The demand of the Kenyan public on the need to mitigate the rise of the cost of living by increasing the minimum wage has been approved by President Kenyatta
There is a new update in the Kenya PAYE administration. For workers in Kenya, this year’s May Day celebration came bearing gifts. It is the gift of an increased minimum wage as announced by President Uhuru Kenyatta at the Nyoyo Stadium in commemoration of the 2022 Workers’ Day celebration.
The announcement by the President pegs the minimum wage at $130 which is a 15% increase intended to help workers cope with the inflationary trend of consumer prices rising by an average of 20% due to the Russia-Ukraine crisis.
This increase is coming 3 years after the former review of 5% in the middle of a current Inflationary trend that rose to 6.47% year-on-year last month from 5.56% in March.
This is also coupled with the fact that the nation just recovered from a major fuel scarcity that struck its major city due to the European unrest.
More on the New Minimum Wage
President Kenyatta also proposed the spirit of an increased minimum wage Kenya and appealed to the private sector to implement the new increase and ensure that every employer abstains from deducting income (PAYE) from Kenyan’s earning Ksh. 35,000 and below.
However, the new directive is not sitting down well with employers who under the aegis of the Federation of Kenya Employers (FKE) complained of a fragile labour market and depressed earnings citing the high cost of operation for most firms and hard economic times.
Also, employers in turn are asking the government to take a critical look at the main constituent of an increase in the cost of living which include fuel prices and what they tagged, ‘the unfavourable tax regime’
As a continuation of employee demands, they also want the tax-free income bracket raised from Sh24,000 to Sh35,000 and tax relief bumped up to Sh3,500 from Sh2,400.
Minimum Wage and Tax
Technically, an increase in a nation’s minimum wage is capable of pushing an employee’s annual income into a higher tax bracket which increases the possibility of imposing a higher marginal tax rate.
