.99),andEasternProvince(1.01),althoughslightlylowerthanforCoastProvince(1.04),NyanzaProvince(1.07),andNorthEastProvince(1.09)accordingtoKNBS(2007).1Thisreportisinasenseacompanionreporttoanearlierreportbytheauthorsthatestimatedalivingwageforthenon-metropolitanLakeNaivashaareaofKenyainMarch2014.BothreportsfocusonareaswherethefreshcutflowerindustryinKenyahasconcentrationsofflowerfarms.ThelargestconcentrationofflowerfarmsinKenyaclusteraroundLakeNaivasha.MuchsmallerconcentrationsofflowerfarmsarefoundinotherareasthatincluderuralareasofMountKenyaandKerichoaswellasareasfairlyclosetoNanyukitownwhereworkersliveinnon-metropolitanurbanareasthataresimilartoconditionsaroundLakeNaivasha.TheneedforthecurrentreportforruralMountKenyabecameapparentafterour2014livingwageestimateandreportfortheLakeNaivashaareawascompletedanditwasfoundthatflowerfarmworkersintheLakeNaivashaarealivedinurbanareasneartoflowerfarmsandnotinruralareasashadbeenexpected.ThismeantthatourlivingwageestimateforLakeNavaishaareawasnotrepresentativeofalivingwageforruralKenyaandsowasnotrelevantforotherlocationsinKenyawhereworkersliveinruralsettingssuchformanyflowerfarms,coffeefarms,andteaplantations.ThisreportandourearlierreportforLakeNaivashausethesamenewmethodologydevelopedbytheauthorstoestimatealivingwage.ThismethodologybuildsonourearlierworkonlivingwagespublishedbyILO(seeAnker,2006a,2006b,2011)andourmanualonhowtoestimatea1SmallupwardadjustmentswouldbereasonableforlivingwageestimatesforruralCoastProvince,ruralNyanzaProvince,andruralNorth-EastProvince(seetext).

6

livingwagepublishedinJanuary2017byEdwardElgarPublishing(Livingwagesaroundtheworld:Manualformeasurement).Ourmethodologyhasbeenusedtoestimatelivingwagesforurbanareasinmorethantwelvecountriesformulti-nationalcorporations.IthasalsobeenusedtoestimatelivingwagesinmanycountriesforFairtradeInternationalandothermembersoftheGlobalLivingWageCoalition(GLWC)thatincludespublishedlivingwagereportsandestimatesforruralWesternCapeProvenceSouthAfrica,ruralnorthernDominicanRepublic,ruralsouthernMalawi,non-metropolitanurbanLakeNaivashaKenya,ZiwayEthiopia,MinasGeraisBrazil,DhakaBangladesh,andruralBhadohiUttarPradeshIndia.ManyotherlivingwagestudiesarecurrentlyunderwaysuchasinChina,Ecuador,Ghana,Guatemala,Mexico,Pakistan,SriLanka,Vietnam,andCostaRica.ThepresentstudyandreportwascommissionedbyFairtradeInternationalwhileour2014livingwagestudyandreportforLakeNaivashawascommissionedbyFairtradeInternational,SustainableAgriculturalNetwork(SAN)/RainforestAlliance,andUTZ.2ThereportispublishedthroughtheGlobalLivingWageCoalition,ofwhichallofthestandardsmentionedasfundersfortheKenyareportsaremembers,alongwithGoodWeaveInternational,ForestStewardshipCouncil(FSC),andSocialAccountabilityInternational(SAI),andinpartnershipwiththeauthorsandtheISEALAlliance.Thisreportispurposelyshorterthanour2014reportforLakeNaivasha.Readersarereferredtoour2014reportthatisavailableontheGLWCwebsiteformoredetailsandexplanationsofourmethodology,Kenyancontext,backgroundandhistoryoflivingwages,andgeneralprinciplesofourlivingwagemethodology.ThepresentreportemphasizescomparisonsbetweenourestimateofalivingwagefortheruralMountKenyaareaandourearlierestimateofalivingwageforthemakeshiftnon-metropolitanurbanareathathassprungupnearLakeNaivashaanditsflowerfarms.Readersshouldremainaware,however,whenreadingthisreport,thatflowerfarmsintheMountKenyaareaarelocatedinbothperi-urban(non-metropolitanurban)areasthataresimilarinlivingcostsandsolivingwagetotheLakeNaivashaarea,aswellasruralareasthat,aswillbeshowninthisreport,haveamuchlowerlivingwagebecauselivingcostsaremuchlower.ThepresentreportalsoupdatesourlivingwageestimatesforruralMountKenyaareaandnon-metropolitanLakeNaivashaareaforinflationtoOctober2016(whenavalidationworkshopwasheldinNairobiwithstakeholdersfromflowerfarms,teaplantations,andcoffeeestatesaswellascivilsociety)sothatournon-metropolitanLakeNaivashaandruralMountKenyalivingwagesareup-to-dateandmorecomparable.Thepresentpaperalsotakesintoconsiderationtheviewsofparticipantsfromthisworkshop.

2The2014livingwagestudyforLakeNaivashaKenyawasthefourthpilotstudydoneaspartofthe“SharedApproachtoLivingWage”memorandumofunderstandingthatFairtradeInternational,RainforestAlliance,SustainableAgricultureNetwork,andUTZhavewithISEALandthreeothercertifyingorstandardsettingorganizations(ForestryStewardshipCouncil(FSC),GoodWeave,andSocialAccountabilityInternational(SAI)).Thismemorandumofunderstandingcommitstheseorganizationsto“adoptacommondefinitionoflivingwageandapplyacommonmethodologytoestimatinglivingwagelevels…withlongtermgoalandsharedmissionofthesesevenorganizationstoseeimprovementsinworkers’conditions,includingwagelevels,inthefarms,factoriesandsupplychains…byseekingsupportfrombrands,buyers,andretailerstomakewagegrowthpossibleattheprimaryproductionlevelpossibleand…workingtogetherwiththerelevantstakeholders.”

7

2. LIVINGWAGEESTIMATEOurestimateofalivingwageforruralMountKenyaforJune2015isKSh11,937($124)permonthbeforeconsiderationoftaxesandothermandatorydeductionsandKSh12,969($135)afterconsiderationoftaxesandmandatory(NSSF,NHIF,andPAYE)togetgrosspayneededbyworkerstobeabletoliveatadecentstandardofliving.TheseareequivalenttoaKSh12,852netlivingwageandaK13,943grosslivingwageforOctober2016aftertakingintoconsiderationinflationinKenyabetweenJune2015(studydate)andOctober2016(validationmeetingwithstakeholdersandcivilsociety)aswellasnewtaxlawsandtaxrates.ThisismuchlowerthanourlivingwagefortheLakeNaivashaarea(KSh19,305takehomelivingwage,$191;andKSh22,104,$219grosslivingwage)afterupdatingour2014estimatesforinflationinpricesbetweenMarch2014andOctober2016accordingtoKNBS(KenyanBureauofStatistics)CPIstatisticsaswellasnewtaxlawsandtaxrates.ItisagainworthnotingasindicatedabovethatitispossibletoconsiderourlivingwageestimatefortheruralMountKenyaareainthepresentreportasalivingwageestimateforruralKenyasincepricesinruralCentralProvince(whereMountKenyaislocated)areonly2%lowerthanaverageruralpricesinKenyaasawholeaccordingtoKNBS(2007).Beforebeginningthisreport,itisimportanttopointoutthatwhilethelivingstandardsweusedtoestimateourlivingwagesforruralandnon-metropolitanurbanKenyaaredecent,theyareforabasicstandardoflivinginkeepingwiththeconceptofalivingwage.Itisalsousefultopointoutaswasdoneinour2014reportthattherealwagesofflowerfarmworkershavefallensignificantlyinrecentyearsdespitebeingnegotiatedinCBAs(byaround40%between2004and2014fornewlyhiredworkers);andthatthereasonwhyourestimatedlivingwageforLakeNaivashaareaismuchhigherthanourlivingwageforruralMountKenyaisbecausemostflowerfarmworkersintheLakeNaivashaarea(aswellasmanyflowerfarmworkersintheMountKenyaarea)liveinurbantownshipsthathavesprungupneartoflowerfarms.Theremainderofthisreportprovidesanexplanationofhowourlivingwagewasestimated.Readersarereferredtoour2014reportfortheLakeNaivashaareaformoredetailsonthemethodologyandjustificationofthisapproach.Transparencyisstressedsothatstakeholders,thevaluechain,andothersareabletoqueryassumptionsandcalculationsthatwentintomakingourlivingwageestimatesforKenya.InbothLakeNaivashaandruralMountKenyaareas,houseswhereworkerslivewerevisitedtofindlocalhousingcosts;marketsandshopswhereworkersbuyfoodwerevisitedtofindlocalfoodprices;discussionswereheldwithkeyinformantsineachareasuchaskeymembersofcivilsociety,government,NGOs,andtradeunions;andsecondarydatafromgovernmentandresearchers,andreportsfromresearchers,NGOs,government,andinternationalorganizationswereused.3. INTRODUCTIONTOLIVINGWAGE3Theideaofalivingwageisthatworkersandtheirfamilyshouldnothavetoliveinpoverty.Butalivingwageshoulddomorethansimplykeepworkersandtheirfamiliesoutofpoverty.Itshouldalsoallowthemtoparticipateinsocialandculturallife.Inotherwords,wagesshouldbe

3Thissectionborrowsinpartfromour2014LakeNaivashalivingwagereportforcompleteness.

8

sufficienttoensurethatworkersandtheirfamiliesareabletoaffordabasiclifestyleconsidereddecentbysocietyatitscurrentlevelofdevelopment.Workersshouldreceivealivingwageinnormalworkhourswithouthavingtoworkovertime.Thefollowingdefinitionofalivingwage(whichisconsistentwithfindingsinthecomprehensiveILOreviewoflivingwagesinAnker,2011)wasagreedtoby7standardsetting/certifyingorganizations:FairtradeInternational,GoodWeaveInternational,ForestStewardshipCouncil(FSC),RainforestAlliance,SustainableAgricultureNetwork(SAN),SocialAccountabilityInternational(SAI),andUTZ,aswellasbytheGLWCpartner,ISEALAlliance.

Remuneration received for a standard workweek by a worker in a particular[timeand]place sufficient toaffordadecent standardof living for theworkerand her or his family. Elements of a decent standard of living include food,water, housing, education, healthcare, transport, clothing and other essentialneedsincludingprovisionforunexpectedevents.

Theideaofalivingwageisnotnew(seeAnker2011forthefollowingandotherquotes).Norisitaradicalidea.Indeed,itcanbethoughtofasamainstreamideathroughouthistory.AdamSmith(1776)wrotethat“Nosocietycansurelybeflourishingandhappy,ofwhichfargreaterpartofthemembersarepoorandmiserable.Itisequitybesidesthattheywhofeed,clotheandlodgethewholebodyofthepeopleshouldhavesuchashareoftheproduceoftheirownlaborastobethemselveswellfed,clothedandlodged.”PopeLeoXIII(1891)inPapalencyclicalRerumNovarumstatedthat“Remunerationmustbeenoughtosupportthewageearnerinreasonableandfrugalcomfort.Ifthroughnecessity,orfearofworseevil,theworkmanacceptsharderconditionsbecauseanemployerorcontractorwillgivenobetter,heisthevictimoffraudandinjustice.”AmericanPresidentFranklinD.Roosevelt(1933)wrotethat“Libertyrequiresopportunitytomakealiving–alivingdecentaccordingtothestandardofthetime,alivingwhichgivesmennotonlyenoughtoliveonbutsomethingtolivefor.”InternationalLaborOrganizationConstitution(1919)statesthat“Peaceandharmonyintheworldrequiresprovisionofanadequatelivingwage”,andUnitedNations’UniversalDeclarationofHumanRights(1948)statesthat“Everyonewhoworkshastherighttojustandfavorableremunerationensuringforhimselfandhisfamilyanexistenceworthyofhumandignity.”SeeAnker(2011)fordescriptionsoflivingwagebyotherprominentindividuals,internationalorganizations,NGOs,companies,andgovernments.4. HOWOURLIVINGWAGESFORKENYAWEREESTIMATEDThefiguresbelowillustratehowweestimatedlivingwagesfortheruralMountKenyaareaandthenon-metropolitanurbanareaaroundLakeNaivasha.WestartedbyestimatingcostofabasiclivingstandardthatwouldbeconsidereddecentforpresentdayruralKenyaandnon-metropolitanurbanKenya.Thiswasdonebysummingupseparateestimatesforthecostforareferencesizefamilyofalowcostnutritiousdiet,basicdecenthousing,andallotherneedsatadecentlevelineacharea,plusasmallmarginfor

9

unforeseeneventssuchasillnessesandaccidentstohelpensurethatcommonunplannedeventsdonoteasilythrowworkersintopoverty(figure1).Beforeacceptingourpreliminaryestimatesofcostforallnon-foodnon-housingitems,wemadesurethatsufficientfundsareprovidedforhealthcareandeducationastheseareconsideredhumanrightsaroundtheworld.Thesumofthesethreeexpensegroups(food,housing,andnon-foodnon-housing)plusasmallmarginforunforeseenevents)representsthetotalcostofabasicbutdecentqualityoflifeforatypicalfamilysizeinthearea.Thiscostisthendefrayedoveratypicalnumberoffull-timeequivalentworkersperfamilytogetthenetlivingwage(figure2).Thislivingwageindicatestakehomepayrequiredandsorepresentsanetlivingwageestimate.Agrosslivingwageisthenestimatedbyaddingmandatorydeductionsfrompaysuchasforsocialsecurity,nationalhealthservices,andincometaxes(figure3).

Figure1:Costofabasicbutdecentlifeforafamily

Figure2:Fromcostofabasicbutdecentlifeforafamilytocalculationofanetlivingwage

Figure3:Fromnetlivingwagetogrosslivingwage

10

SECTION1

COSTOFABASICBUTDECENTLIFEFORAWORKERANDTHEIRFAMILY

5. FOODCOSTSFoodcostwasestimatedusinglocalfoodpricesandalowcostnutritiousmodeldietthatisconsistentwithlocalconditionsandrelativefoodprices.ThismeantthatthemodeldietsandfoodpricesdifferedsomewhatbetweentheruralMountKenyaareaandnon-metropolitanurbanLakeNaivashaarea.

