Workers struggle with high cost of living, taxation - Cotu report

Each passing day is a struggle for the majority of workers in the country.

With the rising cost of living, some can barely afford to put food on their table. Those who have something left in their pocket have been forced to reduce the number of items they buy.

This is as per the findings in a report released by the Central Organisation of Trade Unions on Wednesday.

The report, ‘Turning the tide on Kenya’s economy: Recovery and prosperity through the workers’ lenses’ says over the past year, the steady rise in prices of essential commodities such as electricity and fuel has forced workers to reduce the basket of items they can purchase with their income.

For many employed workers, the current levels of taxation drain their incomes leaving them with very little disposable income.

These include the recently introduced Affordable Housing Levy (AHL) of 1.5 per cent contributed by both the employer and the employee based on gross pay and the proposed 2.75 per cent contribution to the Social Health Insurance Fund.

Of greater worry among workers is the persistent unemployment over the last year as companies close their businesses in the country and opt for neighbouring countries.

This has been occasioned by the high taxation rates introduced by the government in its effort to raise more revenue.

“Unemployment has persisted over the past year and continues to rise with several companies closing shop from Kenya and moving to other neighbouring countries like Tanzania due to increasing cost of doing business as the government imposes more taxes in its attempt to raise revenue,” Cotu SG Francis Atwoli said in the report.

To this extent, the rate at which companies declare workers redundant has been alarming.

According to the report, an estimate by the Federation of Employers (FKE) shows that about 70,000 formal jobs have been lost in Kenya between October 2022 and November 2023.

 “More job losses are expected as employers contemplate further downsizing as a coping mechanism with the drastic increase in operating costs in Kenya,” the report says.

For the workers in the country, the run-away corruption which has been witnessed in the country is further worsening the situation.

According to the report, workers are of the opinion that corruption draws too much from the economy perhaps more than the annual national budget and denies the country so much in tax revenues given that proceeds of corruption are not subjected to taxation.

"Workers have been devastated at the breaking news on corruption cases in Kenya that span the era of the founding to the current fathers of the Nation,” the report says.

In February 2023, for example, the European Union warned Kenya of the possibility of being blacklisted by foreign investors because of corruption and money laundering.

This, the report says denies Kenya of the much-needed employment opportunities that come with foreign direct investments since corruption increases the costs of doing business in Kenya.

The report raises concern that numerous corruption cases have tainted the country’s public procurement as only individuals who bribe the process get government tenders thereby leading to inefficiencies in the market.

The workers have also expressed concern that the country has continued to sink deep into debt due to over-borrowing.

Workers opine that rampant borrowing by the government especially from the IMF and the World Bank that are accompanied by strict conditions that starve the economy of much-needed growth.

“Considering this increase, and given that the government is continually borrowing to pull itself out of the cash crunch, things are not looking better,” Atwoli said.

The report calls on the government to swiftly restore investor trust since several investors continue to shop for investment opportunities in the country.

It further recommends that the country adopts zero tolerance for corruption by investing in human, physical and financial resources for corruption surveillance and crackdowns.