Jobseekers in Mombasa. FILE PHOTO | NMG Never before has job insecurity been so serious in this economy. Just this week, we received the news that London-based brewer Diageo, the parent company of East African Breweries Limited (EABL) is set to retrench more than 100 employees working at its business support centre in Nairobi.
Diageo becomes the latest to announce major job cuts in corporate Kenya in the past one year. The evidence may be anecdotal, but the estimate from newspaper reports is than 2,000 high-quality jobs have been lost in retrenchments implemented by companies including Bamburi Cement, Standard Chartered Bank (Kenya) and Britam. Stanbic Bank also recently drew a plan to lay off up to 200 employees.
We are at a point where even blue-chip companies, the big corporates that have been declaring huge profits year upon year and paying handsome dividends and bonuses to their shareholders, are now eager to send workers home.
Telkom Kenya has announced that it will be retrenching 72 percent of its employees. It is a sign that the ICT sector, often trumpeted as the engine of the emerging “new economy” and touted as the home of well-paying jobs, has entered into the fray of shedding off jobs.
Has retrenchment become a corporate fad? The answer is no. My own view is that corporate Kenya – especially the manufacturing sector- is reacting to dwindling consumer demand by shedding off labour, selling furniture and non-core assets, and postponing any decisions on CapEx. In a sense, the widespread job insecurity in the economy is the reality check that should tell us the rosy economic picture we are fed by Kenya National Bureau of Statistics (KNBS) does not reflect the reality on the ground.
The patterns of the retrenchments we are witnessing will vary both in magnitude and timing with some companies implementing one-time massive layoffs, and others opting for waves of layoffs executed in phases.
Jobs must be, first and foremost, productive. Capitalism is about constantly juggling with factors of production — land, labour and capital — to achieve optimal profits. The corporates are not to blame for the wave of job cuts and layoffs we are witnessing right now.
What we are experiencing is but a reflection of the pressures exerted on balance sheets of companies by the prevailing economic slump in the country. Widespread job insecurity in an economy can, in the long run, harm productivity.
In academic literature, widespread job […]