Salaried Kenyans face new monthly deductions after the Unemployment Insurance Bill 2022 was tabled to the parliamentary budget office on Thursday 7th August 2023 for consideration.

The bill sponsored by Ikolomani Member of Parliament Bernard Shinali will see employers and employees make monthly contributions to the kitty.

Shinali in the bill indicates that the Fund was inspired by South Africa where employer and employee are deducted 1 per cent each.

“The objective of the proposal is to provide for the payment of unemployment benefits to employees who become unemployed or their beneficiaries by proposing to establish the Unemployment Insurance Fund to which both the employer and employee will contribute,” the bill reads in part.

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Shinali indicates that this will help out-of-work employees be able to navigate tough socio-economic times.

Apart from salary deductions, the kitty will also be replenished through parliamentary appropriations from the national government,county government funds as well as donations and grants from development partners.

According to the Bill, the funds will be under the custody of Unemployment Insurance Authority which will be established through an act of parliament.

The Authority will take the form of set rules and laws of a body corporate where it will have a board of nine members and a chairperson.

“The functions of the Authority will include;administering the Fund, advising the Cabinet Secretary on unemployment insurance policies and legislation, advising both levels of government on policy matters on unemployment and unemployment insurance while also facilitating the implementation of such policies relating to unemployment insurance,” the bill reads in part.

Should the Shinali-sponsored bill pass in parliament, the Treasury Cabinet Secretary will have powers to exclude certain cadre of employees from the mandatory salary deduction.

This will be made through the advice of the Salaries and Remuneration Commission (SRC)which sets salaries for state officers and public servants.

Kenyans who will be able to enjoy the benefits of the kitty are those aged between 15-64 years and have been unsuccessfully looking for work for four consecutive weeks.

The said unemployed individual should not be incapacitated in a way that he cannot be able to work if a job opportunity comes up.

All jobless Kenyans, whether educated or not, are set to benefit a new government plan. 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.

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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.

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.

Jobless persons will at least have some capital for their start ups.

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.

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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?