Employers in Western Kenya are grappling with an increasingly tough economic climate, exacerbated by rising statutory deductions that threaten business sustainability and employee welfare.
During the Federation of Kenya Employers’ (FKE) 44th Annual General Meeting (AGM) in Kisumu on Thursday, business leaders urged the government to review taxation policies, arguing that excessive deductions are crippling businesses and reducing workers’ disposable income.
FKE CEO Jacqueline Mugo stressed the need for a fair balance between compliance and profitability.
“Our members are committed to fulfilling their statutory obligations, but we must acknowledge that businesses are struggling to remain profitable while employees feel the financial strain,” she said.
FKE Western Region President Dr. Margaret Oloo voiced concerns over the controversial housing levy, questioning its effectiveness in guaranteeing housing for all workers.
“We acknowledge the government’s efforts in addressing the housing deficit, but businesses are worried about the financial implications. How do we ensure compliance without stifling job creation and economic growth?” she posed.
The meeting focused on taxation, with calls for a review of deductions that significantly reduce workers’ take-home pay.
“With the current level of deductions, businesses are under immense pressure, and employees are left with limited disposable income. There is an urgent need for a national dialogue on taxation and wages,” Mugo stated.
Despite their concerns, employers maintain they are not against compliance but insist the tax system should strike a balance between business sustainability and workers’ welfare.
“We have engaged the National Treasury, and they acknowledge the challenges. The conversation must continue to find solutions that work for both businesses and employees,” Mugo added.
Amid these concerns, FKE celebrated business excellence through the Employer of the Year Awards (EYA), introducing a new category to recognize small and medium enterprises (SMEs) for leadership, innovation, and commitment to employee welfare.
“SMEs play a crucial role in economic growth and job creation. This new category will ensure their contributions are acknowledged and inspire more small businesses to strive for excellence,” Mugo noted.
As discussions on taxation and business sustainability continue, FKE remains optimistic that policy adjustments will enable enterprises to thrive while ensuring fair treatment for employees.
