Nearly 6,000 Kenyans have lost their jobs in the past three years as businesses grapple with the effects of a challenging economic environment.
The Federation of Kenya Employers (FKE) reports that 5,567 individuals were declared redundant during this period. However, the actual number is likely higher since FKE’s data only covers job losses among its member organizations.
This troubling trend comes at a time when many employed Kenyans are experiencing a sharp decline in their standard of living, which FKE attributes to policies implemented under President William Ruto’s administration.
Speaking ahead of the national budget-making process, FKE CEO Jacqueline Mugo expressed growing concern over the financial strain on workers.
She revealed that employers are receiving an increasing number of distress calls as employees struggle to cope with shrinking take-home pay.
“Since the introduction of new payroll deductions, we’ve seen a surge in distress calls from both our members and employees because the take-home pay has fallen below the recommended one-third threshold,” Mugo explained.
The government has introduced multiple deductions, including Pay As You Earn (PAYE), the Social Health Insurance Fund (SHIF) at 2.75 percent, the Affordable Housing Levy at 1.5 percent, and contributions to the National Social Security Fund (NSSF).
From this month onward, NSSF contributions have risen to six percent of an employee’s monthly salary, with employers required to match the same amount. This additional burden is further eroding workers’ earnings.
For example, an individual earning Ksh50,000 now takes home approximately Ksh39,617.15 before factoring in the new six percent NSSF contribution. Combined, the government is deducting over Ksh10,000 from their monthly income.
“The living standards of employees are deteriorating rapidly. They are struggling because of these increased taxes,” Mugo emphasized.
The FKE also highlighted the financial challenges employers are facing. Many businesses are battling rising production costs driven by heavy taxation, higher prices for input products, and increased labor expenses.
Manufacturers are especially hard-hit, with factors such as costly energy, burdensome taxes, and competition from cheaper imports pushing some out of business. Between 2014 and 2022, more than 30 manufacturing plants were forced to close.
Stanbic Bank’s Purchasing Managers’ Index (PMI), which monitors monthly economic activity, has consistently shown over the past four months that the manufacturing sector is struggling.
Mugo warned that employers are now finding it difficult to comply with regulations requiring them to ensure employees take home at least one-third of their gross pay.
“Employers are under immense pressure because the level of deductions forces them into a position where compliance becomes nearly impossible,” she stated.
As the economic outlook grows bleaker, both employees and businesses are feeling the weight of these financial challenges, with calls mounting for urgent government intervention to ease the burden on Kenyans.
Join Kenyan Gen z and millennials official WhatsApp Channel To Stay Updated On time the ongoing situation https://whatsapp.com/channel/0029VaWT5gSGufImU8R0DO30
Tiktok – https://www.tiktok.com/@news.hub88?_t=ZM-8sz45qJid3V&_r=1
