Employers warn of job losses over housing tax
What you need to know:
- FKE says they have not factored the contributions in their payroll budgets.
- It argues the move will increase cost of doing business and reduction in workers salaries.
- Federation said it supports the Big Four Agenda, but said there is need to for the government to look for alternative revenue sources
Kenyan employers Thursday came out in strong opposition to the proposed introduction of a new statutory contribution to finance the government's affordable housing plan.
The employers argued the move will increase the cost of doing business and reduction in workers salaries.
The proposal, which is part of the laws that Treasury secretary Henry Rotich wants parliament to pass, will see employers match their employees’ contribution to the fund upto to a maximum of Sh 5,000.
"The proposed changes increase labour costs for employers and cost of living to employees without any guaranteed benefits to them,” Federation of Kenya Employers President, Mark Obuya said.
Employers are currently making a monthly payment of Sh200 for every employee to the National Hospital Insurance Fund, besides providing accommodation or a housing allowance of 15 per cent of the monthly pay and therefore see the new proposal as a further increase in labor costs.
If parliament passes the law, a worker earning Sh100,000 will make a months contribution of Sh500 to the housing fund while those earning Sh1 million will contribute Sh5,000.
The proposed rates are, however, expected to hit Kenyans, who earn less than Sh50,000 a month hardest.
Payroll budgets
Employers also said they had not factored in these requirements in their payroll budgets and mid-year changes will strain their funds allocations against projects for the remainder of the year.
The State Department of Housing is establishing the fund as part of the plans to provide affordable and quality housing.
The plan is build a million houses by 2022, 800,000 of which will be delivered under public private partnerships and the rest delivered under the social housing programme.
Kenya is estimated to have a 250,000 housing units deficit per year.
Federation of Kenyan Employers (FKE) said the proposal does not indicate whether the contribution will be in addition to the housing allowance they currently offer employees nor specify the role that employers and their workers will play in managing the Housing Fund.
Rotich did not offer details on how the fund will be managed but indicated that contributors will be given priority over non-contributors in accessing the completed houses.
Mr Obuya said employers had already presented their concerns to the parliamentary committee on Labour, in the hope that they will reach an amicable solution.
The federation said it supports the Big Four Agenda, but said there is need to for the government to look for alternative revenue sources to avoid burdening businesses through increased costs.
