Civil servants To Suffer An Additional Statutory Deduction from Pay slips
The national treasury has plans to introduce unemployment insurance fund (UIF), which will cushion jobless Kenyans during these harsh economic times.
In this new development, Kenyans holding jobs will be obligated to remit a two percent tax from their incomes to go direct to UIF so as to cushion the jobless Kenyans.
This is just one of the post COVID-19 economic recovery strategies proposed by the National Treasury. It is going to result to increased taxation for employed individuals, who already have other statutory deductions.
“The government will establish a UIF to cushion workers in financial distress by providing them with short-term relief when they become unemployed, or are on unpaid leave or unable to work because of illness,” said the National Treasury.
“The amount of contribution to the fund will be two per cent which include; one per cent paid by employees from salaries and another one per cent paid by the employers.”
Additionally, UIF will get ksh. 300 million from the ministry of planning spread across two financial years. Those who will be eligible for the tax will be both formally and informally employed Kenyans, who as per the current KNBS data stand at 15.9 M
It is projected that the UIF will solve Kenya’s endemic unemployment rate, which has been seriously hiked by the COVID-19 pandemic that has seen over 2 million Kenyans lost their jobs.
The national treasury however did not offer additional details including the eligibility criteria for beneficiaries and the duration of the cushioning.
If these proposals are approved, Kenya will join other countries that are currently having a similar programme. In the US for instance, unemployment insurance funds give unemployment benefits to eligible persons who lose their jobs. The self employed and those who resigned from their jobs or were sacked are deemed ineligible.
The big question however remains. Will the UIF serve the right persons and purposes?