5.1GeneralPrinciplesUsedtoDevelopModelDiet

ThefollowinggeneralprincipleswereusedtoestablishthemodeldietsusedtoestimatefoodcostsforourlivingwageestimatesforKenya.Theruralandnon-metropolitanurbanmodeldietsneededtobe:

i. Nutritious-withsufficientcaloriesaswellasacceptablequantitiesofproteins,fats,andcarbohydrates,andfruitsandvegetables-tohelpensurethatworkersandtheirfamilieshaveenoughtoeatandcanbehealthy.NotethatourmodeldietforruralMountKenyaareahasmorecaloriesperperson(2.8%),becauseweassumethatspousesinruralKenyahavevigorousphysicalactivitywhereasweassumethatspousesinnon-metropolitanurbanKenyahavemoderatephysicalactivity.

ii. Relativelylowincostforanutritiousdiet.Bothmodeldietsincludelessexpensivetypesofcereals,beans,meats/fish,fruitsandvegetables,etc.foundinlocalmarketsthatworkersfindacceptableinordertokeepdowntotalfoodcost.Thisapproachmimicshowcostconsciousworkersshopforfoodwhilemaintainingnutritionalstandards.Notethatweestimatethatfoodpricesarearound8%lowerintheruralMountKenyaareacomparedtotheLakeNaivashaareabasedonourlocalfoodmarketssurveysintheseareas.4

iii. Consistentwithincomelevels.OurmodeldietforruralMountKenyaisaslightlylessexpensivedietthanourmodeldietforLakeNaivashainthatitincludesfewergramsofrelativelyexpensivefoodsandgreaterquantitiesoflessexpensivefoods.ThisisconsistentwithEngel’sLawandlowerincomelevelsinruralareascomparedtourbanareasinKenya.

4TogetanideaofthedifferenceinfoodpricesbetweenruralMountKenyaandLakeNaivashaareas,wecalculatedthecostofourruralMountKenyamodeldietusing:(i)pricesfromourlocalfoodmarketsurveyforJune2015forruralMountKenyaareaand(ii)pricesforMarch2014forLakeNaivashaarea.Wefoundthatcostofthismodeldietwasvirtuallythesame(0.1%difference).ThismeansthatfoodpricesarelowerinruralMountKenyaareabyaroundtheinflationinfoodpricesinKenyabetweenMarch2014andJune2015,whichwas8.3%accordingtoKNBSCPIstatistics.

11

iv. Consistentwithlocalfoodpreferences,localfoodavailabilityandlocalfoodcosts.BothofourmodeldietsforKenyaincludeconsiderableamountsofmaizemeal,beans,andcommonlyeatengreenvegetables.

5.2ModelDietUsedtoEstimateFoodCostsforLivingWage

ThemodeldietweusedtoestimatealivingwagefortheruralMountKenyaareaisshownbelowinTable1.Thereare2351caloriesinthismodeldiet.Thisisslightlymorethanthe2288caloriesusedtoestimateourmodeldietforLakeNaivashaarea.5NotethatweassumedforbothruralMountKenyaandnon-metropolitanurbanLakeNaivashathatoneadult(personworkingonflowerfarmorpossiblyacoffeefarmorteaplantation)hasvigorousphysicalactivitylevelwhilechildreninthereferencefamilyhavemoderatephysicalactivitylevel.FortheruralMountKenyaarea,weassumedthatthespousehasvigorousphysicalactivityinkeepingwithtypicalactivitypatternsinruralKenya,hilethespouseinthenon-metropolitanurbanLakeNaivashaareahasmoderatephysicalactivityinkeepingwithtypicalurbanactivitypatterns.ThemodeldietsweusedfortheruralMountKenyaareaandtheurbannon-metropolitanLakeNaivashaareaarequitesimilar-althoughtheruralMountKenyamodeldietislessexpensiveperperson,whichisconsistentwithEngel’sLawandthefactthatruralKenyaispoorerthanurbanKenya.WebegandevelopmentofourmodeldietsforurbanandruralKenyawithinformationonactualfoodconsumptioninruralorurbanareasofKenya.Thisledtosmalldifferencesinourruralandurbanmodeldiets,becausepeopleinurbanareasarereportedtoeatmoreexpensivefoodsthanpeopleinruralareasinsurveys,sincepeopleinurbanareastendtohavehigherincomes.Despitethis,differencesinourmodeldietsforurbanandruralKenyaarerelativelysmallbecausewerequirebothmodeldietstomeetWHOminimumnutritionstandards.TheonlydifferencesinourmodeldietsforruralMountKenyaandLakeNaivashaare:(i)fewerslicesofbreadinruralMountKenyamodeldiet(1sliceeveryotherdayintheruralMountKenyamodeldietcomparedto2slicesperdayforchildrenand1sliceforadultseverydayintheLakeNaivashamodeldiet);(ii)lessmilkforadultsintheruralMountKenyamodeldiet(1/4cupofmilktoaddtoteaforadultsintheruralMountKenyamodeldietcomparedto½cuptoaddtoteaintheLakeNaivashamodeldiet);(iii)slightlylesspotatoes(90gramsintheruralMountKenyamodeldietcomparedto100gramsinLakeNaivashamodeldiet);and(iv)slightlymorecookingoilintheruralMountKenyamodeldiet(30gramsintheruralMountKenyamodeldietcompared25gramsintheLakeNaivashamodeldiet).

5ThenumberofcaloriesrequiredwasdeterminedusingSchofieldequations(WHO/FAO,2003)thatarewidelyusedtoestimatecalorieneeds.Theseequationsarebasedonage,sex,averageheight,andactivityleveloffamilymembers.Informationonaverageheightforadultwomenisfrom2008/09DHSbasedondatafromSubramanianetal(2011).Averageheightforadultmenwasassumedtobe10centimeters(about4inches)higher.Theaveragenumberofcaloriesrequiredperpersonforthereferencefamilyturnedouttobe2351caloriesperpersonforruralMountKenyaareaand2288caloriesperpersonforLakeNaivashaarea.

12

ThemodeldietfortheruralMountKenyaareaisshowninTable1.Thecostofthismodeldietwasincreasedby10percenttoallowforsomevariety,by1percenttoallowforsalt,spices,andcondiments,6andby3percenttotakeintoconsiderationminimalspoilageandwastage.7Varietyisimportanttoensurethatadietisnutritiousandpeoplehavesomeopportunitytovarytheirdiets.Thisisespeciallyimportantforvegetables,fruitsandmeats.ThesesamepercentageswereusedtoestimatethecostoffoodforLakeNaivashaarea.

Table1a:OurmodeldietandfoodcostperpersonperdayusingfoodpricesobservedinmarketswhereworkersshopinruralMountKenyaarea,June2015

Fooditemsc Gramsediblea,b,j

Costperkge

Costf

Commentsw

Maize 379 38.3 14.53 Maizeprovides58%ofallcalories.Riceismoreexpensive.Riceispossiblesometimesusingmiscellaneousfundsforvariety.

Bread 13 112.5 1.46 Equivalentto1sliceeveryotherday(comparedto2slicespdforchildren&1slicepdforadultsinLakeNaivasha)

Potato 90 26.2 3.14 Potatoleastexpensiverootandtuber(alsoinLakeNaivasha)

Beans 56 76.3 4.27 Leastexpensivebeanineachmarketvisited.Averageofwariumu(kidneybean)andnextleastexpensivebeanusedinLakeNaivasha.

Milk 175 50 8.73 Freshunpackagedmilk(sameinLakeNaivasha).1cupforchildren;and1/4cupforadultstoaddtotea(comparedto1cupforchildrenand½cupforadultsinLakeNaivasha).

Egg 7 220.1 1.73 1eggeveryweek.Buyfromfarmer½thetimeaslessexpensive.

6Householdsspendapproximately1%oftheirfoodexpenditureforsalt,spicesandcondimentsaccordingtodatafromboth2005/06KenyanIntegratedHouseholdBudgetSurveyand2010urbanCPIexpenditureweights.7“Asignificantproportionofthefoodproduced[inKenya]islostduetopost-harvestspoilageandwastage,includinginsomecasesfromtoxincausingmicro-organisms.Lossesareoftensubstantialforgrainandproduce(fruitsandvegetables)alongwithspoilageofanimalproductsincludingmilk,meatandfish.Lossesofstoredmaizeareestimatedtobeastaggering30-40%perannum.”(RepublicofKenya,Agricultural Sector Coordination Unit, 2011 Nationalfoodandnutritionalsecuritypolicy)

13

Fooditemsc Gramsediblea,b,j

Costperkge

Costf

Commentsw

Meat/poultry/fish 22 349 9.23 Mutton(withoffalonceper10meals).Lessexpensivethanbeef.Allowsforaround¼kgpurchasedmuttonforfamilyeveryotherday.(BeefandoffalusedforLakeNaivasha).

Vegetable1

61 11.5 0.88 180ediblegramsofvegetables.

Cabbageleastexpensivevegetable(sameinLakeNaiviasha)

Vegetable2 61 19.9 2.31 Kalenextleastexpensivevegetable(sameinLakeNaivasha)

Vegetable3 61 25.7 2.12 Avocadoleastexpensivenon-greenvegetable(carrotusedinLakeNaivasha)

Fruit 61 46.1 3.61 Averageofmango(leastexpensivefruit)&orange(leastexpensivefruitavailableyeararound).(MangoandbananausedinLakeNaivasha).

Cookingoil 30 120 3.60 Vegetableoilsoldbyblock(sameinLakeNaivasha).Muchlessexpensivethanliquidvegetableoilsoldinbottle.

Tea 1.5 400 0.58 Loosetea(sameinLakeNaivasha).2cupsperdayforadults.

Sugar 30 95.8 2.87 Sugarinplasticbagpackedbylocalseller.Muchlessexpensivethanpre-packedbrandedsugar.7teaspoonsperday.

Total

59.06($0.62)

Around15%lowerthanforLakeNaivashaconsideringinflationinfoodpricesbetweenMarch2014andJune2015.

Totalwith14%miscellaneousfoodcostsd

67.92($0.71)

14

Notes:pdindicatesperday.pwindicatesperweek.aEdible(consumed)quantitydiffersfrompurchasedquantityforfoodswithinediblepartssuchasfruitsandvegetableswithinedibleskinorstem;beefwithbone;andeggwithshell.PercentageinedibleisdrawnfromUnitedStatesDepartmentofAgriculture(USDA)website(www.ndb.nal.usda.gov/ndb/foods)exceptformangosincepeopleinKenyaeatskinofmango.bNumberofcalories,proteins,fats,andcarbohydratesareestimatedusingUSDAreportedvaluesper100gramsforeachfooditem.cSpecificfooditemsusedtocostourmodeldietarefoodsthatarelowcostforeachmajorfoodgroup.dAdditionalmiscellaneousfoodcostsareassumedtobe14percent.Thisconsistsof:(i)1%formiscellaneousfoodsnotlistedinourmodeldietsuchassalt,spices,chickenstockcubesandcondiments(withsoftdrinks,cakesandsweetsexcluded);(ii)plus10%toallowforsomevariety(e.g.fishorchickensometimes;ricesometimes;moreexpensivevegetablesandfruitssometimes;holidaymealssometimes;etc.);(iii)plus3%forminimalwasteandspoilage.Theassumed1%forsalt,spicesandcondimentsissimilartoapproximately1%householdsspendfortheseaccordingto2005/06KenyanIntegratedHouseholdBudgetSurveydataand2010urbanCPIweights.Assumed10%forvarietyisaconservativeassumption.Assumed3%forspoilageandwasteisaconservativeassumption.eCostperkiloisbasedonpricesobservedinfoodmarketsandshopsinruralMountKenyaareainJune2015.Foodpricesforeachfooditemincludedinmodeldietwerecollectedfrom5-12sellers.Medianofobservedpriceswasusedexceptforeggwhichwasassumedtobepurchaseddirectlyfromfarmerone-halfthetime.Observedpricesofkalewasreducedby10%totakeintoconsiderationthatitspriceinJune(monthofourlocalfoodmarketsurvey)istypicallyhigherthanaveragefortheyear.fCostforeachfooditemwascalculatedbymultiplyingquantitypurchasedbycostperkg.jInadditiontohavingasufficientnumberofcalories(2351),ourmodeldietmeetsWHOrecommendationsforproteins(10-15%ofallcalories),fats(15-30%ofallcalories)andcarbohydrates(lessthan75%ofallcalories).10.6%ofcaloriesinthemodeldietarefromproteins,24.1%arefromfatsandoils,and65.2%arefromcarbohydrates.wDietisforaveragepersoninfamilyof5.5persons.Portionsforadultsarebiggerthanforchildren.Caloriesrequiredbyadultmales,adultfemalesandchildrenwerecalculatedusingSchofieldequations.Then,averagenumberofcaloriesrequiredperpersonforthereferencefamilywascalculatedwhichturnedouttobe2351.CostofourmodeldietforruralMountKenyainJune2015isKSh67.92($0.71)perday,whichisaround15%lowerthancostofourmodeldietforLakeNaivasha.Thisdifferenceincostistraceableto(i)lowerfoodpricesinruralMountKenyaareawhichweestimatedtobearound8%lower,and(ii)ourmodeldietforruralMountKenyaareahavingfewergramsofsomeexpensivefooditemssuchasbreadandmilkforadults-seeabove-inkeepingwithitbeingapoorerarea.Totalfoodcostsforthereferencefamilyis,however,onlyaround6%lowerforruralMountKenyaareacomparedtoLakeNaivashaarea(takingintoconsiderationinflationsinceMarch2014),becausethereferencefamilyisbiggerintheruralMountKenyaarea.

