Businesses to get tax relief for hiring fresh graduates

Businesses that employ at least 10 fresh graduates from technical and vocational institutions will from Saturday enjoy a tax relief equivalent to half of the trainees’ salaries.

The relief starts on January 1 and will be offered to businesses that hire the graduates for between six months to a year, and is meant to boost skills development and stem Kenya’s high youth unemployment rate.

The Treasury made the changes in the Finance Act 2021 in a bid to open doors for the graduates from technical and vocational institutions to gain experience and earn cash like their counterparts from the universities.

“Any employer who engages at least 10 university or technical and vocational education and training graduates as apprentices for a period of six to 12 months during any year of income shall be eligible for a tax rebate in the year subsequent to the year of such engagement,” reads the changes.

Kenya has since 2016 extended the relief to firms that employ at least 10 university graduates. The changes come at a time of growing emphasis on technical and vocational institutions.

Fresh graduates from institutions of higher learning struggle for limited job opportunities due to a lack of specialised market skills and experience to perform tasks.

Employers in Kenya have for years complained of poor quality graduates who do not meet the needs of the job market, prompting companies to spend millions of shillings on training.

The inclusion of graduates from technical and vocational institutions in the tax relief to employers comes amid increasing enrollment at the institutions.

Data from the Kenya National Bureau of Statistics (KNBS) shows that enrollment at the institutions grew 130.4 percent to 451,205 students last year from 195, 857 in 2016, highlighting the growing popularity of the institutions.

Kenya has for years struggled to create formal jobs, a situation that worsened by the Coronavirus pandemic and further dimmed the employment chances for graduates from the institutions of higher learning.

The number of formal jobs contracted for the first time in two decades, highlighting the economy’s struggles with coronavirus-induced shutdowns and restrictions.

Data from the Economic Survey 2021 shows the economy shed 187,300 formal jobs in the year ended June 2020, marking the first time since 2001 when some 18,300 salaried workers were struck off payrolls.


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