The Federation of Kenya Employers (FKE) recently conducted a survey revealing concerning trends in the formal private sector. According to the findings, a significant 70,000 jobs were lost between October 2022 and November 2023, underscoring the challenges faced by the workforce in the current economic landscape.

FKE’s survey indicates a distressing scenario in the formal private sector, reporting a 3% decline with 70,000 job losses over the past year. The data underscores economic hardships, with 40% of employers contemplating workforce reductions due to escalating operational costs. 

The survey further highlights challenges in filling 20% of job vacancies and substantial job losses in skill-intensive sectors like services and education, especially exacerbated by school closures.

FKE’s Executive Director, Jacqueline Mugo, cautioned that the Finance Act of 2023 is anticipated to contribute to more job losses, attributing this trend to increased operational costs. The Act’s implications on businesses are expected to intensify challenges in the formal private sector, potentially leading to further declines in employment opportunities.

The Federation of Kenya Employers (FKE) is a national organization dedicated to representing employers’ interests in Kenya. The primary  roles and functions of fke are to actively influence policies aimed at fostering a conducive business environment. 

Additionally, it provides members with essential business development services and representation, emphasizing its commitment to supporting the growth and sustainability of businesses in the country.

The Finance Act of 2023 has sparked controversy, particularly due to its provisions impacting businesses. Notable clauses include limiting the carry-forward period for foreign exchange losses to five years, requiring VAT registration for suppliers of imported digital services, a threefold increase in the turnover tax rate, and removing manufacturing companies from interest restriction rule exemption. 

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Additionally, the Act defines digital content monetization and digital assets, with specific regulations for Employee Stock Ownership Plans (ESOP).

The Federation of Kenya Employers (FKE) has issued a warning, projecting further job losses in 2024 based on current trends. The implications for the formal sector in the coming year are concerning, with potential challenges and disruptions anticipated in employment levels, posing a significant impact on businesses and the economy.

The ripple effects of job losses, as projected by the Federation of Kenya Employers (FKE), extend beyond individual employment concerns to impact the broader economy. 

The interconnectedness between declining employment levels and economic health raises concerns about potential challenges and disruptions that could affect various sectors and the overall well-being of Kenya’s economy.

FKE advocates mitigating job losses through strategies like a voluntary housing levy, cost reduction, pausing expansion and hiring, and reconsidering dividends. Collaborative efforts among stakeholders are essential for implementing effective solutions. 

The fke kenya also opposes funding Universal Health Coverage through extensive taxation, asserting that the formal sector’s wage employment contribution is relatively small.

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