FKE Pushes for 5pc Wage Rise Cap, Lower Taxes

By Mbungu Harrison

Email, thecoastnewspaper@gmail.com

The Federation of Kenya Employers (FKE)has proposed a maximum five per cent increase in minimum wages, citing economic strain on businesses.

The resolutions were made during the branch’s 65th Annual General Meeting held in Mombasa under the theme _“Reskilling for the AI Economy.”_

FKE executive director Dr Jacqueline Mugo said the federation’s position follows the last minimum wage adjustment on November 1, 2024.

“Wages guidelines are clear that wages should not be increased more than once in 24 months. This period ends on 31st October 2026,” Dr Mugo told delegates.

She said FKE recommends that any increase effective 1st November 2026 should not exceed five per cent for both Agricultural and General wages.

“Our cash flows are constrained due to geopolitics, economic turbulence, and logistical challenges. Should there be an increment of wages, employers should be given up to 1st November to prepare,” she added.

FKE further objected to proposals to align the Agricultural Wages Order to the General Wages Order, saying it is a major policy shift that requires deliberation by the National Labour Board.

The federation called for all statutory deductions and levies to be based on basic pay only. It also urged the government to increase tax relief for minimum wage earners from Sh2,400 to Sh3,600 per month to cushion workers.

On taxation, FKE warned that rising business costs threaten small and medium enterprises.

The lobby said the Kenya Bureau of Standards levy hike from Ksh400,000 to Ksh4 million annually places a “significant burden” on manufacturers. It urged the government to retain the levy at Sh400,000 to protect SMEs and cottage industries.

FKE also raised concern over multiple and unharmonized county levies and cess charges, which it said continue to increase costs. The federation called for harmonized county revenue systems and enforcement of constitutional limits on county taxation.

On trade, the employers’ body said the 25 per cent excise duty on teas from EAC countries destined for export through the Mombasa Tea Auction undermines regional agreements and threatens the auction’s competitiveness.

“The Mombasa Tea Auction supports millions of livelihoods. This duty must be aligned with EAC Customs Management Protocols,” the press statement read.

FKE noted that although packaging materials were zero-rated under the Finance Act 2025/26, implementation guidelines remain unclear. It urged a reduction of import duty on Kraft paper from 35 per cent to 10 per cent and removal of excise duty on packaging materials.

The branch underscored the urgent need to fast-track completion of the Nyali–Kadzandani–Mtwapa Road to ease traffic congestion and support transport, logistics and tourism.

FKE also commended the government for progress on ratifying ILO Conventions C189 on domestic workers and C190 on workplace violence and harassment, urging that ratification be completed soon.

“We urge policymakers to adopt balanced measures that promote both worker welfare and enterprise resilience,” FKE said.

The federation wished all employers and Kenyans a happy Labour Day ahead of 1st May 2026.

The meeting also marked as election of Coast Branch elections where EATTA boss George Omuga was elected as the new Regional President.

At the same time the meeting also served as an exit of long-serving Regional President Dr. David Kisa, who said he was “privileged to have served well and with dignity.” Michael Odhiambo was also elected to the branch leadership.