Almost half a dozen Kenyan companies have in the last six months announced plans to lay off hundreds of employees in the biggest threat to the country’s labour force since the 1990s. This comes on the backdrop of ‘super-growth’ projections by the government showing the economy expanded at 6.3 per cent last year. In the first quarter of this year, the economy grew at 5.6 per cent compared to 6.5 per cent in the corresponding quarter of 2018. In the last two weeks alone, East African Portland Cement Company (EAPCC), Stanbic Bank, East African Breweries Limited and Telecom Kenya announced massive layoffs that will affect more than 2,000 workers. Telkom alone plans to lay off 575 workers. Also, jobs offered by betting firms are on the line in a tussle with the State over licensing. The layoffs cut across both the service and manufacturing industries – pointing to a worrying trend that is only set to gain momentum in the coming years. And as more companies adopt new technologies, become efficient and minimise costs, many Kenyan workers risk being declared redundant, worsening the country’s unemployment crisis. It also does not help matters that Kenya has one of the highest labour costs in the region since the country’s working population ranks higher in education and skillset compared to her peers. Recent trends across both listed and public companies indicate that this is likely to work against the country, with the economy set to shed thousands of jobs in the short-term. “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,” Patrick Obath, Kenya Private Sector Alliance trustee told Financial Standard. “To avoid going down, the first place to look at basically is how to reduce the labour cost.” His sentiments were echoed by Stanbic Bank Chief Executive Charles Mudiwa, who said the lender had no option but to declare more than 200 employees redundant despite a Sh4 billion profit. “The voluntary early retirement is an outcome of a clear strategy, where we are looking at how to become efficient in the business that we run,” said Mr Mudiwa. “But also, as we digitise, and become more digital, it means some functions will have to be re-organised as a result.” The financial services and insurance industries rank high on the list […]
