The Federation of Kenya Employers (FKE) has issued a distress call over the deteriorating living standards of employees, citing the heavy toll of recently introduced taxes.
In a statement released on Friday, January 24, FKE attributed the rising redundancies to high taxes, inflation, and global geopolitical developments. The employers’ body further highlighted a decline in living standards among employed Kenyans under President William Ruto’s administration.
According to FKE CEO Jacqueline Mugo, the escalating payroll deductions have left employees with significantly reduced take-home pay, pushing some below the legally mandated one-third threshold.
“Since the new payroll deductions were introduced, we have received numerous distress calls from our members and employees themselves. The take-home pay has become too little to sustain a decent living,” said Mugo during a press briefing on Friday.
Employers, she added, are increasingly finding themselves in a difficult position—either flouting labor laws or struggling to top up employee salaries to meet legal requirements. “Employers are required by law not to deduct more than two-thirds of an employee’s total earnings, but the increased deductions make compliance nearly impossible,” Mugo explained.
The deductions in question include the 1.5% Affordable Housing Programme levy introduced in March 2024, new premiums under the Social Health Authority (SHA) as part of the transition from the National Health Insurance Fund (NHIF), and enhanced contributions to the National Social Security Fund (NSSF), effective January 2025.
Mugo noted that while FKE supports initiatives like enhanced pension contributions for long-term financial security, the cumulative impact of these deductions is unsustainable. “We want employees to retire with dignity, but the combined statutory deductions have become an unbearable burden,” she said.
The FKE has appealed to the government, through the Ministry of Labour and Social Protection, to review the statutory deductions. The federation has also highlighted the need to harmonize social protection efforts with measures to ensure employees retain a fair and decent income.
The Employment Act is clear: total deductions from wages should not exceed two-thirds of an employee’s earnings. However, Mugo warned that the current framework is pushing employers to breach this requirement.
As more deductions are implemented, the FKE has committed to continued engagement with the government to strike a balance between advancing social protection goals and safeguarding employees’ financial well-being.
The rising cost of statutory contributions has sparked widespread concern among Kenyan workers, with many questioning the sustainability of the measures amid tough economic conditions.
The Federation of Kenya Employers (FKE) has reported that 5,567 Kenyans have been declared redundant over the past three years, with the actual figure likely higher as the organization only tracks job losses among its member companies.
Speaking ahead of the Budget 2025/26 preparations, FKE CEO Jacqueline Mugo noted that employers are increasingly seeking support amid widespread financial distress. “We are witnessing a worrying decline in employee take-home pay, with more distress calls from employers grappling with these challenging economic conditions,” Mugo said, urging the government to prioritize policies that stimulate job creation and ease the cost of living.
“Living standards of our employees are deteriorating. They are suffering because of the new taxes,” Federation of Kenya Employers tells Ruto pic.twitter.com/eZrcjamfJq
— Citizen TV Kenya (@citizentvkenya) January 24, 2025
