FKE: Unpredictable policies pose major threat to investors

FKE Chief Executive Jacqueline Mugo who spoke during the sixtieth anniversary of the federation in Nakuru on April 10, 2019. She raised concerns over unpredictable business environment in the country. [Photo: Harun Wathari, Standard].

The Government has been cautioned against allowing unpredictability in the labour market, which is likely to pollute the business environment in the country.

The Federation of Kenya Employers (FKE) Chief Executive Jacqueline Mugo said recent proposed changes could push investors out of business or leave the country.

She listed the housing levy, and higher contributions to the National Hospital Insurance Fund (NHIF) and National Social Security Fund (NSSF) as an ambush to investors.

“The business environment in the country remains unpredictable and the Government needs to take charge of the situation,” said Mugo.

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“Employers are facing numerous challenges from the huge number of bills proposed by the National Assembly and other platforms.” She was speaking during the 60th anniversary of the federation in Nakuru last week.

The FKE boss took issue with the 1.5 per cent levy to be met by the employee plus an equivalent amount by the employer towards the National Housing Development Fund.

The contributions are meant to raise money to fund the Government’s housing agenda.

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Though the federation supports the idea, it has an issue with the burden it will have on the employers. “Some employers have housing schemes and others offer loans at moderate rates. The idea of a housing fund was good but burdening it on employers is not in order since some already have their own plans on workers housing,” said Mugo.

Ms Mugo also raised concerns over the proposed changes at the NHIF which will see the monthly contributions increased.

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This, she said, will be an additional burden on the employers, especially those who have other insurance covers for their employees. “A majority of Kenyan employers have adopted private health insurance packages for their workers. Matching workers contributions with NHIF will be an unnecessary burden to employers,” said Mugo.

She also took an issue with the proposed increment on NSSF contributions from Sh200 to Sh1,080, with subsequent annual increase for the next five years. The FKE boss said the burden on the employers was also increased after President Uhuru Kenyatta last year increased minimum wage that has left businesses financially pressed.

“It came as a shock to the FKE and the employers when the President announced a five per cent increase on the minimum wage. This, we feel was not in order as it did not correspond to a growth in the economy,” she said.

The employer’s lobby said the changes will see the cost of doing business rise, scaring away investors or forcing them to take actions to remain operating profitably.

“The rate of exit of firms is not yet alarming but is a ticking time bomb. Employers have been forced to use a raft of drastic measures to remain in business including scaling down their workforce and others had to shift their base,” said Mugo.

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She attributed the numerous strikes in the public and private sectors to the changes that have left the employers at the mercies of workers demanding their rights.

With this trend, Mugo said Kenya is likely to be reviewed downwards on the list of economies with ease of doing business which the World Bank in a 2019 report placed fourth in Africa and 61 out of 190 economies across the globe.

She also defended companies in the tea sector over mechanisation.of their operations.

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