DOWNSIZING

Tough times could lead to layoffs - KAM survey

The report shows that blue collar workers, both semi-skilled and unskilled are the most sought after employees by manufactures at 63 per cent.

In Summary

• KAM CEO Phyllis Wakiaga said the current regulatory environment and uncertainty in the trade environment is a key determinant in the decision.

• The report shows that blue collar workers, both semi-skilled and unskilled are the most sought after employees by manufactures at 63 per cent.

KAM CEO Phyllis Wakiaga and Barclays Bank’s Steve Biko
Image: FAITH MUTEGI

At least 330 manufacturing firms are considering cutting their workforce in the next six month as they foresee zero growth in their operations.

This, represents 33 per cent percent of the over 1,000 manufacturing firms in the country.

According to the manufacturing barometer by the Kenya Association of Manufacturers only 240 manufacturers plan to take in more employees.

If actualised, the layoffs will hamper the realisation of the sectors goal to contribute 15 per cent to GDP by 2022 as part of President Uhuru’s Big Four Agenda.

The move to fire employees further paints a picture of why over 800 of manufactures plan to spend more on marketing and sales promotion to boost revenues.

While the association doesn’t specify which sub sectors are likely to be most affected, the 2019 Economic Survey shows those involved in the manufacturing of plastic products, wood and non-metallic mineral products have been recording a decline in growth.

The move is despite the sector recording a 4.2 per cent GDP growth in the last one year from a low of 0.5 percentage points.

Within the review period, formal employment in the manufacturing sector grew by 1.4 per cent to 307,592 persons in 2018.

The number of local employees engaged by EPZ enterprises rose by four per cent to 56,945 last year.

In response to the layoff plans, KAM CEO Phyllis Wakiaga said the current regulatory environment and uncertainty in the trade environment is a key determinant in the decision.

 

“Shareholders are not willing to invest; investors have been deferring their planned investments over the past two years,” Wakiaga said.

The report shows that blue collar workers, both semi-skilled and unskilled are the most sought after employees by manufactures at 63 per cent.

Senior management staff and white collar workers are the less needed employee for hiring at five and 11 per cent respectively.

While a majority of the firms project strong operational spending, over half of them or 52 per cent do not plan on making any new major capital investments on grounds of the delayed VAT funds.

Other headwinds currently affecting the sector include high cost of raw materials, pressure from increased wages, decreased profitability, high energy prices and unhealthy competition from cheap imports.

According to KAM'S Policy Lead Job Wanjohi, lack of modern technology in the agriculture sector exposes the entire sector to risks related to climate change.