70,000 Kenyans have lost jobs in one year over Ruto policies; FKE report
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FKE says 70,000 Kenyans have lost jobs in last one year due to President Ruto policies with more set to be lost
FKE says 70,000 Kenyans have lost jobs in last one year due to President Ruto policies with more set to be lost.
President Ruto’s Finance Act of 2023 would likely result in additional job losses, the Federation of Kenya Employers has warned.
The Federation said in a statement on Friday night that the Finance Act, 2023 has significantly impacted many businesses’ financial flows, which has an effect on payrolls and rendered the cost of doing business unsustainable.
According to the federation, an initial poll reveals that 70,000 Kenyans have lost their jobs in the past year, and more could lose their positions as firms explore making further layoffs.
“It (the survey) shows that between October 2022 and November 2023, we have lost 3 per cent (70,000) of the jobs in the formal private sector and 40 per cent of employers have reported that they are planning to reduce the number of employees to meet the increasing costs of operating in Kenya. We will be launching the full survey report on Jobs Trends in the month of December 2023,” FKE said in the statement.
The statement came after a management board meeting called to evaluate the state of doing business in the country.
The board noted that he weakening shilling has worsened the situation and adversely affected businesses that rely on imports.
FKE observed that the Kenya shilling lost 21 per cent of its value over the past one year for the period ending November 22, 2023.
“The exchange rate of Kenya shilling against the USD has hit a high of 152.45compared to 121.05 at the same time in 2022.”
In the statement signed by FKE President Habil Olaka and CEO Jacqueline Mugo, the Federation said besides the weak shilling, companies are still reeling from the aftereffects of the Covid-19 pandemic and many are yet to regain the financial muscle.
“The employment state is still very fragile. We are not yet back on track since COVID-19. Every day we receive notifications from employers on their intent to declare redundancy,” they said.
The Federation noted that the sorry state of affairs are being exacerbated by the increase in business costs largely driven by tax measures, global geopolitical developments and climate change.
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The employers’ body said whereas the country may not do much about the geopolitical developments like the Russia-Ukraine conflict, it’s within its power to review ax measures that high adverse impact on individuals and businesses.
The Federation said the key taxes that need to be reviewed are VAT on petrol, PAYE and Corporate tax whose impact has greatly reduced the purchasing power of citizens and the cashflow in enterprises.
“We propose that the VAT on petrol revert to 8 per cent as it was before the enactment of the Finance Act 2023. The increase in VAT on petrol has a regressive effect on the economy,” FKE said.
“We also appeal to policymakers to consider reducing the PAYE to a maximum of 25 per cent. This is because food inflation remains the highest contributor to the cost of living.”
The enactment of the Finance Act, 2023 introduced a raft of tax measures in what President Ruto government said was to expand the tax base to increase revenue base and save the country from over reliance on loans.
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