Sharp rise in number of workers jailed for theft, fraud

The number of Kenyan workers convicted for employment-related offences rose by 60 per cent last year, coinciding with tough economic times in which employees’ purchasing power was increasingly facing erosion on the back of stagnant wages and rising cost of essential commodities.

Data published by the Kenya National Bureau of Statistics (KNBS) shows that the number of prisoners convicted for employment related offences rose to 6,921 last year from 6,636 the previous year. About 185 of the convicts were female while 6,636 convicts were male.

While the KNBS data does not explain the sharp rise in employee convictions, analysts and previous surveys have partly linked employee crimes to economic desperation.

“Because workers are human beings with needs and aspirations they may at times resort to stealing from their employers as an adaptation to the harsh economic conditions,” said Halima Shauri, a sociologist with Pwani University.

Many Kenyan workers have been going through a rough stretch in recent months amid tough economic times which eroded their earnings. A relentless rise in inflation to a 19-month-high in April, coupled with a raft of newly-introduced statutory deductions, risk eroding the Kenyan workers’ take-home this year, reversing gains from 2018 when employment earnings were above the cost of living.

Data by the Economic Survey 2019 shows that inflation-adjusted pay — also known as real wage — rose by 3.2 percent in 2018, which was an improvement from the previous year when formal sector employees took a pay cut of 2.9 per cent when their wages were adjusted for inflation. Real wage ordinarily offers the most accurate indicator of workers’ ability to purchase goods and services based on prevailing prices.

Average inflation since January has been above last year’s 4.69 per cent, hitting a 19-month high of 6.58 per cent last month. This has seen prices of basic household goods rise, leaving the average worker poorer. This erosion of buying power comes as the government pushes for additional deductions for the National Social Security Fund (NSSF) contributions and the new housing levy, which will take 1.5 percent of workers gross pay.

Employee theft comes with a huge price tag for Kenyan businesses.

A 2018, study by PricewaterhouseCoopers (PwC) showed that economic crimes by mid-level managers have become the biggest threat to companies in Kenya, bucking a trend where junior and senior management were most linked to internal fraud. The report showed that economic crimes committed by middle-level managers increased from 29 per cent in 2016 to 41 per cent in 2018 — signalling the rising risk posed by this category of employees.

In 2016, KCB Group, Kenya’s biggest bank by assets, sacked 31 employees accused of fraud and professional negligence. Safaricom at the same time sacked 43 employees in the year to March 2018 for fraud-related incidents, a drop from the 52 who were dismissed for similar offences in the previous year. The company made the disclosure in its 2018 sustainability report, saying that it investigated a total of 57 cases of corruption and fraud during the period, up from 33 the previous year.

According to KNBS, workers in the agricultural sector, the second largest employer after education, are the most exposed to the knocks of inflation and levies. Half of the people earning below Sh10,000 work in agriculture.

During the recent Labour Day celebrations workers were left disgruntled after the government failed to increase their minimum and general wages, to cushion them against the rise in the cost of essential commodities.

The Federation of Kenya Employers had cautioned that wage increases and increased deductions will increase the cost of doing business and trigger retrenchment.