Determinants of Negotiated Wages in the Kenyan Banking Industry


  • Mark Murithi Kimathi M.A. Economics, Department of Economics, Masinde Muliro University of science and Technology
  • Edwin Jairus Simiyu PhD Economics, Department of Economics, Masinde Muliro University of science and Technology



Kenyan Banking Industry, Labour Productivity, Negotiated Wages, Unionisable Staff


Over time, wages in the Kenyan banking sector have increased, but not at a rate that has kept up with inflation. This has had a negative effect in that the employees in the banking sector were unable to maintain the standards they were used to. In the banking industry, the average yearly wage per employee climbed from Kes 10,424 in 1968 to Kes 2,082,067 in 2021. The period from 1972 to 1994 saw the greatest loss in the buying power of earnings for banking personnel. From highs of Kes 2,629,534 in 1972 to lows of Kes 726,178 in 1994, the real average wage per employee per year fell. Between 1994 and 2008, there was a recovery in the real annual average wage per employee. Over this time, the real average wage rose from Kes 726,178 to Kes 2,330,778. By 2021, the real average annual wage per employee had decreased to Kes 1,861,550. The purpose of this study was to identify the factors that influence union wages. With time series data for the years 1968 to 2021, a wage model was fitted, and the estimated outcomes showed that gross profit before tax, labour productivity, and the prior period wage of unionisable personnel were key factors in negotiated wages. The other factors, such as the minimum pay set by law, the number of unionised employees, the unemployment rate, the inflation rate, and the union density, had no statistically significant impact on negotiated wages. The study supports the need for developing a labour productivity measurement system that is acceptable to all participants in the banking industry. The fact that the union's strength had little bearing on determining salaries also made it clear that the union needed to find new strategies for luring members.

Author Biography

Edwin Jairus Simiyu, PhD Economics, Department of Economics, Masinde Muliro University of science and Technology

Dr. Edwin J. Simiyu, 

Chairman and Head of Department Economics 

Lecturer, Economics Department  

School of Business and Economics

Masinde Muliro University of Science and Technology


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How to Cite

Kimathi, M. M., & Simiyu, E. J. (2023). Determinants of Negotiated Wages in the Kenyan Banking Industry. African Journal of Empirical Research, 4(2), 590–600.