70,000 Jobs gone as Kenya’s private sector struggles economically—a report by the FKE.
Many Kenyans have been left jobless following the latest government policies on taxes and increased value-added taxes on fuel. According to an alarm raised by the FKE, thousands of Kenyans have lost their jobs and are likely to continue losing jobs at an alarming rate if the new policies are not reviewed. Companies have experienced a surge in the cost of production following the enactment of the Finance Act 2023, which has consequently forced them to downsize their workforce to cut down on their expenses.
70,000 Workers Affected as Employers Brace for Mass Layoffs Amid Escalating Costs
The Federation of Kenya Employers (FKE) disclosed that from October 2022 to November 2023, a staggering 70,000 individuals employed in the formal private sector experienced job losses. The report, unveiled on Friday, November 24, 2023, highlighted a concerning trend, indicating an average daily loss of 192 jobs. Furthermore, the report noted that 40 % of employers are contemplating downsizing their workforce in response to the escalating operational costs.
The report emphasizes that 40% of employers are contemplating downsizing their workforce to cope with the escalating operational costs in Kenya. The comprehensive survey report on Trends is slated for release in December 2023. The report underscores that business costs have become unsustainable since enacting and implementing the Finance Act 2023.
Repercussions of the Finance Act 2023
According to the report, FKE has noted the negative impact of these changes on employers’ cash flows. The heightened cost of capital, influenced by government policies and market conditions, has soared, posing challenges for effective private sector operations. The weakening of the shilling has further complicated matters, adversely affecting businesses reliant on imports, including machinery and equipment vital for the manufacturing sector.
FKE also disclosed that the current cost of living and recent additional taxes have led to a decline in employee productivity, with payslips reflecting reduced incomes. As highlighted in the statement, the challenging environment has forced workers to seek alternative income sources, contributing to diminished productivity.
The FKE president noted that businesses have been pushed to the limit where they cannot meet operational costs while the workforce cannot make ends meet with their take-home salaries.
Expert’s Remarks
Kenyans must prepare for more challenging times in light of the challenging economic circumstances with the daily loss of more than 190 jobs. The impact on businesses and individuals is significant, and navigating these hardships will require resilience and adaptability. One potential avenue for relief lies in reconsidering and revising the Finance Act. By reevaluating and amending specific provisions, there is an opportunity to alleviate the burden on both employers and employees. Such revisions can play a vital role in stabilizing the economy, safeguarding jobs, and providing the necessary breathing room for businesses to recover. This is a long shot but the only quick remedy to the escalating situation.
About The Author
