By Miraj Guo | April 29, 2026
MOMBASA, KENYA — The Federation of Kenya Employers has called on the government to limit the 2026 statutory minimum wage increase to no more than five percent, warning that higher adjustments could strain businesses and threaten the survival of small and medium enterprises.
The proposal was among key resolutions adopted during the FKE Coast Branch 65th Annual General Meeting held in Mombasa under the theme “Reskilling for the AI Economy,” which brought together employers to assess labour trends and the broader economic outlook.
FKE argued that any wage increment across both agricultural and general sectors should not exceed five percent and should take effect from November 1, 2026. The employers’ body noted that the last wage review was implemented in November 2024, adding that existing guidelines discourage adjustments within a 24-month cycle.
The federation also opposed proposals to align the Agricultural Wages Order with the General Wages Order, stating that such changes require wider consultation through the National Labour Board.
To ease pressure on low-income earners, FKE recommended that statutory deductions and levies be calculated based on basic pay rather than gross earnings. It further proposed increasing the tax relief threshold for minimum wage workers from KSh 2,400 to KSh 3,600 per month.
On international labour standards, the federation welcomed progress toward the ratification of key International Labour Organization conventions, urging the government to fast-track implementation and allocate adequate funding.
Employers also raised concerns over infrastructure delays, particularly the Nyali–Kadzandani–Mtwapa Road project, describing it as critical to easing congestion and supporting sectors such as transport, logistics, and tourism.
In addition, FKE highlighted challenges within the tax regime affecting manufacturers. Despite the zero-rating of packaging materials under the Finance Act 2025/26, the federation noted that imported inputs still attract high duties, putting local industries—especially tea packers—at a disadvantage. It proposed reducing import duty on Kraft paper, scrapping excise duty on packaging materials, and granting duty remissions for inputs not available locally.
The meeting further criticized fragmented county levies and licensing systems, calling for harmonization to reduce the cost of doing business. Employers also opposed a sharp increase in levies by the Kenya Bureau of Standards, warning that it could disproportionately affect small enterprises.
On regional trade, the federation expressed concern over a 25 percent excise duty on teas from East African Community countries transiting through the Mombasa Tea Auction, cautioning that the move could disrupt the regional tea value chain and undermine trade agreements.
FKE urged policymakers to strike a careful balance between improving worker welfare and ensuring business sustainability, emphasizing that economic decisions must reflect the realities faced by employers while safeguarding enterprise resilience.
