Tax burden: Ikolomani MP Shinali tables Bill seeking to establish unemployment fund

Kenyans will have dig deep in their pockets to finance ‘Unemployment Fund.

This comes as Ikolomani MP Bernard Shinali tabled the Unemployment Insurance Authority Bill, 2022 seeking to provide benefits to employees who unexpectedly lose their jobs and have no other source of income to sustain them and their beneficiaries.

“Kenyans in employment are the ones spinning the wheel of economic growth through paying taxes but there is no safety net to cushion them in the event a disaster strikes or any other eventuality occurs and renders them jobless,” Shinali told The Standard.

The lawmaker cited the Covid-19 pandemic which caused many Kenyans to lose their jobs because employers could not manage to pay or retain them. 

“Many businesses were affected and thousands of Kenyans found themselves jobless and hopeless, some plunged into depression because they had no alternative source of income,” argued the legislator.

He said the lives of some employees literally stopped after they lost jobs due to the pandemic “because they could not afford to pay school fees for their children or fend for their families as they used to do.”

Although the legislator said a final say on the proposed bill before the National Assembly, The Central Organisation of Trade Unions (COTU) Secretary General Francis Atwoli has opposed it.

Atwoli said the bill is an extreme burden to Kenyan employees. Atwoli argued that employees and employers have nothing left on their payslips due to soaring deductions.

 While urging Kiharu MP Ndidi Nyoro, who leads the Budget Committee in the National Assembly to reject the bill, Atwoli said the government is trying and putting measures and mechanisms in place to spur the economy, but before the economy can come to where it is supposed to be, Kenyans should be spared the burden of more taxes.

But Shinali in his defence said low-cadre employees including those employed in tea farms will benefit from the proposed Bill if it sails through Parliament.  

“Currently, a Kenyan working in tea farms in Kericho cannot afford fare back home if his or her job ends today, we would like such a worker to receive a six-month pay after losing the job to sustain himself while searching for another job,” said Shinali.

He added, “This Bill seeks to cushion employees who become unemployed or their respective beneficiaries against harmful socio-economic effects of unemployment, but it is not cast in stone, I welcome criticism from Kenyans because we want the draft proposal subjected to public participation so that it can be enriched.”

Mr Shinali, however, dismissed claims that the Bill seeks to benefit all jobless Kenyans.

“Focus is on employees rendered jobless at some point and are still in the productive age bracket. These particular Kenyans ought to receive benefits equivalent to the salaries they were earning to enable them to fend for their families and recollect themselves as they look for alternative sources of income after losing their jobs,” argued Shinali.

“People can plan their lives instead of going into depression after seeing their lives falling apart just because they have lost a job,” he said.

“This Act shall not apply to certain cadre of public officers as may be prescribed in regulations by the Cabinet Secretary taking into consideration the advice of the Salaries and Remuneration Commission (SRC) and Cabinet Secretary responsible for matters relating to finance,” reads the draft proposed Bill in part.

Mr Shinali said Kenyans are free to interrogate the proposed one percent deductions from the salaries of those employed and the employer.  “When the proposed bill goes to public participation, we expect labour movements and Kenyans to give their views that would enrich it.”

he said the proposed Bill has been tried elsewhere and has worked perfectly.

“In the US for instance, a citizen who loses his or her job is fed by the government under a similar arrangement, we would like to borrow a leaf from such successful practices,” he explained.

Shinali said Kenyans can hardly access their NSSF benefits whenever they lose their jobs unless one has attained the mandatory retirement age. “We are not questioning NSSF but these are facts we must face.  A Kenyan stops making contributions to NHIF and Pay as you earn (Payee) after losing a job which is a loss to the government.”

“Our plan is to ensure such employees get assistance to remain afloat and continue making such contributions for their own good and that of the government,” argued the legislator.

The Bill proposes the establishment of the Unemployment Insurance Authority as a corporation with a board containing a chairperson and nine other members.

Functions of the Authority will include administering the Fund and advising the Labour Cabinet Secretary on unemployment insurance policies and legislation.

The Authority will also be advising both levels of government on policy matters on unemployment and unemployment insurance while facilitating the implementation of such policies relating to unemployment insurance.

The draft Bill also provides for the appointment of staff to the Authority to help it effectively discharge its responsibilities.