5.3FoodPrices

Toestimatethecostofourmodeldiets,localresearcherscollectedfoodpricesfromlocalmarketswhereworkerstypicallyshopinbothruralMountKenyaandLakeNaivashaareas.Thisallowedustoestimatethecostofourmodeldietusingpricesthatworkersactuallypayforfood.Localresearchersvisited5marketsintheruralMountKenyaareaandcollectedpricesfrom5-12differentsellersforeachofmanydifferentfooditems.Inthisway,itwaspossibletodeterminewhichfooditemswereleastexpensiveforeachfoodgroup(e.g.mangoandorangeforfruits;muttonformeats;kale,cabbageandavocadoforvegetables);thesefoodswerethenincludedinourmodeldietfortheruralMountKenyaarea.88Foreachmajorfoodgroup(e.g.meats/fish/poultry,vegetables,oils,fruits,pulses,etc.),weidentifiedthelowestcostitem(s)perediblegramforinclusioninourmodeldiettorepresenteachmajorfoodgroup.Forexample,fruitsarerepresentedinourmodeldietsbymangoandorangeforruralMountKenyaandbymangoandbananafor

15

Sincefoodpriceswerecollectedinaparticularmonth(MarchforLakeNaivashaandJuneforruralMountKenya),thereisanimplicitassumptionthatthesepricesarerepresentativeoffoodpricesthroughouttheyear.Eventhoughthewaywechoosefooditemstoincludeinourmodeldiet(lowestcostfooditemsforeachfoodgroup)takesintoconsiderationseasonalityinfoodprices,itisstillpossiblethatthefoodpriceswecollectedinMarchandJuneoverestimatedorunderestimatedtypicalfoodpricesovertheyear.Thisisespeciallypossibleforvegetablesandfruitsthatareoftenseasonal.TodetermineifJunefoodpricesforruralMountKenyaarereasonablyrepresentativeofpricesthroughouttheyear,weanalyzedmonthlyfoodpricedatafor2011-2013reportedbyKenyaNationalBureauofStatistics(KNBS)onitswebsiteaswellasusedresultsfromanarticlethatlookedatseasonalityofwholesalefruitandvegetablepricesinNairobi,MombasaandKisumufor1994-2003(MathengeandTschirley,2006).Basedontheseanalysesofseasonalityinfoodprices,wedecidedtoreducethepricesweobservedinJunefortheruralMountKenyaareaby10%forkale.9,106. COSTOFHOUSINGFORWORKERSINRURALMOUNTKENYAAREAHousingcostsforourlivingwagewereestimatedbysummingthecostof:(i)rentforanacceptabledwellingorusevalueofanacceptableownedhouse,and(ii)utilitycosts(water,lighting,andcookingfuel).11WeestimatedthistobeKSh3,260($34)permonth.

6.1StandardforBasicAcceptableHousing

Inordertoestimatecostforbasicacceptablehousing,itisnecessarytosetminimumstandardsforhousing.WeusedthesamehousingstandardfortheruralMountKenyaareaasfortheLakeNaivashaareawithoneexception.ElectricitywasnotrequiredfortheruralMountKenyaarea,becauseaminorityofruralhousesinKenyahaveaccesstoelectricity.Readersarereferredtoour2014livingwagereportforLakeNaivashaareaforjustificationofourhousingstandard,whichisindicatedbelow:

• durablefloorsuchascement

• durablewallssuchasstoneorcementLakeNaivasha;vegetablesarerepresentedbycabbage,kaleandavocadoforruralMountKenyaandbykale,cabbageandcarrotforLakeNaivasha;milkbyunpackagedunpasteurizedmilkinbothareas;meats/fish/poultrybymuttonandoffalforruralMountKenyaandbybeefandoffalforLakeNaivasha;rootsandtubersbypotatoinbothareas;oilsbyoilsoldinsolidblockinlocalmarketsinbothareas;sugarbybrownsugarpackedbylocalshopinplasticbaginbothareas;andcerealsbymaizeinbothareas.9WedidnotreducetheJunepriceweobservedforcabbagedespitetheclearseasonalityfoundbyMathengeandTschirley(2006),becausewefoundaverylowpriceforcabbageinourlocalmarketsurveyforruralMountKenyaarea(onlyKSh11.5perkilo,andsoabout$0.05perpound).10PotatopricesinKenyaareknowntobeseasonalwithlowerpricesaroundharvestperiodsespeciallyJuly-AugustandtoalesserextentJanuary-February.TheissuehereiswhetherMarchorJunepricesareaveragefortheyear.SincetheyappeartobeaverageforJuneandhighforMarch,weadjustedtheMarchpricebutnottheJunepriceforpotatoes.11Weassumethatthereisnoneedforfuelforheating.

16

• durableroofofzincironorcementwithoutleaks

• sufficientnumberofwindowsforadequatelightingandventilation(preferably2

windowsperroom)

• pitlatrineingoodconditionwithslabandsufficientlydeepforproperdrainageandusedbyatmost15persons

• electricity(LakeNaivashaareaonly)

• safewatersource

• kitchenareaseparatefromsleepingquarters

• around30-40squaremetersoffloorspace12

• buildinginreasonablecondition

• safeoutsideenvironment

TheabovehousingstandardexceedscurrenthousingconditionsfoundinruralKenya.Thisisnecessarytoensurehealthyanddecenthousingasstipulatedininternationalconventionsandbyinternationalorganizations.Forexample,accordingtodatafromthe2005/06KenyanIntegratedHouseholdBudgetSurvey,the2007HealthExpenditureandUtilizationSurveyandthe2008/09DemographicandHealthSurvey,only26%ofruralhousesinKenyahaveacementfloor,only23%haveconcrete/stone/cementwalls,only10%haveaflushtoilet/ventilatedimprovedpittoilet,andonly38%havepipedwater,borehole,orprotectedwell(althougharound76%ofruralhouseshaveazincironroof).Only8%ofruralhomeshadelectricityaccordingto2008/09DHS,butthispercentageisknowntohaveincreasedsignificantlyinrecentyears.Ourhousingstandardisbasic.Acceptablehousesinourstandardarenotrequiredtohaveanindoortoilet,indoorrunningwater,indoorkitchen,orelectricity.

6.2RentforBasicAcceptableHousing

Tohelpdeterminerentofanacceptablehouse,4typicalrentedhomesofflowerfarmworkersintheruralMountKenyaareawerevisited.All4houseswerewellbelowourhousingstandard.Threeoftheserentalsconsistedofonesmallroomofaround100squarefeet(10feetby10

12KenyaMinistryofHousing(2004)considerslowcosturbanhousingas“comprisingaminimumoftwohabitablerooms,cookingareaandsanitaryfacilities,coveringaminimumgrossfloorareaof40squaremetersforeachhousehold”.

17

feet)oraround9squaremeters,andthefourthrentalincludedtwosmallroomstotalingaround180squarefeetoflivingspace.Allfourrentalshadacementfloorandzincironroofwithwoodwalls.Theroomswerewithoutanyfacilitiessuchasindoorwaterortoilet.Theirwoodwallsconsistedofverypoorlyjoinedslatsthatletinsomuchairthattenantslinedtheinsideoftheirwallswithcardboard.Theiroutdoorpittoiletswereallinverypoorcondition.ThesefourunacceptablerentalsrentedforKSh600-1,300permonthexcludingutilitiesandcostKSh66.7persquaremeteronaverage.ThisimpliedaroundKSh2,000-2,400permonth(KSh2,200onaverage)foranunacceptablehousewiththerequired30-36squaremetersoflivingspace.13

6.3UserCostofOwnedHouseinRuralMountKenyaArea

Threeapproaches(usercost,paymentoutlays,andacquisitioncost)areusedbynationalstatisticalofficestoestimatethevalueofowner-occupiedhousing(ILO,2004,ConsumerPriceIndexManual).TheInternationalComparabilityProgram(ICP)oftheWorldBankfollowstheusercostapproachtoestimatepurchasingpowerparityvalues(PPP)forallcountriesintheworld(OECDandStatisticsNorway,2010;andDiewert,2010).Belowwealsousetheusercostapproachtoestimatetheusevalue/rentalequivalentvalueofacceptableowner-occupiedhousesinruralMountKenyaarea.Thisestimaterequiresinformationon:costofbuildinganacceptablehouse,maintenanceandrepaircosts,andexpectedservicelifeofahouse.14MostfamiliesowntheirhomeinruralKenyaanddonotrent(81%owntheirhouseaccordingtothe2008/09DHS).Asaresult,thereisnotmuchofarentalhousingmarketinruralKenyaandtherentalhousingthatisavailableisoftensubstandardaswefound.ThismeansthatabetterwayofestimatingthecostofhousingwouldbetolookatthecostofowningahomeinruralKenya.WeobtainedinformationonthecostofbuildinganewhouseintheruralMountKenyaareafromseveralsources-(i)aflowerfarmworkerintheareawhorecentlybuiltapoorlyconstructedhouseinaruralarea,(ii)aNGOofficialwhobuiltawell-constructedadditiontohishouseinruralCentralProvince,(iii)acoffeefarminCentralProvincethatrecentlybuiltarural

13WealsospokewithmanagersofacoffeefarmintheKiambuareaofCentralProvinceaboutthecostofrentinginaruralarea.Theyindicatedthata2-roomhousecouldberentedforKSh2,500-3,000permonth.Theyalsoindicatedthatabare12feetby12feetroomrentedforKSh1,000-1,500permonth(orKSh93.4persquaremeteronaverage),whichimpliedKSh2,800-3,800permonthforahousewith30-36squaremeters.TheseestimatesarehigherthanthosefortheruralMountKenyaareaasexpectedbecauseKiambuismuchclosertoNairobi.14Notethatweignoreinourcalculationtheopportunitycostofmoneyinvestedinahouseeventhoughthisisoftenincludedintheusercostapproach.Thiscostistypicallyestimatedbymultiplyingthenetinvestedvalueofahousebyareasonablerealinterestrate(usuallyaround2.5%)andthensubtractingtheexpectedrateofcapitalappreciation.Weignorethis,becausehowtoestimatetheopportunitycostoftheinvestmentinahouseishighlycontroversialandsubjective.Theappropriaterealinterestrateandtheexpectedcapitalappreciationratetousearehighlysubjectiveand,inanycase,theyhavecounterbalancingeffects.Readersarereferredtotheauthors’manualonlivingwagesforjustificationofourapproach(AnkerandAnker,2017).

18

house,(iv)HabitatforHumanitythatbuildsbasicbutdecenthouses,and(v)theInstituteofQuantitySurveyorsofKenya.Asmallbasicruralhousewithstonewalls,zincironroof,andcementfloorandfoundationcostsKSh450,000-500,000tobuildusinglocalmaterialsaccordingtoHabitatforHumanity.Thisincludesthecostoflocalmaterialsandskilledlaborbutnotthecostofunskilledlaborthathastobeprovidedforfreebytheeventualowner.Ifweassumethatthefreeunskilledlaboriswortharound10%ofconstructioncosts,thecostofaHabitatforHumanityhousewouldcometoaroundKSh495,000-550,000(aroundKSh520,000midpoint).ThisismuchmorethantheapproximatelyKSh200,000costreportedbyaflowerfarmworkerwhorecentlybuiltasmallruralhouse.Butthisflowerfarmworker’shousedidnotcomeclosetomeetingourhousingstandardsinceithadpoorlyjoinedwoodwallsanddidnothaveacementfoundationorfloor(whichalonewouldcostaroundanadditionalKSh150,000accordingtoalocalarchitect).AnofficialofanNGOworkinginNairobireportedthatherecentlyspentKSh140,000forawell-constructed100squarefoot(9.3squaremeters)additioninaruralarea–whichimpliesaroundKSh450,000-540,000(aroundK500,000midpoint)forabuildingwithoutamenitiesfor30-36squaremetersoflivingspaceonaproratedpersquaremeterbasis.AcoffeefarmwevisitedinCentralProvinceindicatedthatasmallbasichousecoststhemKSh340,000tobuild.ButthiscostdidnotincludethecostofsandorlaborandsoitscostcouldbesomewherearoundKSh500,000allin.ItisworthnotingthattheaboveestimatesofthecostofbuildingasmallhouseinruralMountKenyaareaismuchlowerthanthecostofbuildingaccordingtotheInstituteofQuantitySurveyorsofKenya(http://architecturekenya.com/much-will-building-cost-construct-kenya/).For30squaremeters,constructioncostinNairobiissaidtobeKSh1,230,000forahighclasssingleunit(maisonette)andKSh960,000foralowcostlowriseflat.Theaboveestimatesofconstructioncostforabasicbutdecent30-36squaremeterhouseindicatethatthisissomewherearoundtheKSh520,000costofaHabitatforHumanityhouse.ThiscostissimilartothearoundKSh500,000costreportedbyacoffeefarmwevisitedinCentralProvinceaswellasbyaNGOofficialwespoketo.Also,KSh520,000isroughlyconsistentwiththeKSh200,000costofaflowerfarmworker’spoorlyconstructedhousewithbadlyjoinedwoodwallsandpoorlylaidoutearthenfloor.

6.3.1ServicelifeofanacceptablehouseTheHabitatforHumanityofficeinNairobifeltthattheirhouseshaveaservicelifeof70years.Incontrast,thecoffeefarmmanagersandNGOofficialwespoketofeltthat50yearswasareasonableestimateofservicelifeforwell-constructedruralhouses.Ourfeelingisthataservicelifeof50yearsisareasonableassumptiongiventhat:(i)HabitatforHumanityinNairobialsoassumedveryhighannualmaintenancecosts(seenextsection),(ii)HabitatforHumanityinMalawifeltthattheirhouseshaveaservicelifeof30years,(iii)thetypicalservicelifeassumptionforhousesinEuropeandtheUnitedStatesis70years(OECDandStatisticsNorway,2010),and(iv)werecommendusing50yearsinour(AnkerandAnker,2017)livingwagemanualfordevelopingcountrysituationsintheabsenceofreliabledataonthis.

19

6.3.2MaintenanceandrepaircostsThetypicalassumptionformaintenanceandrepaircostsisbetween2%and4%ofhousevaluewith2%themostcommonassumptionforhigh-incomecountries(Diewert,2010).ThisimpliesanannualcostformaintenanceandrepairsofabasicacceptablehouseofbetweenKSh10,400(using2%)andKSh20,800(using4%).ThisismuchlessthantheKSh30,000thatHabitatforHumanityinNairobifeltwasnecessaryforannualmaintenanceandrepairswhichwefeelistoohigh.

6.3.3EstimatingusercostofownedhouseusingaboveinformationWeestimatetheusercostofabasichouseinruralKenyatobearoundKSh26,000peryearusingwhatwefeelarereasonableassumptionsof–KSh520,000costofconstructionforaHabitatforHumanityHouse(whichissimilartoconstructioncostfromothersources),50yearsofservicelife(typicalassumptionfordevelopingcountries),and3%annualcostofroutinemaintenanceandrepairs(typicalassumption).ThiscostconsistsofKSh10,400peryearfordepreciation(i.e.520,000buildingcost/50serviceyears)andKSh15,600peryearforroutinemaintenanceandrepairs(i.e.520,000buildingcost×.03).ThisimpliesaroundKSh2,200permonth(i.e.26,000/12).

6.3.4SummaryofcostofrentalorrentalequivalentusercostofownedhouseAbovewemadetwoestimatesofhousingcosts.RentalcostforsufficientspaceforanunacceptablequalityhouseintheruralMountKenyaareawouldbeataminimumbetweenaroundKSh2,000-2,400permonth.WealsoestimatedthatthecostforasmallbutdecentacceptableownedhousewouldbearoundKSh2,200basedontheusercostapproachusingwhatwefeelarereasonableassumptionsaboutservicelifeandmaintenanceandrepairsofthishouse.Takingthesetwoestimatestogether,wedecidedtouseKSh2,200forthecostofahouse.ThisisourestimateoftheusercostofasmalldecentownedhouseforruralKenya.Itiswithintherangeofobservedrentsforhouseswithsufficientlivingspacebutpooramenities.Notethatthiscostislessthanone-halfoftheKSh5,000permonthrentwefoundin2014forthenon-metropolitanurbanLakeNaivashaareaandtheKSh4,500forrentfoundbytheKenyaHumanRightsCommissioninitslivingwagestudyofthenon-metropolitanurbanareanearNanyukiintheMountKenyaarea(Kambo,2015).

