Monday, 24 September 2012

End to the teachers strike :How does this affect you as a mwananchi

The Battle of the Titans came to a halt yesterday ending 3 grueling weeks for the entire education sector. Well, the snag caused by the teachers strike has been an explosive issue with people taking different sides. Personally it has been good fodder for a healthy argument between me and my wife. For one, her parents are teachers and she was feeling that the teachers have always been taken for a roller coaster and they fully deserved the pay. On the other end, I felt that the timing of the strike was wrong though the teacher's cry was justified. Well, after consultations the Finance Minister in a striped shirt and a leather jacket meet KNUT officials lead by Mr Wilson Sossion, where he gave the government's offer which Sossion and company embraced waiting for the teachers NEC, which is the body that will call off the strike.
 
But we all know, with or without the NEC, the strike is over. To be frank, that 13.54 billion lump sum is better than nothing. For the government it saves the country the industrial strife that had gripped the country for the last 3 weeks. The lowest paid teacher will take home between Kshs19,000 from Kshs 13,000. The highest will earn 144,928. For my teacher friends, congratulations for the fight though it involved the common collateral damage in form of our poor candidates. I honestly believe that our teachers know the perfect ingredients for exams success and they will apply the same to the candidates, the 3 weeks loss  notwithstanding. Additionally they are fully motivated and they have no reason to fail in that.
 
On the upside from an economic sense, I understand a common fact that could be unknown to many. The 13.5 Billion will have some repercussions which, while embracing the teachers pay hike, we should all be prepared to face.. For one, the government through De la Ru will not mint the 13.5 billion. The money will have to come from somewhere. With the budget allocations already made, the money to sustain the lump sum payment to the teachers will be carved from the development allocations, the national recurring budget, local and global borrowing and if worst come to worst, through taxes.
                        

Before the budget allocations are done all government departments present budget allocations which the exchequer foots in the subsequent budget. On the other hand recurrent expenditure are the expenditure that occur after the existing expenditure for that financial year are made. This is one of the probable avenues through which the government will raise the teachers pay off. Its also probable that the government may borrow the money in quick needed arrangements with either local or international lenders. These loans are never free of charge which means the government will refund back the money plus interest.

The government will probably increases taxes to finance the teachers deal which could come in form of raised VAT, Custom Duty, Excise Duty and lastly Income taxes which is the bracket that most of us fit in. Due to the belief that Kenyans are the highest taxed people in the world, the government will obviously not increase peoples taxes, especially considering this is an election year. So where am I heading to? .Custom and Excise duty will be the next stop where taxes paid by importers and exports maybe raised by a few units. These few units will be translated into prices for this goods since the importers have margins to settle. In the long commodity prices will get high.
 

These counter effects resulting from the pay off and the others that may follow should provide a platform for the government to enact measures that should insulate the local mwananchi. Coincidentally, the rise could boost some sectors of the economy since teachers have proved to be avid farmers, traders and consumers but its important the entire public is protected from the effects of the resultant bubble effect.

As the week starts off, I hope the fortunes of the students will be doubled with the return of the highly motivated teachers. Steps should also be introduced to harmonize the salaries of other groups in parallelism with all civil servants to avoid such industrial actions. I pray such a formula be reached for our doctors and nurses.
Finally, the are calls for Mr Sossion the public face of the teachers union to vie for an elective seat. His popularity with teachers is sky high and with their large numbers, Sossion could be sitting on a goldmine. Good Luck Mr Sossion
Peace.

pictures courtesy of Google

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