17 May 2017

Kenya: Recruiters Now Call for Tax Cuts to Stem Job Losses

The Institute of Human Resource Management (IHRM) Council says high taxation and cost of production are driving the current wave of private sector job cuts.

Council chairman Elijah Sitimah said high labour and transportation costs as well as power tariffs have particularly accelerated job losses.

So high is the taxation, Mr Sitimah said, that some companies were forced to closed down local operations and moved to other countries.

Manufactured goods, he noted, were taxed at 16 per cent Value Added Tax, 30 per cent corporate tax besides other levies that made it hard for firms to stay afloat.

"More than 50 per cent of the earnings by businesses go to taxes. Such harsh business environment has forced companies to close down, resulting to loss of jobs," he said.

Speaking to journalists at PrideInn Beach Resort in Mombasa on the sidelines of a Human Resource congress, Mr Sitimah urged the government to reduce taxes, bring down the cost of importing of goods as well as improve infrastructure to cut transport costs.

About 600 human resource professionals converged at Mombasa for the congress, which was organised by the IHRM.

Minimum wage

Mr Sitimah warned that more workers might end up losing jobs as some employers cannot afford to pay the recent 18 per cent minimum wage increase announced during Labour Day celebrations.

"Some companies have been hit by low business to an extent that they cannot pay workers. And with the salary increment it will be difficult for struggling firms to meet the labour costs," he said.

Public Service Commission chairperson Margaret Kobia called on the government and the private sector to allocate adequate funds for training civil servants and workers.

Sponsors of the congress include Nation Media Group, Sanlam, the Kenya Revenue Authority, AON, Higher Education Loans Board, Pwani Life and NIC Bank.

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