6.4UtilitiesCosts

Utilitycostsalsoneedtobeestimated.Thisincludescostofcookingfuel,water,andlighting.WeestimatedutilitycostsfortheruralMountKenyaareaintwoways.WeestimatedutilitycostsusinginformationwecollectedfromworkersintheruralMountKenyaareaonhowmuchtheyreportedtousthattheyspendforutilities.Forthis,weincludedavalueforthetimefamiliesspendtocollectfreefirewoodandwater.Howthiswasdoneisexplainedinfollowingsections.ThisindicatedatotalofKSh1,060($11)permonthforutilitiesfortheruralMountKenyaarea.Tochecktoseewhetherourestimatewasreasonable,weestimatedutilitycostsinasecondway.Weused2005/06KenyaHouseholdIncomeandBudgetSurveydataandmultipliedtheratioforruralareasofthe%ofhouseholdexpendituresforutilitiestothe%ofhouseholdexpendituresforfoodaccordingtothissurveybythecostofourmodeldiet.This

20

indicatedutilitycostsofKSh861($9)permonth.ThisamountislowerthanourKSh1,060estimatebasedonourprimarydataanalysis,becauseweattributedvaluetothetimethatfamiliesspendcollectingfirewoodandwaterinourestimate.NotethatKSh1,060ismuchlowerthantheKSh2,700forutilitieswefoundforthenon-metropolitanurbanLakeNaivashaarea.ThemainreasonforthislargedifferenceisthatworkersintheLakeNaivashaareabuytheirwaterandcharcoalathighpriceswhereasworkerscollecttheirownwaterandfirewoodintheruralMountKenyaarea.

6.4.1CookingfuelFirewoodisbyfarthemostcommoncookingfuelinruralKenya(87%ofruralhouseholdsusefirewoodforcookingaccordingtothe2008/09DHS).15Whilesomepeopleinruralareasbuyfirewood,mostcollecttheirfirewood.Accordingtoworkerswespoketo,collectingandpreparingfirewoodtookaround½to1hourperday.IfweassumethatthistimeisworthKSh25perhour(whichisroughly10%lessthantheagriculturalminimumwageperhourin2015assuminganormalworkweekof44hoursinrecognitionthatreturnforunpaidfamilylaborisgenerallylessthanamarketdeterminedwagesuchastheofficialminimumwage),thiswouldimplya“cost”forfirewoodofapproximatelyKSh380permonthifweusethelowerendofthe½to1hourperdayrangeforcollectingandpreparingfirewood.ThisismuchlessthantheKSh1,200permonthforcookingfuelusedforourLakeNaivashalivingwageandthearoundKSh1,200spentbytwoworkersintheruralMountKenyaareawespoketowhoboughttheirfirewoodandcharcoal.

6.4.2LightingandelectricityElectricityisnotconsiderednecessaryfordecencyinruralKenya,becauseaminorityofruralhouseholdshaveelectricity(8%accordingtothe2008/09DHS,althoughthispercentageisknowntohaveincreasedmarkedlysincethen).Mostruralhouseholdsusekeroseneforlighting(85%accordingtothe2007HealthExpenditureandUtilizationSurvey).DiscussionswithworkersindicatedthatkerosenegenerallycostsaroundKSh300permonth(i.e.5literspermonthtimesKSh60perliter).ThisishalfoftheKSh600weusedforelectricityforLakeNaivashaandwhichworkersrentinginruralMountKenyaareaindicatedtousthattheyspentforelectricity.ThisisalsolowerthantheKSh900thattheKenyaRevenueAuthorityassignedin2014tothemonetaryvalueofelectricityforcalculatingincometax(KenyaRevenueAuthority,2009).

6.4.3WaterMostruralhouseholdsgettheirwaterfromspringsandsurfacewater(50%),followedbywellsorboreholes(28%),andpipedwater(21%)accordingtothe2008/09DHS.WefoundasimilarpatternfortheruralMountKenyaflowerfarmworkerswhosehomeswerevisited.Thosewhocollectedwaterreportedgenerallyspendingaround30minuteseachdaycollectingwater.Ifweassumethathalfofruralhouseholdsspend30minutesadaytocollectwaterandtheotherhalfhavewateravailablenearhomefromawellortap,andthatonehouroftimeisworthKSh25(i.e.approximately90%oftheofficialagriculturalminimumwagerate),thisimpliesacostof

15ItisworthnotingthattheworkerswhowespoketowhorentedintheruralMountKenyaareagenerallyusedLPGforcookingbecausetheyhadnoplacetostorefirewood.

21

approximatelyKSh380permonthforwater.KenyataxauthorityusesKSh200tovalueprovisionofwaterforagriculturalemployees(KenyaRevenueAuthority,2009).KSh380permonthforwaterismuchlowerthantheKSh900weusedforLakeNaivashaarealivingwagewherepeoplebuywaterfromvendorswhodeliverwater.

6.5Summaryofhousingcosts

OurestimateofhousingcostspermonthforruralMountKenyaisKSh3,260(KSh2,200forhouseandKSh1,060forutilities).ThisismuchlessthantheKSh7,700fortheLakeNaivashaarea(KSh5,000forrentandKSh2,700forutilities).Alargedifferencewasexpected,becauseurbanareashavebothhigherrentsandhigherutilitycostscomparedtoruralareas.

7. NON-FOODANDNON-HOUSING(NFNH)COSTSNon-foodnon-housingcosts(NFNH)fortheruralMountKenyaareawereestimatedinfoursteps.ThesameapproachwasusedforLakeNaivashaarea.Instep1,NFNHcostswereestimatedbasedonhouseholdexpenditurepatternsinKenyaaccordingtothe2005/06KIHBS(KenyanIntegratedHouseholdBudgetSurvey).RuraldatawereusedforruralMountKenyaareaandnon-metropolitanurbandatawereusedforLakeNaivashaarea.Thisapproach,whichreliesonavariantofEngel’slaw,16issimpleandprovidesapreliminaryestimateofthecostofNFNHneeds.Step2removesunnecessaryexpendituresforadecentlivingstandard(tobaccoandprivatemotorvehicle)forbothareas.Step3adjuststhe2005/06HIEShouseholdexpendituredataforbothareastotakeintoconsiderationthatthesedataindicateaveragehouseholdexpenditureandnotexpenditureforhouseholdsatthe40thpercentileofthehouseholdexpendituredistributionthatweareinterestedin.Step4looksmorecarefullyathealthcareandeducationcostsbasedondiscussionswithworkersandkeyinformantsinbothareastodetermineiffundsincludedforthesefromsteps1-3aresufficientfordecency-andthenaddsadditionalfundswhenrequiredtoensurethatadequatefundsfortheseareavailableinNFNH.Fordetailsoftheapproachused,readersarereferredtoour2014livingwagereportforLakeNaivasha.WeestimatedthatallNFNHcostsfordecencyforruralMountKenyaareawasKSh4,818($50)permonthforthereferencefamilyof5.5persons.Thiscoversalcohol;clothingandfootwear;householdfurniture,contentsandappliances;healthcare;education;transportation;communications;recreationandculture;eatingawayfromhome;andmiscellaneousgoodsandservicessuchasinsurance,bankservices,andpersonalcare.SeveralaspectsofourNFNHestimateareworthnoting.First,theNFNHtoFoodratiousedtomakethepreliminaryestimateofNFNHcostsinsteps1-3was0.336fortheruralMountKenyaarea.Thisismuchlowerthanthe0.728ratiousedfortheLakeNaivashaarea.AlowerratioforruralMountKenyaisconsistentwiththefactthatruralareasalmostalwayshavefewerNFNHexpensesthanurbanareas.Forexample,householdsinruralareashavefewerexpensesfor

16Engel’slawisfrom1857andstatesthatthepercentageoftotalexpenditurethathouseholdsspendforfooddecreasesashouseholdincomeincreases(seeAnker2011).

22

transportationcomparedtourbanareas(e.g.2.9%ofallexpendituresforruralareascomparedto6.3%fornon-metropolitanurbanareas,and8.7%formetropolitanurbanareas).Therefore,thepreliminaryestimateofNFNHcostsforruralMountKenya(KSh3,818)ismuchlowerthanfornon-metropolitanurbanLakeNaivasha(KSh8,066).Second,postchecksinstep4increasedthepreliminaryNFNHestimateforruralMountKenyabymorethanpostchecksdidforLakeNaivasha(byKSh1,000permonthcomparedtoKSh300permonth)mainlybecausewhilefamiliesinruralandurbanareashavingsimilarcostsforhealthcareandeducation,thepreliminaryNFNHestimateforruralMountKenyaismuchlowerthanthatforLakeNaivashabecausetheNFNH/Foodratioismuchlowerforruralareasthanfornon-metropolitanurbanareas.

7.1Whetherfundsincludedinpreliminaryestimateofnon-foodnon-housingcostsforhealthcareandeducationaresufficient

7.1.1HealthcareKenyafacesanumberofhealthcarechallengeswithupperrespiratoryinfectionsanddysenteryrelativelyimportantinKenyahighlands.17AlthoughhealthcareinKenyaisfreeatgovernmentfacilities,medicinesareoftenunavailable(RepublicofKenya,MinistryofMedicalServicesandMinistryofHealthandSanitation,2009).ThefactisthatpeopleinKenyarelyonavarietyofhealthcareproviders.AccordingtoWorldBank’sWorldDevelopmentIndicators(2014),46.4%ofallhealthexpendituresbyhouseholdsinKenyaareoutofpocketexpenditures.Giventhissituation,itisclearthatfundsareneededtoenableworkerstoaccessprivatehealthservicesatleastsometimes.18ThepreliminaryestimateoffundsforhealthcareforthereferencefamilyinruralMountKenyaincludedinNFNHfromsteps1-3wasKSh111($1.2)permonthperfamily.Thisverylowpreliminaryestimateforhealthcarewasexpected,becauseitisbasedon2005/2006HIESdata,whichonlyconsiderexpenditureformedicinesashealthcareexpenditure.19TogetanideaofhowmuchourpreliminaryestimateofKSh111permonthforhealthcareforruralMountKenyaneedstobeincreased,weuseddataonfrequencyofillnessesfromthe2007HealthExpenditureandUtilizationSurvey20andinformationoncostsofconsultancies,medicine

17UpperrespiratoryinfectionsanddysenteryarethetwomostimportantreasonsforvisitingahealthcareaccordingtoclinicsvisitedintheruralMountKenyaarea.18Notethatifafarmhasahealthclinicthatprovidesfreecaretoworkers(andpossiblytheirfamilies),thiswouldbeconsideredanin-kindbenefitthatthefarmwouldreceive“credit”foraspartialpaymentofourlivingwage.Seedetaileddiscussiononin-kindbenefitsinour2014reportforLakeNaivasha.19Inastrangebitoflogic,KNBS(2007)BasicReportonWell-beinginKenyaexcludeshealthexpenditureotherthanformedicationbecauseitfeelsthat“suchexpenditurereflectsaregrettablenecessitythatdoesnotincreasewelfare.Byincludinghealthexpendituresforsomeonewhohasfallensick,weregisteranincreaseinwelfarewhen,infact,theoppositehasoccurred.Thefundamentalproblemisthatitisnotpossibletomeasurethelossofwelfareassociatedwithbeingsick,andwhichis(presumably)amelioratedtosomeextentbyhealthexpenditures.Includingthelatterwithoutallowingfortheformerwouldbeincorrect(DeatonandZaidi,2002).”20Accordingtothe2007HealthExpenditureandUtilizationSurvey,thereareapproximately3.2visitstohealthcareprovidersperpersonperyearonaverageinurbanareasand2.5visitsperpersonperyearinruralareasonaverage.Wedecidedtousetheurbandataonthisontheassumptionthatthisnumberofvisitsisneededandthat

23

andlabtestscollectedfromprivateclinicsandpharmaciesintheruralMountKenyaarea.AccordingtochemistsvisitedintheruralMountKenyaarea,consultationstypicallycostaroundKSh100.TypicalmedicinescostaroundKSh350fordysentery,KSh200forupperrespiratoryillness,andKSh1,500forasthma.TypicallabtestscostaroundKSh200.ThesedataimplyacostofaroundKSh800($8)perpersonperyearforvisitstoprivatehealthcarefacilitiesifweassumethatpeoplegotoaprivateclinichalfofthetimeandtoapublicfacilityhalfofthetimeastheyactuallydoaccordingto2007HealthExpenditureandUtilizationSurveydata(i.e.3.2visitsperpersonperyearintotal×1/2ofvisitstoprivateprovider×(KSh100forconsultancy+KSh300formedicines+KSh200forlabtestseveryothervisit)).ThisestimateofKSh800perpersonperyearimpliesKSh367permonthforafamilyof5.5personsonaproratedmonthlybasis(i.e.KSh800perpersonperyear×5.5persons/12months).However,sincemedicineissometimesoutofstockingovernmenthealthfacilitiesandsopatientssometimesneedtopurchasemedicinesfromapharmacyaftertheyvisitagovernmentfacility,weroundedthisKSh367uptoKSh400($4)permonthneededforhealthcare.Insummary,ourpreliminaryestimateofKSh111forhealthcareincludedinourpreliminaryestimateofNFNHcostsismuchtoolowbecausetheonlyexpenditureKNBSconsidersashealthcareexpenditureinitshouseholdexpenditurestatisticsisformedicines.WethereforeincreasedNFNHbyKSh300(i.e.approximatelyKSh400-KSh111)becausebasedonarapidassessmentpostcheckofhealthcarecostsforruralKenya,weestimatedthathealthcarecostsforareferencefamilywasaroundKSh400permonth.NotethatthisadjustmenttoourpreliminaryNFNHestimateforruralMountKenyaisthesameastheKSh300postcheckadjustmentforhealthcareweusedforLakeNaivashaarea.

