Tough time as Kenyan companies plan mass job cuts
By Fredrick Obura | August 9th 2019
NAIROBI, KENYA: The wave of lay-offs has hit Kenyan companies once again with more than four firms spelling intentions of getting rid of hundreds of workers before the end of the year.
Out of over 60 listed companies at the Nairobi Securities Exchange (NSE), 15 companies have so far announced that they are not making enough money signalling tough times ahead.
Some analysts attribute the layoff wave to the high cost of labour and production as well as mass adoption of technology.
“The cost of labour in this country is very high and that means that if companies cannot rejig their businesses to be more efficient they are going to go down, to avoid going down, the first place to look at basically is how to reduce the labour cost,” says Patrick Obath, Kenya Private Sector Alliance trustee.
“A lot of companies are also going digital and buying various innovations most of which are now being developed locally; the innovations carry a lot of efficiencies leading to redundancies in some jobs,” he says.
He added that the technology wave means many people are going to lose their jobs and forced to rethink their careers and at times, it will call for retraining to fit into the digital economy that Kenya is fast-moving to.
Telkom, Stanbic, East Africa Portland Cement, and the Diageo, the parent company of East African Breweries have already issued layoff warnings to workers with some of the retrenchments planned for as early as this month.
East Africa Portland, which is the latest firm to announce the retrenchment plan, says all workers will have to go home as competition in the industry and lack of sufficient capital makes it untenable for the firm to operate as expected.
The company had 448 permanent and 488 contract employees on its payroll as of last year, with the former being offered a severance package of one month’s pay for every year worked as well as a gratuity payment.
The company also revealed that it has been making Sh8 million loss daily, making its turnaround strategy untenable.
Stanbic bank plans to part ways with around 255 employees in a voluntary retirement package plan.
“The voluntary early retirement is an outcome of a clear strategy, where we are looking at how to become in the business that we run. But also as digitise, and become more digital it means some functions will have to be re-organised as a result,” said Stanbic Bank Kenya Chief Executive Charles Mudiwa.
Stanbic joins a number of banks in the country that have been restructuring their operations in line with a changing economic landscape.
In the telecoms sector, Telkom with last month announced that it would send home hundreds of its workers following an impending merger with Airtel Kenya.
“We intend to terminate the employment of approximately 575 of our employees, on account of redundancy, as a result of the transaction,” says Telkom CEO Mugo Kibati.
In February, Telkom and Airtel announced the signing of a binding agreement to combine its respective mobile, enterprise and carrier service businesses in Kenya to operate under a joint venture company to be named Airtel-Telkom.
Consequently, the company said in a memo to staff that it will discontinue the transferred business and must terminate the contracts of employees currently deployed in the affected business areas.
“In accordance with the provisions of Employment Act, we have notified communications workers union and sent out letters to individuals affected giving one month’s notice with effect from July 31,” Kibati said.
The Joint Venture Company, said Kibati, might consider offering employment to some sacked employees “subject to positions being available in the new organisation and those individuals meeting the recruitment criteria.”
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