Kenyans stare at bleak future as job cuts loom

A photo taken on September 22, 2016 shows unemployed Kenyans seated outside Hilton Hotel in Nairobi. The rate of unemployment in the country is still on the rise. PHOTO | JOAN PERERUAN | NATION MEDIA GROUP 

In Summary

• The 2017 Economic Survey shows that 747,300 of the new jobs, or 89.7 per cent, were in the informal sector.
• The private sector, which accounted for 67.2 per cent of the new formal jobs last year, expects to see more job cuts.

By EDWIN OKOTH
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As Kenyans marked the 128th international Labour Day, the country’s employment outlook continued to be bleak amid economic uncertainties.

A wave of job losses across sectors including banking, construction, media, agriculture and tourism has caused concerns, with an unpredictable future.

As the country lost its job creation momentum for the first time in four years — managing 832,900 in the formal and informal sectors in 2016 from 841,600 a year earlier — the government maintains a freeze on hiring.

AUSTERITY MEASURES

A December 2016 memo from Treasury Cabinet Secretary Henry Rotich announced cost-cutting measures as it narrowed down to hiring only for essential services such as security, health and education, in the public service.

The 2017 Economic Survey shows that 747,300 of the new jobs, or 89.7 per cent, were in the informal sector, from 713,600 in 2015.

The rest, 85,600, were white collar jobs — meaning the formal employment market lags far behind the number of graduates, with more than 500,000 leaving college yearly.

JOB CUTS

The gap means Kenya’s projected working age growth by nine million in the next decade will present a big headache.

Kenyans continue to stare at looming job cuts, even as the latest data from Kenya National Bureau of Statistics (KNBS) shows the economy grew at 5.8 per cent.

The private sector, which accounted for 67.2 per cent of the new formal jobs last year, expects to see more job cuts.

A recent Kenya Private Sector Alliance (Kepsa) study found that a fifth of Nairobi-based firms plan staff cuts in the next six months, citing an unfavourable business climate.

Banks, microfinance institutions and transport companies foresee staff cuts arising from information technology (IT) disruption and completion of the standard gauge railway.

Other sectors expect a slowdown in growth linked to political uncertainty and harsh weather, which has depressed agriculture, the report says.

RETRENCHMENT
The worst hit in the wave of layoffs that characterised the better part of last year were banks.

The sackings, blamed on a tough economic climate, spilled into 2017.

KCB Group recently unveiled an early retirement scheme in a bid to save Sh2 billion per annum in staff costs.

The bank, whose staff count dropped by 223 last year, had carried out personnel cuts, spending Sh186 million in compensation to the affected employees.

Last October, Sidian Bank announced it was retrenching 108 workers under a voluntary retirement plan to trim its payroll.

Less than a week earlier, Family Bank had made a similar announcement, also citing costs.

The year saw more than 10 major firms implement or announce massive job cuts.

They include Kenya Airways, which started it off by sending home 600 staff, and Coca-Cola, which laid off 80 workers in July.

Airtel had started the year with an announcement to shed off 60 staff members.

INVESTORS HESITANT
The multibillion-shilling railway builder China Roads and Bridge Corporation (CRBC) shocked many when its 109 workers, based at a manufacturing factory in Kathekani, Kibwezi East Sub-County in Makueni County, were paid their monthly dues and told to leave in July.

Come this year, regional lender Bank of Africa Group closed 12 branches around the country, declaring an unknown number of its 520-strong workforce redundant.

The Sharia-compliant First Community Bank (FCB) laid off a third of its workforce — 106.

Ecobank’s decision to close nine of its 29 outlets also came with human capital consequences.

This being an election year, the situation is likely to get worse as most investors adopt a wait-and-see attitude because of political uncertainty ahead of the August 8 General Election.