7.1.2EducationDesireforeducationforchildrenisverystronginKenya.Parentsverymuchwanttheirchildrentogotoschooltohelppreparethemforabetterlife.Thisdesirewasclearlyreflectedindiscussionswehadwithworkersandothersaswellasbythefactthat17.2%ofgovernmentbudgetand6.7%ofGDPisspentoneducation(WorldBank’sWorldDevelopmentIndicators).21Weassumethatfordecencyparentsneedtobeabletoaffordtosendtheirchildrentoschoolthroughsecondaryschool.Wealsoassumethatitisacceptableforchildrentoattendpublicschoolandnothavetoattendaprivateschool,becauseonly10.6%ofprimaryschoolstudentsattendaprivateschoolandonly12.7%ofsecondaryschoolchildrenattendaprivateschoolinKenyaaccordingtoWorldBankWorldDevelopmentIndicators.Kenya’seducationalsystemhas8yearsofprimaryschool(beginningatage6)and4yearsofsecondaryschool.Therearevariousexpensesforparentssuchasschoolfees,remedialclasses,

somepeopleinruralareasaretoopooratpresenttoalwaysvisitahealthcareproviderwhentheyaresick.Thisimpliesapproximately18visitsperyearforafamilyof5.5persons.21SchoolenrolmentratesarehighinKenya.Almostallchildrenattendprimaryschool.Primaryschoolnetenrolmentratewas82%in2009andprimaryschoolcompletionratewas91%in2006(WorldBankWorldDevelopmentIndicators).Secondaryschoolnetenrolmentrateisalsohighat50%in2009(WorldBankWorldDevelopmentIndicators).

24

books,schooluniforms,stationary,lunch,andendortermexams.Moststudentswalktoschoolinruralareas,sotransportexpensesforschoolarenotimportantinruralKenya.Wediscussedschoolcostswithworkers.Schoolcostsareofgreatconcerntoworkersandtherearemanydifferenttypesofcostsalthoughthesecostsvarybyschool.Workersmentionedhavingtopaysometimesoralwaysfor:schooluniforms,sweaters,socksandshoes;exercisebooksandtextbooks;examfees;activityfees;mealsandsnacks;teachermotivationfee;remedialclasses;districteducationfee.ChildrenintheruralMountKenyaareawalkedtoschoolandsotherewerenotransportcosts.InformationwasobtainedfromsevenworkersintheruralMountKenyaareaaboutprimaryschoolcostsandfrom3workersaboutsecondaryschoolcosts.Thisisnotmanyparents,andforthisreasonweusesomejudgmentaboutreportedschoolcostsforruralMountKenyaareaaswellasuseschoolcostsreportedbyworkersfortheLakeNaivashaarea.RuralMountKenyaparentsreportedspendingaroundKSh4,000peryearonaverageforprimaryschool(witharangefromaroundKSh2,000-13,000).ThisislowerthanthetypicalcostofprimaryschoolofaroundKSh5,000peryearwefoundwhenspeakingtoworkersintheLakeNaivashaarea(withasmallerrangeofaroundKSh3,000-7,500).ThreeparentsintheruralMountKenyaareaindicatedthattheyspentaroundKSh16,000peryearonaverage(median)forsecondaryschool(aroundKSh14,000,KSh23,000andKSh16,000)whichissimilartothearoundKSh15,000peryear(withrangeofKSh10,000toKSh24,000)indicatedbyparentsinLakeNaivashaarea.GiventhatsecondaryschoolcostestimateswereobtainedfromonlyafewworkersintheruralMountKenyaarea,wedecidedtousethesimilarKSh15,000peryearforsecondaryschoolfoundforLakeNaivasha.Forprimaryschool,wedecidedtouseKSh4,000peryearwhichisthemedianreportedbysevenruralMountKenyaworkers(whichwaslessthanthearoundKSh5,000peryearindicatedbyLakeNaivashaworkers).ThesecostsimpliedschoolcostsofaroundKSh1,491permonthforaruralMountKenyareferencefamilywith3.5childrengiventhatthereare8yearsofprimaryschooland4yearsofsecondaryschool(i.e.3.5children×(KSh4,000peryearforprimary×8years+KSh15,000peryearforsecondary×4years)/18yearsofchildhood).OurpreliminaryofNFNHcostsforruralMountKenyaincludedKSh764($8)permonthforeducation.ThisislessthanourestimateofschoolcostsbasedontheaboverapidassessmentpostcheckofKSh1,491permonth.Forthisreason,weincreasedourpreliminaryNFNHestimatebyKSh700(i.e.approximately1,491-764).8. MARGINABOVECOSTOFABASICQUALITYLIFETOHELPENABLE

SUSTAINABILITYSincelargeunforeseenexpensescanquicklythrowworkerslivingatabasiclifestyleintopovertyanddebtfromwhichtheymaynotbeabletorecover,suchasillnesses,HIV/AIDS,accidents,funerals,etc.,itiscommonwhenestimatingalivingwagetoaddasmallmarginabovethecostofabasicqualitylifetoallowforunexpectedevents.Weuseda5%marginforruralMountKenyajustaswedidforLakeNaivashaandlivingwageestimatesforothercountries.Thisisaconservativeestimateoftheneedforfundsforthis.Thus,KSh972($10)is

25

providedforemergenciesanddiscretionaryspendingforruralMountKenyaareainthelivingwage.Notethatinterestanddebtpaymentsareignored.Itisassumedthatalivingwagewouldenableworkerstobeabletostayoutofcripplingdebtrepayments.

26

SECTIONII–LIVINGWAGEFORWORKERS

LIVINGWAGEFORWORKERS

9. FAMILYSIZENEEDINGTOBESUPPORTEDBYLIVINGWAGELivingwageisafamilyconcept.ThisisclearlyshownbyourcomprehensivereviewoflivingwagesforILO(Anker,2011).TheneedforalivingwagetosupportafamilyisalsoincludedinthelivingwagedefinitionagreedtobytheGlobalLivingWageCoalition(FairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,andpartnerISEALAlliance).Weusedafamilysizeof5.5persons(twoadultsand3.5children)toestimateourlivingwagefortheruralMountKenyaarea.Thisishigherthanthefamilysizeof5personsusedtoestimateourlivingwagefortheLakeNaivashaareathatisanon-metropolitanurbanareawherefamilysizeandfertilityratesarelowerthaninruralareas.AveragehouseholdsizeinruralKenyaforhouseholdswith2+persons(i.e.excludingsinglepersonhouseholdsthatarenotrelevantforafamily-basedlivingwage)is5.9personsaccordingtothe2005/06KenyanIntegratedHouseholdBudgetSurvey(KIHBS).Thetotalfertilityrate22inruralKenyais5.2accordingtothe2008/09DHS.Sincetheinfantandchildmortalityrateis7.3%inruralKenyaaccordingtoWorldBankWorldDevelopmentIndicators,thisimplies4.8childrensurvivetoage5onaverageinruralKenya,whichwouldimplyafamilysizeof6.8whentwoparentsareincluded(althoughitisworthnotingthisnumberofbirthsoccuroveralongperiodoftimesothatfamilysizeatanygivenpointintimeissignificantlylowerthan6.8).BothofthesefamilysizeindicatorsindicateanappropriatefamilysizeforruralKenyagreaterthan5.Tobeconservative,wedecidedtouseafamilysizeof5.5personsforruralKenya.

10. NUMBEROFFULL-TIMEWORKERSINFAMILYPROVIDINGSUPPORTAslivingwageisafamilyconcept,itisappropriatetoexpectmorethanoneadult/parentinafamilytoprovidesupportthroughwork.Weestimatedthelikelihoodthatanadultage25-59worksfull-timethroughouttheyearis71%inruralKenyaand74%inurbanKenya(asexplainedbelow).Thismeansthatsinceweareconcernedwithasituationwhereonepersoninthefamilyworksfull-timeonaflowerfarmorforanotheremployer,thenumberoffull-timeequivalentworkerspercoupleis1.71forruralareasand1.74forurbanareas.WeusedthesevaluestoestimateourlivingwagesforruralMountKenyaandnon-metropolitanurbanLakeNaivasha.Bothareashavesimilarvaluesbecausefemaleaswellasmalelaborforceparticipationratesareveryhighinbothareas,andthehigherunemploymentratesinurbanareasarecounterbalancedbyhigherpart-timeemploymentratesovertheyearinruralareas.Howthe

22Totalfertilityrateis“abasicindicatoroftheleveloffertility,calculatedbysummingage-specificbirthratesoverallreproductiveages.Itmaybeinterpretedastheexpectednumberofchildrenawomanwhosurvivestotheendofthereproductiveagespanwillhaveduringherlifetimeifsheexperiencesthegivenage-specificrates.”(UNdataGlossary,2014).

27

1.71and1.74valueswereestimatedforruralandurbanareasisindicatedintheremainderofthissection.Tohelpdetermineestimatereasonablevaluesforthenumberoffull-timeequivalentworkerspercouplefortheruralMountKenyaareaandtheLakeNaivashaarea,wegatheredavailabledataforruralandurbanKenyaon:(i)ageandsexspecificlaborforceparticipationratesforages25-59,(ii)unemploymentratesforages25-59,and(iii)averagenumberofhoursworkedandextentofpart-timeemploymentforthosewhowork.Wefoundlaborforceparticipationratesfromthreesources.23AllindicatedveryhighratesinbothruralandurbanKenya.Weestimatedthatthelaborforceparticipationrateforages25-5924wasapproximately92%forurbanareasand90%forruralareas.Readersarereferredtoour2014reportforLakeNaivashaformoredetails.OpenunemploymentisveryhighinKenya,especiallyinurbanareas.Weestimatedthistobeapproximately6.2%forruralareasforages25-59(averageofarecentestimateoftheruralunemploymentrateof5.1%forages25+fromILO(ILOSTAT)andaratheroldestimateof7.3%forages25-59fromthe1998/99LaborForceSurvey).Theseestimatescomparetoanestimatedurbanunemploymentrateof17.1%forages25-59(averageofarecentestimateoftheurbanunemploymentrateof13.7%forages25+fromILO(ILOSTAT)andaratheroldestimateof19.5%forage25-59fromthe1998/99LaborForceSurvey).25Part-timeemploymentovertheyearisveryimportantinruralKenyaandrelativelyunimportantinurbanKenyaaccordingtoavailabledata.Averagenumberofhoursworkedperweekforpersons25-59was37hoursinruralareasaccordingtothe1998/99LaborForceSurvey(latestavailablesource).ManyinruralKenyaworkseasonally,whichisaformofpart-timeworkovertheyear.Indeedaccordingtothe2008/09DHS,only62%ofworkersworkyeararound,presumablymainlyonsmallfarmsinruralareas.Althoughitisdifficulttoknowwithprecisionpart-timeemploymentrateinruralKenya,itisclearthatitishigh.ForruralMountKenyaarea,weassumedthatthoseinthelaborforceworked84%offull-timehoursonaverageovertheyear(i.e.37averagehoursworkeddividedby44hoursinastandardworkweek).26

23Sourceswere:1998/99LaborForceSurvey(CentralBureauofStatistics2003);2014estimatedlaborforceparticipationratesforKenyafromILObasedon1999PopulationCensusofKenya(ILO,LABORSTA);and2008/09DemographicandHealthSurvey(DHS,2009).24Ages25-59areusedbecausethoseyoungerthanage25maystillbeinschoolandinanycasearelesslikelytohavefamiliesoftheirown;andmanypersonsoverage59areretiredand/orhaveolderchildren.Notethatusingages25-59ratherthanages15+forestimatingtheunemploymentrateisalsoimportancebecauseyouthunemploymentrate(forages15-24)isespeciallyhigh.25Therearealsootherlessreliableestimatesofurbanunemploymentrates-suchasfromKrishnamurthyandVercic(2009)–aswellas19.9%forages15-64fromthe2005/06KenyaIntegratedHouseholdBudgetSurvey.26Forurbanareas,weusedaconservativeassumptionof5%forpart-timeemploymentrate,sincepart-timeworkisnotbelievedtobeimportantinurbanKenyaespeciallyinlightofthefactthattheaveragenumberofhoursworkedis49hoursaccordingtothe1998/99LaborForceSurvey.

28

Usingthefiguresnotedabove,weestimatedthatadultsage25-59workfull-timeapproximately0.71ofthetimeinruralareas(i.e..90laborforceparticipationratex1.0-.062unemploymentrate×.84proportionoffull-timehoursworked)and.74ofthetimeinurbanareas(i.e.0.92laborforceparticipationrate×1.0-.177unemploymentrate×1.0-.05/2part-timeemploymentrate).Thisimplied1.71full-timeequivalentworkerspercoupleforruralKenyaand1.74forurbanKenyawhenoneadultinafamilyisapermanentworkerwhoworksfull-timeyeararoundsuchasonafarmorinafactory.11. MANDATORYDEDUCTIONSFROMPAYEmployeesinKenyahavemandatorydeductionsfrompay.Thesedeductionshavetobetakenintoconsiderationwhenestimatingalivingwage,becauseworkersneedsufficientdisposableincometobeableaffordadecentbasiclifeforthemselvesandtheirimmediatefamily.EmployeesmustcontributetoNHIFandNSSF.ThiswouldamounttoKSh1,032($11)permonthatarurallivingwageinJune2015andKSh1,274($13)inOctober2016.WorkersinKenyaalsohavetopayincometaxwiththeratesinthePayAsYouEarn(PAYE)systemusedinKenya:10%fromKSh1,016-10,164,15%fromKSh10,165-19,740,and20%fromKSh19,741-29,316.ButthereisataxreliefofKSh1,162.Thismeansthatworkersearningarurallivingwagewouldnothavehadtopayincometaxin2015becauseinkindbenefitsarenotsubjecttoincometaxandNSSFpaymentsaredeductible(weestimatethatworkerswouldhavetopayKSh79inincometaxinOctober2016onourrurallivingwageupdatedforinflationtoOctober2016).ThiscontraststothesituationfacedbyworkersearningalivingwageintheLakeNaivashaareawhereweestimatethatworkerswouldhavetopayincometaxofKSh1,119inOctober2016.Notethatthesetaxcalculationsdependsomewhatonthevalueoftheinkindbenefitsthatworkersreceive–sinceworkersdonotpaytaxesoninkindbenefits.AswedidnothaveanyspecificinformationforruralMountKenyaoninkindbenefits,weassumedthattheyhavethesamevalueasweestimatedforLakeNaivasha.

