Almost 6,000 Kenyans Lose Jobs Over Three Years as Taxes Surge – FKE

Nearly 6,000 Kenyans lost their jobs over the last three years as companies struggled to keep up with the changing economic climate.

According to the Federation of Kenya Employers (FKE), 5,567 Kenyans were declared redundant in the past 3 years. However, that number is likely higher with FKE only tracking those losing jobs among its members.

This comes as the living standards of employed Kenyans deteriorate under President William Ruto’s regime, according to the organisation.

While offering its advice to the government ahead of the budgetmaking process, FKE CEO Jaqueline Mugo revealed that employers are receiving more distress calls as the employee take-home continues to shrink.

“Since the new payroll deductions were introduced, we’ve received a lot of distress calls from our members and from employees themselves because the take-home pay is too little and it is below the threshold of one-third that employees are supposed to take home,” Mugo stated.

The government is deducting Pay As You Earn (PAYE), the Social Health Insurance Fund (SHIF) at 2.75 per cent, the Affordable Housing Levy at 1.5 per cent, and the National Social Security Fund (NSSF).

Starting this month, the government has raised NSSF contributions to 6 per cent of the monthly salary, with employers matching the same amount, further impacting the payslip.

For a person earning Ksh50,000, the take-home has shrunk to about Ksh39,617.15, that is before introducing the new NSSF charged at 6 per cent. The government is taking slightly over Ksh10,000 in levies.

“Living standards of our employees are deteriorating. They are suffering because of the new taxes,” Mugo stated.

According to FKE, employers are facing pressures to meet production costs that are rising with taxes around input products and labour as well.

Manufacturers contend with elevated costs due to factors such as expensive energy, high taxation, and the influx of cheaper imports. These issues have led to the closure of more than 30 manufacturing plants between 2014 and 2022.

Stanbic’s PMI report, which weighs economic factors around the country monthly, has over the last four months of the year shown the manufacturing sector is struggling.

“Our concern is that employers are finding it difficult to comply with the rule. They are supposed to deduct not more than two-thirds of an employee’s total earnings each month, but they are in a way forced to be in breach because of the level of deductions,” asserted Mugo.