Why the State should protect jobs even as it creates new ones
A former employee of Eveready East Africa Ltd talks to a security guard at the factory in Nakuru on the day it was closed. PHOTO | FILE
At this year’s Marketing Society of Kenya (MSK) Awards dinner, chief guest Adan Mohammed noted that the media is too keen to report on closed manufacturing plants yet when the State creates new manufacturing jobs there are fewer reports on the same.
The Industrialisation secretary was referring to the launch of a new textile manufacturing company in Mombasa that will employ 3,000 Kenyans initially and more than 15,000 by 2015.
The Jubilee government manifesto and Vision 2030 all indicate that policies are inclined towards creating employment as unemployed youth are seen as a time bomb.
But in Kenya, leaders don’t seem to be walking the talk. The increase in tax on Senator Keg beer has resulted in loss of about 100 jobs at Kenya Breweries Ltd.
More jobs have been lost in the retail sector as the unique outlets that were used to distribute the low-end market beer could not sustain the new prices. More than 10,0000 farmers had their sorghum contracts cancelled by the brewery.
This example illustrates that one manufacturing job supports many others. On the other hand, when the low-income earners cannot afford legally approved beer they feel less dignified and their quality of life goes down.
Other manufacturing plants that have closed include part of Tata Chemical, formally Magadi Soda, and Eveready, among others.
The government may have failed to appreciate the pains these companies were going through. As a result they closed the plants and retrenched workers. The goods they produced will now have to be bought from another country, raising Kenya’s import bill.
The closure also affected the economy in the towns the plants were located. Security companies, garbage collectors, food merchants and other suppliers to the companies are counting their losses. Just like the Senator case, one manufacturing job supports many others.
Not all is lost, however. The initiative to produce cheaper power is bearing fruits as cost of electricity continues declining.
Infrastructure is a multiplier and more power should increase the economic progression of the nation.
Still, as experts have suggested, the ambitious 5,000 megawatts plan should be aligned to demand to protect the gains in lower costs from being eroded by capacity costs in unused energy.
Energy capacity costs work like an overdraft where the bank charges the customer a fee for availing the facility even if the customer does not overdraw the account.
Policymakers’ actions should reflect their talk. Leaders should come to the realisation that just like in war, strategy survives the first three seconds of contact. This calls for speed and willingness to change plans to reflect the circumstances on the ground.
The writer is the marketing director of SBO Research. [email protected], Twitter @bngahu
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