29

SECTIONIII

ESTIMATINGGAPSBETWEENLIVINGWAGEANDPREVAILINGWAGES

12. PREVAILINGWAGESININDUSTRYOFFOCUSANDOTHERINDICATORSInformationonprevailingflowerfarmwagesinthissectionisbasedonourunderstandingofthe2013-2015flowerfarmCBAandsowagesasofJune2015.27Basicwagesvarybytypeofworkeronflowerfarms.Packhouseworkers(whoarearound20%ofallflowerfarmworkers)earnmorethanotherflowerfarmworkerssuchasgreenhouseworkers(largestgroupofworkers).Workers’payalsodifferswithnumberofyearsofcontinuousservicewithnewlyhiredworkersearningmuchlessthanworkerswithmanyyearsofexperience(seeour2014LakeNaivashareport).Forexpositionalpurposesasinour2014report,wecutthroughthisvariationbymakingwhatwefeelarereasonableassumptionsinordertoestimatetypicalprevailingwagesformostflowerfarmworkers.Weusethebasicwagepluscommoncashallowancesandreasonablevaluesforcommonin-kindbenefitsincludedinthegeneralflowerfarmCBA.Thisisdoneforgreenhouseworkerswithvaryingamountsofcontinuousserviceasinour2014LakeNaivashareport.Wedonotconsiderovertimepayinthesecalculations,becausealivingwageshouldbeearnedinnormalworktime.Andweassumethatflowerfarmworkersarepermanentandhavefull-timeworkthroughouttheyearandthereforethatitisnotnecessarytobeconcernedwithnon-availabilityofworkduringpartsoftheyearasthisreflectsthegeneralsituationonflowerfarms.Weestimatedthatwagesin2015ofgreenhouseworkersareKSh15,771foraworkerwhostartedin1997,KSh13,011foraworkerwhostartedin2004,KSh12,204foraworkerwhostartedin2009,andKSh9,940foraworkerwhostartedin2014(table2andfigure4).ThesewagesincludeKSh4,340forcommoncashallowancesandinkindbenefits.28

27NotethatinOctober2016anewCBAwassignedandbackdatedtoAugust1,2015.SeeappendixCforinformationonupdatedCBAwages.28Weusedthesameamountsforcashallowancesandinkindbenefitsthatweusedinour2014reportforLakeNaivasha,becausemostoftheseallowancesandbenefitsweresetinthetwoyear2013-2015CBA.WeestimatedthattherewasKSh1,908forcashallowancesandKSh2,432forcommonin-kindbenefits.Therewerecashallowancesfor:housing,leavetravel,anddeathintheCBA.Therewerecommonin-kindbenefitsthatreduceworkers’needforcashincomefor:meals,transportation,school,crèche,andhealthclinic.Therewerealsootherbenefitsthatarevaluabletoworkersthatwedidnotconsider,becausetheydonotincreasecurrentdisposableincomeorreduceexpenseswithintheyearsuchas:gratuityonterminationafter5yearsofcontinuousservice,severancepayforredundancy,generouspaidsickleave,generouspaidannualleave,generouspaidmaternityleave,andterminationnotice.TheassumptionofthesamevalueforinkindbenefitsforruralMountKenyaasforLakeNaivashawasmadeintheabsenceofspecificinformationonthisforruralMountKenyaarea.

30

Table2andfigure4compareourrurallivingwagetoprevailingwagesindicatedabovefortypicalflowerfarmworkers.WehavealsoincludedforcomparisonpurposesthetwoWorldBankinternationalpovertylinewagesandtheagriculturalminimumwage.Itisworthnotingthatprevailingwagesintable2donotincludebonusesorovertimepay.Bonusesareimportantforpackhouseworkers(whocomprisearound20%offlowerfarmworkers)andovertimeisimportantforotherworkersincertainpeakperiodssuchasValentine’sDayandMother’sDay.WhetherornotgreenhouseflowerfarmworkersonfarmsintheruralMountKenyaareareceivearurallivingwagedependsonthenumberofyearsofcontinuousservicethattheyhave,althoughitislikelythatmanypackhouseworkersearnalivingwageintheruralMountKenyaarea.Greenhouseworkerswitharoundatleast11yearsofcontinuousserviceintheruralMountKenyaareareceivedarurallivingwagein2015.Greenhouseworkerswith6yearsofexperienceearned6%lessthanarurallivingwagein2015.Recentlyhiredgreenhouseworkersearnwellbelowarurallivingwage-forexample,thosewith1yearofexperienceearned23%lessthanarurallivingwageinJune2015.ThissituationforruralMountKenyaflowerfarmworkerscontrastssharplywiththesituationforflowerfarmworkersworkingandlivinginnon-metropolitanurbanareassuchasaroundLakeNaivashaareawhereflowerfarmworkersearnmuchlessthanalivingwage(seeour2014livingwagereportforLakeNaivashaarea).ItisalsoimportanttonotethatmanyflowerfarmworkersintheMountKenyaareaalsoliveinsmalltowns,suchasthoseworkingonflowerfarmsthatarenotfarfromNanyuki,andthattheyalsoearnwellbelowalivingwage.Thereasonforsuchalargedifferenceinthesizeofthegapbetweenprevailingwagesandlivingwageforflowerfarmsinaruralareaandflowerfarmsneartotownsisbecause,whilewagesaresimilarforflowerfarmworkersregardlessofwheretheirflowerfarmislocated(sinceflowerfarmwagesaredeterminedbysimilarCBAs),livingcostsaremuchlowerinruralareasofKenyacomparedtonon-metropolitanurbanareasofKenyasuchasaroundLakeNaivashaandNanyuki.Thoselivinginurbansettingsfacehigherfoodprices,higherrentsandutilitycosts,andhighernon-foodnon-housingneedsandcostssuchasfortransport.NoticethatourlivingwageforruralMountKenyaisverysimilartotheWorldBank$3.10adaypovertylinewage.Atthesametime,itis2.4timeshigherthantheagriculturalminimumwageand1.6timeshigherthantheWorldBank$1.9adayextremepovertylinewage.

31

Figure4:RuralMountKenyawageladder:Comparingourrurallivingwagetoprevailingwagesonflowerfarmsbyyearstarted,agriculturalminimumwage,andWorldBankpovertylinewages,June2015(inKSh)

Source:TheAuthors

2,432 2,432 2,432 2,432 2,432

11,431

8,671 7,864

5,6007,597

1,032

15,771

13,01112,204

9,940

12,969

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Joinedin1997 Joinedin2004 Joinedin2009 Joinedin2014 Livingwage

Cashallowance Valueofin-kindbenefitsBasicwage Taxes5,437MinimumWageAgriculture 8,232$1.90extremepovertylinewage13,432$3.10povertylinewage

32

Table2:RuralMountKenyalivingwagecomparedtoprevailingwagesonflowerfarms,June2015

Cashallowances

Valueofcommonin-kindbenefits

Basicwage Grosspay

%differenceGrosspayandLivingWage

Joinedin1997 1,908 2,432 11,431 15,771 +22%Joinedin2004 1,908 2,432 8,671 13,011 +0%Joinedin2009 1,908 2,432 7,864 12,204 -6%Joinedin2014 1,908 2,432 5,600 9,940 -23%Ourrurallivingwage 1,908 2,432 8,629 12,969

Source:TheAuthorsNotes:Forexpositionalpurposes,weassumedthatwagesincludevalueofcommoncashallowancesandfairandreasonableestimatedvaluesforcommonin-kindbenefits.Prevailingflowerfarmwagesexcludebonusesandovertime.Bonusesareimportantforpackhouseworkerswhocomprisearound20%offlowerfarmworkers.

13. CONCLUSIONSOurlivingwageestimateforJune2015fortheruralMountKenyaareaisKSh11,937($124)permonthbeforeconsiderationofmandatorydeductionsandKSh12,969($135)permonthconsideringmandatorydeductionsthatworkersmustpay.TheselivingwagesareKSh12,852netlivingwageandKSh13,943grosslivingwageinOctober2016wheninflationandchangesintaxesbetweenJune2015andOctober2016aretakenintoconsideration.TheselivingwagesforruralMountKenyashouldbereasonablyrepresentativeofthelivingwageformostofruralKenya,sincepricesinruralCentralProvincewhereMountKenyaislocatedaresimilartopricesforruralKenyaasawholeaccordingtotheKenyaNationalBureauofStatistics.Andalthoughthisreportfocusedonflowerfarms,webelievethatitprovidesausefullivingwageestimateforotherruralbasedfarmsproducingotheragriculturalproductssuchascoffee,tea,andfreshvegetables,sincealivingwageisthesameforallpeoplelivinginageographicarearegardlessoftheiroccupationoremployer.Tables3and4belowindicatehowourlivingwageswereestimatedandsomekeyassumptionsusedtomaketheseestimates.Asindicatedthroughoutthisreport,conservativeassumptionswereusedtoestimateourlivingwagefortheruralMountKenyaarea.ThismeansthatourlivingwageestimatesareconservativeestimatesofwhatisneededforabasicbutdecentstandardoflivinginruralKenya.TheintentionofourlivingwageestimateforruralMountKenyaareaaswellasourlivingwageestimatemadeearlierforthenon-metropolitanurbanLakeNaivashaarea(andsobyextensionfornon-metropolitanurbanareasneartoNanyuki)istoprovideameasureofthewageneededtosupportabasicbutdecentlifeandnota

33

comfortablemiddleclasslifestyle,andforthisreasonourlivingwageestimatesrepresentthecostofbasicdecencyandafrugalbutdecentlifestyle.Thisreportisinasenseacompanionreporttoour2014reportthatestimatedalivingwageforthenon-metropolitanurbanLakeNaivashaareaofKenya.BothreportsfocusonthefreshcutflowerindustryinKenya,whichhasalargeconcentrationofflowerfarmsintheLakeNaivashaareaandsmallerconcentrationsofflowerfarmsinotherareassuchasinruralareasaroundMountKenyaandKerichoandnon-metropolitanareasintheMountKenyaareanearNanyuki.Our2014reportforLakeNaivashaprovidesmoredetailsaboutourmethodologyandapproachtoestimatingalivingwage.Ournetlivingwage(ornettakehomepayrequiredforbasicdecency)forruralMountKenyaareaisaround33%lowerthanourlivingwagefornon-metropolitanurbanLakeNaivashaareawhenbothlivingwagesareupdatedtoOctober2016byinflation.ThedifferenceforourgrosslivingwagesforOctober2016(i.e.grosspayrequiredforbasicdecency)betweenruralMountKenyaandnon-metropolitanurbanLakeNaivashaincreasestoaround37%becausetaxratesaremuchhighertaxesontheLakeNaivashalivingwagethanontheruralMountKenyalivingwage.ThislargedifferenceinlivingwagesfortheseareasisduetothefactthatworkersonLakeNaivashaarea(andnearNanyuki)flowerfarmsliveinurbantownshipswhereasworkersonruralMountKenyaflowerfarmsliveinruralareas.Asaresult,LakeNaivasha(andnearNanyuki)flowerfarmworkershavemuchgreaterexpensescomparedtoruralMountKenyaflowerfarmworkers,becauseurbansettingshavehigherfoodprices,higherrentsandutilitycosts,andhighernon-foodnon-housingneedsandcosts.BecausewagesforflowerfarmworkersaresetinaCBAthatappliestoallworkers,thegapbetweenprevailingwagesandalivingwageismuchsmallerforruralKenyaflowerfarmworkerscomparedtothegapforflowerfarmworkersnearLakeNaivashaandNanyuki.WhetherornotgreenhouseflowerfarmworkersintheruralMountKenyaareareceivearurallivingwagedependsontheirnumberofyearsofcontinuousservice.Greenhouseworkerswitharound11ormoreyearsofcontinuousserviceintheruralMountKenyaareareceivedarurallivingwagein2015.GreenhouseworkersintheruralMountKenyaareawith6yearsofexperienceearnedaround6%lessthanarurallivingwagein2015.Recentlyhiredgreenhouseworkersearnedwellbelowarurallivingwage-forexample,thosewith1yearofexperienceearned23%lessthanarurallivingwagein2015.Incontrast,flowerfarmworkersintheLakeNaivashaareaandnearNanyukiearnedmuchlessthanalivingwage(seeour2014livingwagereportfortheLakeNaivashaarea).Whendevelopingplanstoincreaseflowerfarmwages,flowerfarmsandthevaluechainshouldkeepinmindthattherealvalueofwagesforflowerfarmworkershavefallensharplyinrecentyears(by20-40%between2004-2014dependingonseniority-seeour2014LakeNaivashareport)andthishasputconsiderableadditionalburdenonflowerfarmworkers.ItisalsoimportanttokeepinmindthatflowerfarmsinKenyafacetheirownsetofproblemsincludingpressurefrominternationalbuyersonpricesandcompetitionfromEthiopiaaswellasahighlyovervaluedcurrency(seeour2014LakeNaivashareport).Thismeansinouropinionthat

34

substantialincreasesinthewagesofflowerfarmworkersinKenyawillrequireinvolvementoftheentirevaluechainincludingbuyers,distributers,andretailers.Itishopedthatthisreportwillcontributetoworkerandmanagementdialogueaswellascontributetodialoguebetweenstandardsetting/certificationorganizationsandthevaluechaintofindwaystoincreasewageswhilemaintainingavibrantflowerfarmindustryinKenya.Itisalsohopedthatthisreportwillhelpjumpstarteffortstoraisewagesinotheragriculturalindustriesaswellasinflowers,suchasforcoffeeandtea.

