Nairobi — Federation of Kenya Employers (FKE) says 70,000 employees in the formal private sector have lost their jobs since October 2022.
FKE Executive Director Jacqueline Mugo revealed the staggering job losses even while reiterating the federation's earlier warning that the Finance Act of 2023 would lead to more job losses.
The federation said the Finance Act of 2023 has adversely affected many businesses' cash flows, which has an effect on payrolls and rendered the cost of doing business unsustainable.
"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," FKE said in a statement.
Mugo promised to launch a full survey report on Trends in December 2023.
The Federation noted that despite the huge loss, 40 per cent of businesses in the sector were still considering downsizing to address the rapid rise in operating costs in the country.
FKE noted the country's job situation remains unstable because of the COVID-19 pandemic's aftermath, as there has been no clear road to recovery.
Trapped by a fragile currency and a buttered economy, the FKE has now criticized the government policies, pointing out their detrimental effects on import-dependent enterprises.
The Federation observed that the Kenya shilling lost 21 per cent of its value in the year-long ending November 22, 2023.
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It stated this devaluation is a result of capital flight and a decrease in foreign exchange inflow, worsed by the poor value of exports.
"The Kenyan shilling has experienced a sharp decline, losing 21 per cent of its value between September 13, 2022, and November 22, 2023. The exchange rate against the USD has soared to 152.45, a significant jump from the 121.05 recorded during the same period in 2022," read the statement.
The Federation proposed the three main taxes that need to be addressed are corporate tax, PAYE, and gasoline VAT.
It noted the taxes have a significant negative influence on citizens' purchasing power and business cash flow.
"We suggest returning the gasoline VAT to 8%, as it was prior to the Finance Act 2023's passage. Fuel price increases have a regressive impact on the economy," FKE noted.
Additionally, employers urged legislators to consider capping the PAYE rate at 25 per cent considering the largest factor still driving up living expenses is food inflation.
"In addition, we seek the removal of the minimum turnover tax. This tax is going to exacerbate informality and destroy micro businesses that employ 84 per cent of wage employees in Kenya," read the statement.
"Businesses are closing down, and we are seeing employees increasingly becoming working poor."
