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Disquiet at Kenya Airways over proposal to scrap pension scheme

BUSINESS
By Standard Reporter | February 11th 2016

Anxiety has gripped Kenya Airways employees over a proposal to scrap pension scheme in a move to cut costs.

This is after a consultative meeting between the national carrier’s management and the employees over turn-around proposals by consultancy firm Mckinsey and Company.

Mckinsey and Company, which was appointed by KQ in November, 2015 as lead consultants to ensure the turnaround of the company within the next 18 months, proposed that the company scraps its pension scheme as one of the cost-cutting measures.

Now some insiders warn that workers could lose about a tenth of their pay if the proposals made on Tuesday are implemented. They also stand to lose in-flight benefits.

The report by the Senate select committee inquiring into the affairs of Kenya Airways and its subsidiaries had recommended three ways to solve the dwindling fortunes of the ‘Pride of Africa’.

The committee chaired by Kisumu Senator Anyang’ Nyong’o emphasised that if management could not help in the airline’s recovery, then the other solutions included dissolution of the company, recapitalisation through a rights issue and bringing on board additional stakeholders or sale of the Government’s 29 per cent stake.

Yesterday, a top manager at KQ confided to The Standard: “Staff morale is very low. We are staring at a possible backlash if the unpopular proposal is implemented. How can a company operate without staff and employers’ contribution to the pension scheme?” “We are also anxious to see the company get back to its feet but trying to cut the staff’s benefits is going too far. This is a breach of the law. The contracts are very clear.”

Another manager, who also spoke on condition of anonymity, warned: “We didn’t expect that interfering with staff benefits will be part of the solution to the financial crisis.” Some employees appealed to the Ministry of Labour to intervene on the matter and avert a looming crisis.

“The ministry should not be silent on this matter. We call upon our unions to take up the matter. We are in support of the recovery process but it should not be used to frustrate us,” said a cabin crew who did not want to give his name fearing for reprisal.

The senators called for prudent outsourcing of services. However, they said this should not compromise the morale and efficiency of the existing employees and welcomed the Mckinsey initiative, emphasizing the importance of taking into their recommendations.

Ticketing system

They resolved that given the importance of KQ to the Kenyan economy, the shareholders should inject new capital into the airline to facilitate its turnaround.

Makueni Senator Mutula Kilonzo Junior said there is need for wider consultations. “Pension scheme is an incentive for workers all over the world. Any other service that does not affect substantive rights of the workers can be reduced or scrapped,” Kilonzo, who was a member of Nyong’o-led committee, said.

The senators also recommended that shareholders should provide financial bailout in form of equity. This includes reconstitution of the board of directors, structuring and putting into place a management team with sufficient skills and experience in the aviation industry and with an ability to turnaround the company.

The lawmakers also backed calls to hire a new marketing director with proven international experience to turnaround its ticketing system and ensure proper accounting of revenue from market sales.

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