Table3.CalculationoflivingwageforruralMountKenyaforJune2015(withupdatedvaluesforOctober2016inlasttworows)andpercentagedifferencefromlivingwagefornon-metropolitanurbanLakeNaivashahExpensesandlivingwage KShinJune

2015aUSDinJune2015

%differencefromvaluesfornon-metropolitanurbanKenyah

Foodcostpermonthforreferencefamily 11,362 118 -6%gFoodcostperpersonperdayb 67.92 0.71 -15%fHousingcostpermonth 3,260 34 -61%Rentpermonth 2,200 23 -60%Utilitiespermonth 1,060 11 -64%Non-foodnon-housingcostpermonthd 4,818 50 -47%

PreliminaryNFNH 3,818 40 -57%Healthcarepostcheck 300 3 +113%Educationpostcheck 700 7 NR(as0forLake

Naivasha)Emergenciesandunforeseeneventspermonth

972 10 -35%%

Totalcostpermonthfordecentlivingstandardforreferencefamily

20,412 213 -35%

Livingwagepermonth

LWpermonthnetpay(1.71full-timeworkersinreferencefamily)

11,937 124 -33%

Incometaxe 0 0 iNSSFandNHIFtaxes 1,032 11 -35%iLWpermonthgrosspay(1.71fulltimeworkersinfamily)

12,969 135 -37%

LivingwagesupdatedtoOctober2016byinflationandchangesintaxes

35

LWpermonthnetpay 12,852 127 -33%

LWpermonthgrosspay 13,943 138 -37%

Notes:NRindicatesnotrelevant.aExchangerateofKSh96toUSDwasusedtocalculateUSDvaluesforJune2015andKSh101forOctober2016asthesewereratesatthesetimes.ShillingsandUSDswereroundedtonearestshillinganddollarforpresentationalpurposes.bModeldietsusedtoestimatefoodcostarebasicbutnutritious.Inexpensivefoodswereusedtoestimatemodeldietcost.Foodpriceswerebasedonlocalmarketssurveys.dNon-foodnon-housingcostswereestimatedin4steps(seetext).RatioofNFNHtofoodwas0.728forurbannon-metropolitanLakeNaivashaand0.336forruralMountKenya.PostcheckadjustmentstopreliminaryestimateofNFNHwereKSh700foreducationandKSh300forhealthcareforruralMountKenyaandK300forhealthcareforLakeNaivasha.eWeassumedforexpositionalpurposesthatalivingwagewouldincludecommonin-kindbenefitsworthKSh2,432permonthandthatthisisnotsubjecttoincometax.fCostoffoodperpersonperdayislowerfortheruralMountKenyaareacomparedtothenon-metropolitanurbanLakeNaivashaareadueto(i)lowerfoodprices,and(ii)alessexpensivemodeldietintermsofgramsofexpensivefoods.gLowercostoffoodforthereferencefamilyinruralMountKenyacomparedtoLakeNaivasha(seenotef)isreducedby(i)thelargerreferencefamilysizeinruralMountKenyaarea(5.5comparedto5forLakeNaivasha)andgreaternumberofcaloriesrequiredperpersonbecauseofmorevigorousphysicalactivityinruralareasofKenya(2351comparedto2288forLakeNaivasha).hForcomparisonstoruralMountKenya,LakeNaivashavaluesforMarch2014wereincreasedbytheinflationobservedforKenyabetweenMarch2014andJune2015.AlsonotethatvaluesusedinthistableforLakeNaivashafor2014areslightlydifferentfromthoseinour2014reportforLakeNaivasha.Becauseour2014reportwasapilotstudy,weadjustedforthistableour2014valuesforLakeNaivashatobeconsistentwithhowourlivingwagemethodologydevelopedsincethispilotstudyasindicatedinourlivingwagemanual(AnkerandAnker,2017).iValuesfortaxes,andthereforepercentagedifferences,takeintoconsiderationchangesintaxlawsbetweenstudydatesandOctober2016.IncometaxwasnotpayableinOctober2016ataruralMountKenyalivingwage.IncometaxwasKSh1,119ataLakeNaivashalivingwageinOctober2016.

Table7Keyvaluesandassumptionsforalivingwageestimate

KEYVALUESANDASSUMPTIONS Comments

Location(&industryifrelevant) RuralMountKenyaarea

ExchangerateoflocalcurrencytoUSDKSh96=US$1(forJune2015)KSh101=US$1(forOctober2016)

Numberofhoursinnormalworkweek 44hours

Numberofworkerspercouple 1.71

Referencefamilysize 5.5

Numberofchildreninreferencefamily 3.5

PreliminaryratioofNon-FoodNon-HousingtoFoodCosts 0.336

LivingWageReportforRuralKenya-withcontextprovidedinthehorticultureindustry

©GlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwithISEALAllianceandRichardAnkerandMarthaAnker

36

BIBLIOGRAPHY

Anker R. 2006a. Living wages around the world: A new methodology and internationallycomparableestimates.InternationalLabourReview.Vol145no4.

Anker R. 2006b. Poverty lines around the world: A new methodology and internationally

comparableestimates.InternationalLabourReview.Vol145.No4.Anker R. 2011.Estimating a livingwage: Amethodological review. Conditions ofWork and

EmploymentSeriesNo.29.InternationalLabourOrganization.Geneva.Anker R. 2011a. Engel’s law around the world: 150 years later. Working Paper Series 247.

PoliticalEconomyResearchInstitute,UniversityofMassachusetts.Amherst.Anker R and Anker M. 2017. Living wages around the world: Manual for measurement.

EdwardElgar.CheltenhamandNorthampton.AnkerRandAnkerN.2017. Inkindbenefitsaspartialpaymentofwages:A reviewof laws

around the world.Working Paper Series 428. Political Economy Research Institute,UniversityofMassachusetts.Amherst.

Becht,R,Odada,E.O.,Higgins,S.2005.LakeNaivasha:Experienceandlessonslearnedbrief.in

Managing lakes and basins for sustainable use, a report for lake basinmanagers andstakeholders.Kusatsu:InternationalLakeEnvironmentCommitteeFoundation(ILEC).

CIA. 2014. The World Factbook. https://www.cia.gov/library/publications/the-world-

factbook/.AccessedApril1,2014.Central Bureau of Statistics. 2003. Report of 1998/1999 Labour Force Survey. Republic of

Kenya.Nairobi.Collective bargaining agreement between Agricultural Employers’ Association and Kenya

PlantationandAgriculturalWorkers’Union,2013-2015.Unpublisheddocument.Diewert E., 2010.Notes on the treatment of housing in the national accounts and the ICP.

InternationalComparisonProgram.WashingtonDC.

LivingWageReportforRuralKenya-withcontextprovidedinthehorticultureindustry

©GlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwithISEALAllianceandRichardAnkerandMarthaAnker

37

Ecker, Olivier, and Qaim, Matin. 2008. Income and price elasticities of food demand andnutrient consumption in Malawi. Selected paper prepared for presentation at theAmericanAgricultural EconomicsAssociationAnnualMeeting.Orlando, FL. July27-29,2008.

Economist. 2014.Education inKenya:Paid-for schools arebetter value formoney than the

“free”sort.February22,2014.ErgonAssociates.2012.ETPwageladderreport–Kenya.Unpublishedreport.FAO.2013.Milkanddairyproductsinhumannutrition.editorsMuehlhoff,E.;Bennett,A.;and

McMahonD.FAO.Rome.FAO.2014.FAOSTATonlinedatabase.GovernmentofIndia,MinistryofHousingandUrbanPovertyAlleviation.2009.Guidelinesfor

affordablehousinginpartnership.ILO.LABORSTA.Onlinedatabase.ILO.LABORSTAT.Onlinedatabase.ILO, Institute of Labour Studies. 2013. Kenya: Making quality employment the driver of

development.ILO.Geneva.ILO,2004.ConsumerPriceManual.ILO.Geneva.Institute of Quantity Surveyors of Kenya. (http://architecturekenya.com/much-will-building-

cost-construct-kenya/).IUF,Unite,WaronWant.2010.Abittercup:TheexploitationofteaworkersinIndiaand

KenyasupplyingBritishsupermarkets.http://www.waronwant.org/attachments/A%20Bitter%20Cup.pdf.AccessedApril20,2014.

LivingWageReportforRuralKenya-withcontextprovidedinthehorticultureindustry

©GlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwithISEALAllianceandRichardAnkerandMarthaAnker

38

Karanja, S and Opiyo, D. March 15, 2014. Many Kenyans sleeping hungry: Majority ofinterviewees feel things are generally going fast in the wrong direction. SaturdayNation.Kenya.

KenyaFlowerCouncil.2014.Growingresponsibly.www.kenyaflowercouncil.org/index.php/89-

the-flower-industry-in-kenya.AccessedMay5,2014.KenyaGazetteSupplementNo.126.30August,2013.TheLabourInstitutionsAct,2007.Kambo,Mary. 2015.A report on the cost of living study conducted in Timau, Katheri and

MathagiroareasofNanyuki,KenyaHumanRightsCommission,unpublished.Kenya Open Data Survey. 2009. https://www.opendata.go.ke/Population/2009-Census-Vol-1-

Table-3-Rural-and-Urban-Populati/e7c7-w67t/1.Accessed2014.KenyanNationalBureauofStatistics.2014.CPIandinflationrates:Table3,Nationalaverage

retail prices of selected commodities (monthly reports for 2011-1013).http://www.knbs.or.ke/index.php?option=com_content&view=article&id=228:cpi-and-inflation-rates-for-december-2013&catid=82&Itemid=593.

KenyaNationalBureauofStatisticsandSocietyforInternationalDevelopment.2013.Exploring

Kenya’sinequality:Pullingapartorpullingtogether?Kenyan National Bureau of Statistics and Waiguru, Ogw Cabinet Secretary. 2013. Economic

survey2013:Highlights.RepublicofKenya.KenyanNationalBureauofStatistics.2012.KenyaFactsandFigures2012.RepublicofKenya.KenyanNationalBureauofStatistics.2010.Thenewconsumerpriceindex(CPI)users’guide.

RepublicofKenya.KenyanNational Bureauof Statistics (KNBS) and ICFMacro. 2010.KenyanDemographic and

HealthSurvey2008-09.Calverton,Maryland.KenyanNationalBureauof Statistics. 2007.Basic reportonwell-being inKenya. Republic of

Kenya.Nairobi.

LivingWageReportforRuralKenya-withcontextprovidedinthehorticultureindustry

©GlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwithISEALAllianceandRichardAnkerandMarthaAnker

39

Kenyan National Bureau of Statistics. 2007b. Constituency report on well-being in Kenya.RepublicofKenya.Nairobi.

KenyanNationalBureauofStatistics.2006.KenyaIntegratedHouseholdBudgetSurvey2005

(KIHBS2005/06).Nairobi.Kenyan National Bureau of Statistics. 2010. Compendium of definitions. Republic of Kenya.

Nairobi.KenyaRevenueAuthority,DomesticTaxesDepartment.2009.Employer'sguidetopayasyou

earninKenya,RevisedEdition–2009,FormP.7.http://www.revenue.go.ke/incometax/pdf/PAYEGuide2009.pdf.

Krishnamurthy, Sriramesh and Verčič, Dejan. 2009. The global public relations handbook,

revisededition,331.TaylorandFrancis.Leone T, Coast E, and Randall S. 2010. Did you sleep here last night? The impact of the

householddefinitioninsamplesurveys:ATanzaniancasestudy.EuropeanPopulationConference,3-5September2010,Vienna.http://epc2010.princeton.edu.

Mathenge, Mary and Tschirley, David. 2006. Seasonal analysis of selected fresh fruit and

vegetable prices at wholesale level in key urban markets of Kenya. TegemeoInsitute/EgertonUniversityandtheDepartmentofAgriculturalEconomicsatMichiganStateUniversity.http://ageconsearch.umn.edu/bitstream/55166/2/wp22.pdf.

Mugo, Kariuki. 2011.Partnershipworking brings safewater to Kenya’s poor.TheGuardian.

August9,2011.National Council for Law Reporting. 2007. The Employment Act, Cap. 226 (No 1 of 2007).

Accessedonwww.kenyalaw.org.Oanda.2014.Currencyconverter.http://www.oanda.com/currency/converter/.OECD and Statistics Norway, 2010. User cost for rents of dwellings in the West Balkan

Countries.InternationalComparisonProgram.WashingtonDC.

LivingWageReportforRuralKenya-withcontextprovidedinthehorticultureindustry

©GlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwithISEALAllianceandRichardAnkerandMarthaAnker

40

ParryT. February13,2014.The costof aValentine’s rose–poorKenyanworkerson£30amonth.Mirror,UK.

Republic of Kenya, Agricultural Sector Coordination Unit, 2011. National food and security

policy.Republic of Kenya, Ministry of Health. 2009. Household health expenditure and utilization

surveyreport2007.Nairobi.Republic of Kenya,Ministry ofMedical Services andMinistry ofHealth and Sanitation. 2009.

Access to essential medicines in Kenya: A health facility survey.http://apps.who.int/medicinedocs/documents/s18695en/s18695en.pdf.

Republic of Kenya, Ministry of Health. 2006. Kenyan national guidelines on nutrition and

HIV/AIDS.Nairobi.Republic of Kenya, Ministry of Housing. 2004. Sessional paper No 3 of 2004 on national

housingpolicyforKenya.Nairobi.RiddellA.2003.Theintroductionoffreeprimaryeducationinsub-SaharanAfrica.UNESCO.Riisgaard, Lone and Gibbon, Peter. 2014. Labour management on contemporary Kenyan

flower farms: Foundations of an industrial-civic compromise. Journal of AgriculturalChange.

South AfricaMinistry of Labour. 1997. Basic conditions of employment act no. 75 of 1997

sectoraldetermination19:Farmworkersector,SouthAfrica.Pretoria.Subramanian, S.V.; Ozaltin, E.; and Finaly, J. E. 2011. Height of Nations: A socio-economic

analysisofcohortdifferencesandpatternsamongwomenin54low-tomiddle-Incomecountries.PLOSOne.

Sustainable Agriculture Network. 2010. Standard on sustainable agriculture.

http://sanstandards.org/userfiles/SAN-S-1-1_2%20Sustainable%20Agriculture%20Standard_docx(1).pdf.AccessedApril10,2014.

LivingWageReportforRuralKenya-withcontextprovidedinthehorticultureindustry

©GlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwithISEALAllianceandRichardAnkerandMarthaAnker

41

UNESCO. 2012. Education for all monitoring report. Fact Sheet Education in Kenyahttp://www.unesco.org/new/fileadmin/MULTIMEDIA/HQ/ED/pdf/EDUCATION_IN_KENYA_A_FACT_SHEET.pdf.

UNICEF.2014.Kenyastatistics.

http://www.unicef.org/french/infobycountry/kenya_statistics.html.AccessedApril20,2014.

UNICEF.2014.Thechildren:Primaryschoolyears.

http://www.unicef.org/kenya/children_3795.html.AccessedMay3,2014.UnitedNations,2016.UNDATAglossary.Availableat

http://data.un.org/Glossary.aspx?q=total+fertility+rate.United States Department of Agriculture (USDA)National Agriculture Library (NAL).web site

(www.ndb.nal.usda.gov/ndb/foods).Waithaka, James. March 8/9, 2014. Kenya’s luxury spending potential is growing fast.

WeekendStar,Kenya.WHO,SPHEREProject.2011.SPHEREhandbook:Humanitariancharteronminimumstandards

inhumanitarianresponse.WHO, WEDC. July 2013. How much water is needed in emergencies. Technical notes on

drinkingwater,sanitationandhygieneemergencies.WHO/FAO. 2003.Diet, Nutrition, and the Prevention of Chronic Disease. Report of a Joint

WHO/FAO Expert Consultation. TWO Technical Report Series 916. World HealthOrganization.Geneva.

WHO/FAO/UNU.2007.Proteinandaminoacidrequirementsinhumannutrition.Reportofa

joint FAO/WHO/UNU expert consultation.WHO Technical Report Series 935.WorldHealthOrganization.Geneva.

WilshawR.2013.Exploringthe linksbetween internationalbusinessandpovertyreduction:

BouquetsandbeansfromKenya.Oxfam,UK.

