TUKO.co.ke journalist Japhet Ruto has over eight years of experience in financial, business, and technology reporting and offers profound insights into Kenyan and global economic trends.

The Federation of Kenya Employers (FKE) has expressed concerns about the government's ongoing raids on payslips, which are intended to raise tax revenue.

FKE warned that over-taxation could lead to social unrest as employees' take-home pay nosedives.

FKE executive director Jacqueline Mugo revealed that Kenyans' net pay has dropped to unsustainable levels, falling below the recommended one-third of earnings.

Mugo said employers were forced to deduct more money from employees after President William Ruto's administration introduced multiple taxes.

"Clearly, if we continue raiding the pay slip, we will not have any income. So what will they do? They will have to keep borrowing; they will be distressed, and that eventually translates to social unrest. Then people begin to wonder what the value of being employed is. In our calculation, about 45 to 50% of employees' salaries are going to tax and deductions," she lamented in a press conference on Friday, January 24.

Employers disclosed that since 2022, over 5,000 individuals had lost their employment under the current administration, with at least 57 companies reporting layoffs.

"In 2024, we had 202 companies declaring redundancies. In 2023, we had 11, and in 2022, the remaining. Out of this, from our membership, some 5,567 were affected. This is just an indication because these are just the numbers we get from our members. There are lots of other companies declaring redundancies,” Mugo revealed.

FKE noted enterprises have been forced to downsize to lower their wage bills as a result of the national and county governments' inability to settle pending bills, which have crossed the KSh 1 trillion mark.

Mugo appealed to state corporations to clear their outstanding debts to allow the private sector to thrive.

She cautioned the government against tax hikes, noting that employees are overburdened.

Despite FKE's pleas, Kenyans' income will decline following the implementation of another phase of the National Social Security Fund (NSSF) rates.

The new rates, which will be implemented in February 2025, will trim employees' pay by up to KSh 1,512, further burdening households amid harsh economic times.

NSSF will adjust the upper and lower income limits from KSh 36,000 to KSh 72,000 and KSh 7,000 to KSh 8,000, respectively.

According to the NSSF Act, 2013, the minimum contribution will rise from KSh 420 to KSh 480, while the highest deduction will increase from KSh 2,160 to KSh 3,840.

Source: TUKO.co.ke