LAYOFFS

Kenyans go into Christmas jobless, future unknown

In Summary

•Job losses have hit nearly all sectors of the economy from commercial banks to insurance firms, manufacturing to telecommunication firms

•KNBS data shows a total of 840,000 new jobs were created last year, a decline from 897,000 jobs created in 2017

Mobicom employees demonstrate outside NSSF offices at Milimani over sudden and unlawful layoffs by their employer on August 2 2019
Mobicom employees demonstrate outside NSSF offices at Milimani over sudden and unlawful layoffs by their employer on August 2 2019
Image: WILFRED NYANGARESI

A large number of Kenyans won’t be splurging on Christmas shopping, rather having to tighten their wallets as they survive on savings before they land their next job.

2019 has seen more than 7,000 workers lose their jobs owing to a tough economic environment as a result of a number of  factors including, poor policies and low access to credit by the private sector and government’s failure to pay their dues on time

At the beginning of December, 19 employees left insurer Sanlam following the firm’s implementation of its voluntary early retirement (VER) and redundancy programme.

The layoff plan which targeted staff above 50 years saw the initial sign up of 20 staff members drawn from various cross functions within the organisation.

Sanlam follows a growing list of private entities in the country opting to get rid of dead weight in the form of layoffs to try and salvage their enterprises and remain profitable at a tumultuous time.

Job losses have hit nearly all sectors of the economy from commercial banks to insurance firms, manufacturing to telecommunication firms. Even the media has not been spared from mass sackings.

While disruptions driven by technology in all these sectors have also led to a significant number of layoffs, the rising rate of job cuts in the country may be a clear indicator that while the economy is growing on paper, things are terribly different on the ground.

 

STAFF SENT HOME

During the year more than 10 firms, both state-owned and private organisations, announced they would be sacking staff, either through a voluntary layoff plan or while announcing plans to close down.

Among them was Air Afrik, which announced it would retrench 200 workers from Kenya and Sudan following massive losses. The airline suffered a Sh2.1 billion loss in leasing contracts.

One of the hardest-hitting losses this year might have been the shutting down of Kenya’s largest players in sports betting firms as a result of continuous tussles with the government over tax regulations.

SportPesa, closed its Kenyan business, sending home at least 400 workers and leaving others, especially companies dependent on revenue from advertising such as media houses, at the mercies of their employers.

Betin, on the other hand, closed shop in June leaving at least 2,500 youth jobless.

The Kericho-based Finlays Flowers announced to close two farms by December 25, with staff layoffs expected to impact more than 1,000 workers. This even as the flower firm sent home another 1,800 workers last year.

Andela, a young budding firm offering coding training and jobs also announced plans to let go of 175 of its junior trainees. The firm launched in Kenya in June 2015 was geared to offering jobs for the ever-evolving workspace by training local developers.

Oil marketer Ola Energy – formerly Oil Libya said it planned to lay off workers in an early retirement scheme. Though the exact number was not revealed, other firms are also offering early retirement schemes to ease staff sackings.

In September, Stanbic Bank Kenya laid off 88 staff in an an early retirement scheme to cut payroll expenses in its future operations.

Others hit by the sacking wave were East African Portland Cement that announced it would send home 600 workers while Telkom Kenya was set to lay off 575 workers owing to the telco’s planned merger with Airtel.

Kenya’s largest beer maker also owned by London-based Diageo announced to lay off 100 employees in its Nairobi centre as it relocates it’s business service centre to India.

Securex Agencies sacked 222 workers declaring their positions redundant as the firm sought to return to profitability, and the list goes on.

 

THE OXYMORON

All these sackings come at a time when the Jubilee government is on the spot for failure to deliver on its promises, one among them, the creation of one million jobs annually.

According to the Kenya Economic Survey 2019, unemployment stood at 9.3 per cent last year, with the GDP at Sh8.56 trillion.

The report shows a total of 840,000 new jobs were created last year, a decline from 897,000 jobs created in 2017.

Of the jobs created, 83.6 per cent were in the informal sector and 16.4 per cent in the formal sector, showing how new hires in private firms continue to remain stifled, with only a handful of workers snagging coveted blue-collar jobs.

A report by World Bank dubbed ‘Kenya Social Protection and Job Programmes Public Expenditure Review’ shows nine million individuals are expected to enter the labor force in a decade between 2015 and 2025, further pushing up the country’s unemployment rate, which stood at 9.3 per cent last year, according to Kenya Economic Survey 2019.

The ten year World Bank survey projects the unemployment rate in Kenya to rise to 10.5 per cent this year before slowing to 10 per cent in 2020.

This means, moving forward, the country has to create at least 900,000 jobs annually between now and 2025 to absorb the high number of youths joining the job market as well as those being let go. 

“This will contribute to a growing job deficit in the labor market in the future. Moreover, urban jobs are needed due to added pressure on urban labor markets from increasing urbanization,’’ the report says.