Federation of Kenyan Employees Warns Government of Unemployment Risk Due to Tax Laws

The Federation of Kenyan Employees (FKE) has issued a stern warning to the Kenyan government, expressing concerns that current tax laws, especially in light of soaring fuel prices, could exacerbate unemployment in the country.
According to the federation, these tax measures are excessively burdensome and may lead to business closures, subsequently resulting in a surge in unemployment and a stagnation of economic growth.
FKE Executive Director, Jacqueline Mugo, emphasized the adverse impact of these changes, stating, “All these changes, encompassing aspects like healthcare, training, PAYE, and housing levies, translate to an increased burden on employers. They are now compelled to devise innovative strategies to sustain operations without being constrained by rigid wage bills.”
Furthermore, Mugo highlighted the correlation between heightened taxation on the formal sector and the hindrance it poses to job creation, saying, “The more you tax the formal sector, the more you make it difficult for these enterprises to generate employment opportunities, and we are already witnessing this trend.”
FKE President Habil Olaka echoed Mugo’s sentiments, emphasizing that taxation should not lead to impoverishment. He advocated for tax measures that primarily focus on broadening the tax base by promoting job creation. “The fundamental principle of tax management should not be to burden individuals and corporations into destitution. Instead, it should empower businesses and individuals to enhance their productivity, subsequently bringing them into the tax net,” Olaka remarked.
Additionally, the employers’ organization raised concerns about the government’s plan to finance the Universal Health Coverage through formal workers and employees, labeling it as misguided. They argued that this approach overlooks the fact that a significant portion of the Kenyan workforce is employed in the informal sector.
FKE’s Executive Director, Ms. Mugo, emphasized this point, saying, “Even the jobs that are being created predominantly originate from the informal sector, which constitutes three-quarters of the employment sector. We have observed a decline in the number of formal sector jobs even before the current administration took office. The heavier the tax burden on the formal sector, the more challenging it becomes for these enterprises to facilitate job creation.”
The consensus among FKE representatives is that a more balanced and holistic approach to taxation is needed, one that not only secures government revenue but also fosters job growth and economic resilience.
As Kenya grapples with the complex interplay of economic challenges, FKE’s stance underscores the urgent need for a comprehensive and equitable tax policy that supports both the government’s fiscal objectives and the welfare of its citizens.