GLANCE FACTS
Retrenchment exercise
• The exercise has been marred with controversy with the workers union accusing KQ of stepping on workers’ rights.
• Employment costs doubled over the last five years, having risen from $71.5 million in 2007 to $160 million this year .
• Naikuni maintains the number of local employees has grown from 3,729 to 4,170.
By Morris Aron
Kenya Airways (KQ) said it will retrench another 578 employees under the ongoing staff rationalisation programme.
This is in addition to another 126 who were sent home on Tuesday.
KQ Chief Executive Officer Titus Naikuni yesterday told a press conference that the voluntary retrenchment was a success with 21 per cent of the 600 members of the 4,800 staff set to be retrenched, deciding to leave voluntarily.
Within the law
“We followed the labour laws to the letter, and looked around at what is happening in the marketplace in Kenya and Africa and packaged the best and most fair deal for our employees,” said Dr Naikuni.
“Our programme is generous to those affected from both a severance and provident perspective. “Those leaving the business will have an estimated average payout of up to Sh2 million.
KQ said that it will spend Sh800 million in severance pay for those affected and that the retrenchment will see it save Sh1.2 billion annually in labour costs, as it embarks on its ambitious expansion.
But even as the airline branded the exercise a success, workers’ union said the exercise failed, as close to 80 per cent of the workers had refused to exit voluntarily. “A 21 per cent uptake of an offer is a failure,” said a union source.
Naikuni said having considered the business environment, the board approved a voluntary early retirement, and a staff rationalisation to address ‘internal inefficiencies’ and reduce the employee cost base of Sh13.4 billion by 10-15 per cent.
“Over the last few months, the company has revisited cost structures, reviewed processes, increasing efficiencies to mitigate decline in profitability, while maintaining and growing customer satisfaction,” he said.
“The company also recognises the need to rationalise the current business to create a platform for the planned growth of network and fleet,” said Naikuni.
Growth strategy
KQ said that it decided on retrenchment to cut down the ballooning wage bill to aid expansion.
