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Firms in Kenya lay off thousands of workers

NAIROBI
By Dominic Omondi | November 29th 2016
Federation of Kenya Employers Executive Director Jacqueline Mugo.

NAIROBI: More than 10,000 employees may have lost their jobs in 2016 alone, as employers grapple with a tough business environment.

Over 20 companies, including a host of banks and manufacturers, have laid off thousands of employees, leaving families across the country without a source of income.

Although Kenya Airways has so far sent home only 80 employees, it plans to lay off 600 others in its second phase of retrenchment, making it the biggest job-cutter this year.

Standard Chartered Bank has sent home 300 employees, Equity Bank 400, Sidian Bank 108, Family Bank, First Community and NIC 32.

Other companies that have jumped into the retrenchment bandwagon include Telkom (500 employees), Flower farm Karuturi (2,600), Kenya Meat Commission (118), Airtel (more than 60), Sameer Africa (600), Portland Cement (1,000), and Uchumi (253). Also, this year Kenya Flouspar Company shut its operations and sent home about 700 workers.

But even as workers stare at an uncertain future, official figures indicate that the economy registered impressive growth, creating confusion on what the true state of the economy is.

“Overall, the economy is estimated to have expanded by 6.2 per cent during the second quarter of 2016 compared to 5.9 per cent during the same quarter of 2015. This growth was mainly supported by better performance in agriculture, forestry and fishing, transportation and storage, real estate and wholesale and retail trade,” said the Kenya National Bureau of Statistics in its quarterly report.

Figures from the national statistician also showed inflation was contained and the shilling stabilised, thus saving Kenyans from a high cost of living.

Moreover, the World Bank ranked Kenya the third most improved country globally in ease of doing business as the country moved up 21 places in the log to join another 100 countries with a favourable business environment.

Joy Kiiru, an Economics lecturer at the University of Nairobi described this phenomenon where the economy is surging forward while leaving the population without jobs as a “jobless growth”.

Jobless growth has been blamed on the rise of ICT-driven service sectors such as finance and insurance which are not as labour-intensive as the manufacturing sector. Indeed, while the overall economy seemed to grow very fast, the manufacturing sector experienced one of its slowest growths in years.

According to Jacqueline Mugo, the Executive Director of the Federation of Kenya Employers, the most affected areas have been the banking sector due to the effects of the Banking (Amendment) Act 2016 which capped interest rates on loans, the tourism sector which has been reeling from insecurity occasioned by terrorist attacks and the sugar industry which is grappling with cheap imports.

Last-Ditch Effort

“Despite the figures that you are seeing on GDP (gross domestic growth), companies are facing a lot of stresses in trying to make ends meet. And as they project the future, a lot of them are thinking they will not be able to sustain the number of workers that they have,” said Ms Mugo, adding that the cost of employment in Kenya is quite high.

“The decision to lay off staff, or to retrench or to declare as redundant is a last-ditch effort turn to around the performance of a company,” she explained.

Mugo said that they have not tallied the number of employers who have so far laid off, but warned that the problem might be “fairly widespread.”

She added that the Government has done some work, but it has not been enough to contain the job losses.

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