President Ruto Unveils Sweeping Worker-Centric Reforms at Kenya’s 60th Labour Day
The event, marking COTU’s Diamond Jubilee, underscored the theme “Self-Reliance in Production is the Key to Economic Growth,” aligning with Kenya’s Bottom-Up Economic Transformation Agenda.
Ruto unveils worker-focused reforms at Kenya’s 60th Labour Day in Nairobi. Photo/State House.
By Robert Assad
On May 1, 2025, President William Ruto delivered a landmark speech at Uhuru Gardens during Kenya’s 60th Labour Day celebrations, hosted by the Central Organisation of Trade Unions (COTU).
Addressing thousands of workers, union leaders, and dignitaries, Ruto outlined bold reforms aimed at enhancing workers’ welfare, boosting economic self-reliance, and transforming Kenya’s socio-economic landscape.
The event, marking COTU’s Diamond Jubilee, underscored the theme “Self-Reliance in Production is the Key to Economic Growth,” aligning with Kenya’s Bottom-Up Economic Transformation Agenda.
Tax Reforms to Boost Workers’ Income
A centerpiece of Ruto’s address was the announcement of significant tax reforms under the 2025 Finance Bill, recently approved by the Cabinet.
To increase workers’ take-home pay, employers will now apply tax reliefs and exemptions directly when calculating Pay As You Earn (PAYE), bypassing the current system of claiming reliefs through the Kenya Revenue Authority (KRA).
This shift is expected to streamline processes and deliver immediate financial benefits to employees across sectors.
In a move to honor retirees, Ruto declared all pension and gratuity payments for public and private sector workers tax-exempt.
“This reform recognizes the service and sacrifice of our senior citizens, ensuring retirement is met with dignity, not distress,” he said.
Small businesses also stand to gain, with simplified tax treatments allowing full deductions for equipment costs in the year of purchase, eliminating delays in accessing relief.
Revolutionizing National Savings
Ruto highlighted Kenya’s strides in fostering a robust savings culture, addressing decades of stagnation. Until 2023, the average worker saved just KSh200 monthly through the National Social Security Fund (NSSF), amassing KSh320 billion over 60 years.
The 2023 law mandating 6% contributions from both employees and employers has yielded KSh280 billion in two years, nearly matching the six-decade total.
By year-end, savings are projected to double the 60-year figure, with a goal of KSh1 trillion by 2027. Ruto aims to raise Kenya’s savings-to-GDP ratio from 10-12% to 25% in the medium term, rivaling regional peers like Uganda and Tanzania.
Bottom-Up Agenda: Driving Inclusive Growth
The President detailed progress under the Bottom-Up Economic Transformation Agenda, focusing on five pillars: agriculture, micro, small, and medium enterprises (MSMEs), universal healthcare, affordable housing, and the digital and creative economy.
In agriculture, reforms have slashed fertilizer prices, boosting maize production by 40% and stabilizing farmer incomes. Coffee sector reforms, including streamlining the Nairobi Coffee Exchange, have raised farmer prices from KSh50 to KSh110-150 per kilogram, while sugar industry revitalization has spurred record production and job creation.
Ruto shared the story of Mama Redempta Makokha from Mumias, who used an KSh80,000 bonus to improve her wellbeing, illustrating the agenda’s tangible impact.
The Affordable Housing Programme has created over 250,000 jobs in fields like masonry, carpentry, and engineering, with plans to expand homeownership in the coming months.
The MSME sector, described as Kenya’s “greatest untapped reservoir of employment,” benefits from the Hustler Fund, which has disbursed KSh70 billion to 25 million Kenyans, mobilizing KSh4.5 billion in savings.
A nine-band credit rating system has formalized credit histories, enabling 4.5 million borrowers to access commercial bank loans, with 400,000 transitioning to the Hustler Fund Bridge product, some securing up to KSh150,000.
Education and Labour Migration
Education reforms have addressed a 116,000-teacher shortage from 2022, with 76,000 teachers hired in two years. An additional KSh2.4 billion will fund 20,000 intern teachers from January 2026, alongside KSh1.6 billion for teacher training and KSh1 billion for promotions, improving student-teacher ratios and literacy outcomes.
Labour migration efforts have placed 200,000 Kenyans in jobs abroad in 2024, with a new Labour Attaché Office in Berlin set to enhance opportunities in the European Union through bilateral agreements.
Universal Healthcare and Worker Rights
Ruto reported a leap in healthcare coverage, with 21 million Kenyans registered under the Social Health Authority, up from 8 million under the defunct NHIF, advancing Universal Health Coverage.
He urged all citizens to register. On worker rights, Ruto reaffirmed the constitutional right to unionize, directing the Ministry of Labour to ensure outsourced contract workers can join trade unions and benefit from collective bargaining.
Kenya will also ratify two International Labour Organization (ILO) conventions: Convention 189 (2011) on domestic workers’ rights and Convention 190 (2019) on eliminating workplace violence and harassment.
Economic Context and Public Sentiment
The Labour Day announcements come amid economic challenges, including 7.8% inflation and 12.7% unemployment, particularly among youth, as noted in recent X posts.
Critics argue that wage growth lags behind living costs, with COTU previously advocating for a 15% minimum wage hike. However, Ruto’s 2024 pledge of a 6% wage increase and today’s reforms signal a commitment to workers’ welfare.
The Finance Bill’s provisions are expected to face scrutiny in Parliament, with stakeholders like COTU likely to push for broader protections.
A Vision for Self-Reliance
Ruto’s speech painted a vision of a self-reliant Kenya, driven by productive workers, innovative entrepreneurs, and supportive policies.
“We are not merely making declarations; we are taking bold, concrete, and measurable steps,” he said. The reforms, from tax exemptions to savings mobilization, aim to empower workers and businesses while addressing systemic inefficiencies.
As Kenya celebrates 60 years of labour advocacy, Ruto’s address reinforces the government’s role in upholding labour dignity and fostering economic resilience.
The Labour Day event, attended by COTU Secretary-General Francis Atwoli and other union leaders, highlighted the enduring partnership between the government and trade unions.
With the 2025 Finance Bill set to reshape Kenya’s economic landscape, all eyes will be on its implementation and impact on the nation’s 19.1 million workers, who remain the backbone of Kenya’s aspirations for growth and prosperity.
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