LivingWageReportforRuralKenya-withcontextprovidedinthehorticultureindustry

©GlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwithISEALAllianceandRichardAnkerandMarthaAnker

42

Workers’WelfareCommittee.Feb2013.Housingsurveyreport.Unpublishedreport.World Bank. 2014. World Development Indicators. http://data.worldbank.org/data-

catalog/world-development-indicators.AccessedApril2,2014.WorldBank.2009.Povertyandinequalityassessment.WorldBank.WashingtonDC.

LivingWageReportforRuralKenya-withcontextprovidedinthehorticultureindustry

©GlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwithISEALAllianceandRichardAnkerandMarthaAnker

43

ANNEXES

AnnexA.Oursynopsisofbenefitsincollectivebargainingagreement(CBA)betweenAgriculturalEmployers’AssociationandKenyaPlantationandAgriculturalWorkers’Unionfor2013-2015

Benefits Description Comments(includingindicationwhenbenefitisalsoingovernmentEmploymentAct)

CashallowancespaidwithinoneyearHousingallowance KSh1,700permonth.House

onfarmanoptiononsomefarms.

Somefarmsprovideon-farmhousingasalternative.EmploymentAct:“atemployer’sownexpenseprovidereasonableaccommodation…orpay…sufficientsum,asrent,to…obtainreasonableaccommodation.”Fairtradeflowerstandard:“ensurethatworkersreceivehousingorhaveaccesstotransportationfreewherehousingandinfrastructurearenotavailableinsufficientquantityandquality.”

Transport(commute)allowance

Amountvariesbyfarm.Busprovidedasalternativeonsomefarms.

FarmsoftenprovidebusasalternativetotransportallowanceinLakeNaivashaareaatleast.

Leavetravelallowance KSh2,500peryear Fortraveltohomearea.Receivedwhetherornotworkertravels.

Deathallowance KSh27,000(equivalenttoaboutKSh7permonthvalue)

Similartoinsurance.Intendedtopayforcostandtransportofcoffinforworkerwhodies.

In-kindbenefitsreceivedwithinyearMeals KSh30perday(our

estimateofcostoflunchtofarms)

LivingWageReportforRuralKenya-withcontextprovidedinthehorticultureindustry

©GlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwithISEALAllianceandRichardAnkerandMarthaAnker

44

Benefits Description Comments(includingindicationwhenbenefitisalsoingovernmentEmploymentAct)

Paidannualleave 24days 26daysif>5yearsofservice.21daysinEmploymentAct.Thiswasnotconsideredanadditionalpaymentbecauseitisalreadytakenintoconsiderationinthemonthlywageofpermanentworkers.

Healthcare Medicinesandmedicaltreatment.Transporttohospitalwhennecessary.

SameasinEmploymentAct.Musthavenurseorothersuitablepersononsitewhen>100workers.

Housing Seeabove Housingallowancemorecommonthanprovisionofhousing.

Transportationtowork Seeabove Transportationallowancealternativesometimesavailable.

School ProvidedbysomefarmsCrèche ProvidedbysomefarmsIn-kindbenefitsnotreceivedwithinpast1year(notconsideredaspartialpaymentoflivingwagebecausenotreceivedwithyear)Gratuity 23daysatbasicpayper

yearofservicePaidtoworkersleavingemploymentwith6+yearsofserviceforanyreasonexceptsummarydismissal.

Redundancy/severancepay

21daysofpayforeachyearofservice

Cannotcollectbothredundancy&gratuity.2monthnoticeor1monthpayinlieuofnoticeinEmploymentAct.

Otherbenefits(notconsideredaspartialpaymentoflivingwagebecauseeithernotreceivedwithyear,ordoesnotincreasemonthlytakehomepay,orisovertimepay)Paidsickleave 53daysfullpay;55days

halfpayRequiresincapacitycertificatefrommedicalpractitioner&verificationbycompanymedicalpractitioner.Unusualinpractice(e.g.only35of637workersfromonelargefarmwevisitedreceivedsickleaveinpastmonth).7daysfullpay&7days1/2payinEmploymentAct.

Paidmaternityleave 3months 2monthsinEmploymentActBreastfeeding 1hourperday Forchildren<10monthsCompassionateleave “Shouldnotbe

unreasonablyrefused”Similartoadditionalpaidannualleave

Limitonnumberof Probationperiodcannot Temporaryworkersmustbeconfirmed

LivingWageReportforRuralKenya-withcontextprovidedinthehorticultureindustry

©GlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwithISEALAllianceandRichardAnkerandMarthaAnker

45

Benefits Description Comments(includingindicationwhenbenefitisalsoingovernmentEmploymentAct)

temporaryworkers exceed2months aspermanentworkerafter2months.Paidleaveforunionofficials

2daysforunionduties Also15daysperyearfor4employeesforcourses/seminars

Overtimepay 1.5timesrateforovertime 2timesrateforworkrestdaysandholidays

Notes:CBAsalsospecifybasicwage,whichishigherthanstatutoryminimumwageforagriculture(KSh4,854in2014andKSh5,436in2015).In2013-2015CBAagreement,basicwagewasKSh5,401-5,900fornewworkerswith+11.5%in2014and2015fornewworkershiredin2013(seenexttable).

46

AnnexB.FloricultureCBAbasicwage,cashallowances,andsomebenefits,1997-2015

Years BasicWages(KSh)a

HousingAllowance

WorkHours

AnnualLeave

LeaveTravelAllowance

SickLeave TerminationNotice

Redundancy/SeverancePay

Gratuity DeathofEmployee

FGG1997–1999

1,716,1,959,2,500,3,000,3,500(14%-9%onaslidingscale)

500/=

46&60

21w.days

800/=

30days&30days

Onemonths’notice

15dayseachyr.

15daysafter10yrs.

7,000/=inclusiveoftransportandcoffin

FGG1999-2001

1,900,2,180,2,750,3,300,3,800,(11%%11%)

750/=

46&58

22w.days

1,200/=

35days&40days

Onemonths’notice

18dayseachyr.

18days

10,000/=inclusiveoftransportandcoffin

FGG2001–2003

2,400,2,600,3,200,3,800,4,400(8%&8%)

800/=

46&58

22w.days

1,200/=

40days&45days

Onemonths’notice

18dayseachyr.

19days

12,000/=inclusiveoftransportandcoffin

FGG2003–2005

2,800,3,000,3,700,4,400,5,100(11%&10%)

950/= 46&56

22w.days

1,200/=

40days&45days

Onemonths’notice

18dayseachyr.

20days 15,000/=inclusiveoftransportandcoffin

FGG2005–2007

3,100,3,300,3,900,4,600,5,300

1,200/=(cities)1,000/=

46&56

22w.days

1,600/=

45days&50days

Onemonths’notice

19days

21days

17,000/=inclusiveoftransport

LivingWageReportforRuralKenya-withcontextprovidedinthehorticultureindustry

©GlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwithISEALAllianceandRichardAnkerandMarthaAnker

47

Years BasicWages(KSh)a

HousingAllowance

WorkHours

AnnualLeave

LeaveTravelAllowance

SickLeave TerminationNotice

Redundancy/SeverancePay

Gratuity DeathofEmployee

(14%-9%onaslidingscale)

(otherareas)

andcoffin

FGG2007–2009

3,400,3,600,4,300,4,900,5,800(10%-8%onaslidingscale)

1,500/=(cities)1,200/=(otherareas)

46&56

Uptofiveyrsservice–22workdays.Overfiveyrs–24w.days.

1,800/= 50days&50days

Upto5yrs–onemonth’snotice&over5yrs–45daysorpayinlieu

20days

21days

19,000/=inclusiveoftransportandcoffin

FGG2009–2011

3,601–4,3004,301–4,9004,901–5,8005,801andabove

1800(cities)1500(otherareas)

46&56

Uptofiveyrsservice–23days.Overfiveyrs–25days.

2000/= 50fullpay52halfpay

Upto5yrs–onemonth’snotice&over5yrs–45daysorpayinlieu

20days 21days 22,500/=inclusiveoftransportandcoffin

FGG2011–2013

4,050–4,600–12.54,601–5,300-12%5,301–6,300–11.56,301–6,500–11%6,501andabove-11%

2,000(Cities)1,800(Muni)1,500(Others)

46&56

24w.days(upto5yrs)26w.days(over5yrs)

2,300/= 50fullpay52halfpay

Upto5yrsservice-30daysorpayinlieu;Between5–10yrs-45dayorpayinlieu;10yrsandabove–60days’orpayinlieu

21days’eachyr

22days 24,000/=inclusiveoftransport&coffin

LivingWageReportforRuralKenya-withcontextprovidedinthehorticultureindustry

©GlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwithISEALAllianceandRichardAnkerandMarthaAnker

48

Years BasicWages(KSh)a

HousingAllowance

WorkHours

AnnualLeave

LeaveTravelAllowance

SickLeave TerminationNotice

Redundancy/SeverancePay

Gratuity DeathofEmployee

FGG2013–2015

5,000–5,400–12%5,401–5,900–11.55,901–6,900–11%6,901–8,000-10.5%8,001–9,300–10%9,300andabove-10%

2,400(Cities)2,000(Muni)1,700(Others)

46&56

24w.days26w.days

2,500/=

53fullpay55halfpay

Upto5yrs-30daysorpayinlieu;Between5–10yrs–45daysorpayinlieu;10yrsandabove–60days

21dayseachyr

23daysbasicpay

27,000/=inclusiveoftransportandcoffin

Separatefarm1CBA2010-2012

Nvs–min1stYr–2ndYr7,858&8,722=9,817&10,897=8,500&9,435=8,904&9,883=11,628&12,907=14,783&16,409=18,274&20,284=NbiMin7,878&8,744=10,685&11860=13,955&15490=17,742&19694=21,929&24,341=

Nvs.2,903/=2005/=1809/=1,809/=1,451/=Nbi6,170/=4,174/=4,174/=3,508/=3,508/=Gen.worker1,451/=or15%ofbasic

46&60

Upto5yrs–24days5to10yrs–26days10to20yrs-28daysOver20yrs–30days

GradedemployeeGrade3-3,217/=Grade2-2a2,574/=Grade1–1a2,333/=

51full-pay51halfpay

Upto5yrs.–1month,Over5&upto10yrs–1.5months,Over10yrs–2months

24days

24days

Providecoffin&21,000/=forfuneralexpensesandtransport

LivingWageReportforRuralKenya-withcontextprovidedinthehorticultureindustry

©GlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwithISEALAllianceandRichardAnkerandMarthaAnker

49

Years BasicWages(KSh)a

HousingAllowance

WorkHours

AnnualLeave

LeaveTravelAllowance

SickLeave TerminationNotice

Redundancy/SeverancePay

Gratuity DeathofEmployee

Separatefarm1CBA2012Sept–2014Aug

Naivasha9,681&10,746/=12,096&13,427/=10,473&11,625/=10,970&12,177/=14,327&15,903/=18,214&20,218/=22,515&24,992/=Nairobi9,706&10,774/=13,165&14,613/=17,197&19,085/=21,860&24,265/=27,019&29,991/=11%&11%

GradedNvs3053/=2,125/=1,909/=1,909/=1,551/=Nbi6,320/=4,274/=4,274/=3,608/=3,608/=Generalworkers1,451or15%ofbasic

46&60

Upto5yrs–24days5to10yrs–26days10to20yrs-28workdaysOver20yrs–30workdays

Grade33,217/=Grade2–2a2,574/=Grade1–1a2,333/=Generalworker2,478–2,800

51daysfullpay&51dayshalfpay

Upto5yrs.–1month,Over5&upto10yrs–1.5months,Over10yrs–2months

24days

24dayifterminated,retireorresignprovidedhe/shehasservedaminimumoffive(5)yrscontinuousservice

Shs.25,000/=forfuneralexpensesandtransportationpluscoffin

LivingWageReportforRuralKenya-withcontextprovidedinthehorticultureindustry

©GlobalLivingWageCoalitionUndertheAegisofFairtradeInternational,ForestStewardshipCouncil,GoodWeaveInternational,RainforestAlliance,SocialAccountabilityInternational,SustainableAgricultureNetwork,andUTZ,inpartnershipwithISEALAllianceandRichardAnkerandMarthaAnker

50

Years BasicWages(KSh)a

HousingAllowance

WorkHours

AnnualLeave

LeaveTravelAllowance

SickLeave TerminationNotice

Redundancy/SeverancePay

Gratuity DeathofEmployee

Separatefarm2CBA2010–2011

Gen.7,776/=Watchmen–8006/=7,964/=8,847/=7,937=

15%ofbasic

46&48

1-5yrs-25daysOver5yrs–28days

150/=-1,750/=asperdistance

50&62subjecttoproductionofmedicalcertificate

Upto3yrs–1month,over3yrs–2months

20days 21daysonretirementorresignation

Coffin&27,500/=fortransportofemployeeorspouse

Separatefarm3CBA2011–2013

5,890/=10%&10%

1,600/=permonthor15%ofbasic

46&48

30consecutivedaysatoneyearinservice

2,200/= 50fulldays&54daysathalfpay

2yrs–ImonthOver2yrs–2months

23dayseachyr

5yrscontinuousservice-23dayseachyr

23,000/=

Notes:aPercentagesindicatepercentageincreasesforeachyearofCBA.

51

AnnexC:UpdateonKenyaflowerfarmwagesandnewcollectivebargainingagreement(CBA)for2015-2017signedOctober21,2016

VeryrecentlyonOctober21,2016,theKenyaAgriculturalEmployersAssociationandTheKenyaPlantationandAgriculturalWorkerUnionsignedanewcollectivebargainingagreementeffectiveretroactivelytoAugust1,2015andinforceuntilJuly31,2017.Thisagreementprovidedforanincreaseof12.5%forworkersalreadyemployedonJuly31,2015(endofprevious2013-2015CBA),withanadditional12.5%increaseonJuly31,2016.ThehousingallowancewasincreasedfromKSh1,700permonthtoKSh1,900permonthandtheleavetravelallowancewasincreasedfromKSh2,500peryeartoKSh2,700peryearforatotalincreaseof11.4%incashallowancesfromKSh1,908permonthtoKSh2,125permonth.ThebasicwagefornewlyhiredgeneralworkerswassetatKSh6,048,whichisaround20%higherthanthepreviousCBAofKSh5,000.Itisworthnotingthattheincreaseinbasicwageishigherthanthearound6-7%inflationrateinKenya(althoughitisalsoworthnotingthatannualfoodinflationwasrunningataround11%betweenOctober2015andOctober2016).ThisnewCBAmeansthatthegapbetweenprevailingwageandourlivingwageisalittlelowerthaninourreport.