Bamburi sheds 71 employees in new business strategy

Listed cement-maker Bamburi reduced its workforce by 71 employees last year following layoffs and voluntary early retirements as many firms right-sized to further tighten the jobs market.

Bamburi, which performed well in the year, partly buoyed by orders from the standard gauge railway (SGR), paid out Sh192 million to send home the affected employees, according to its recently published annual report.

“The Group implemented a restructuring exercise across its entities to align the organisation structure to the evolving strategic direction. The restructuring costs include costs of staff voluntary early retirements and redundancies,” said Bamburi Cement.

The layoff reduced its workforce to 851 employees from 932 the previous year and 936 in 2013.

Bamburi’s payroll stood at Sh1.9 billion last year up from Sh1.5 billion the previous year.

The company, which enjoys the largest market share in the cement industry, has to contend with declining margins as competitors lower prices to grow their top line.

Last year the company recorded a 40 per cent growth in net profit to Sh4.3 billion attributed to supplies to large infrastructural projects.

READ: Bamburi profit jump bucks rival firms trend

The cement-maker joins a growing list of companies that have cut staff numbers or imposed recruitment freeze, including Standard Chartered, Kenya Airways, Equity Bank, Co-op Bank and Uchumi Supermarkets.

Analysts at Standard Chartered expect the job market to remain tight, with demand for locally produced goods depressed.

“Given that Kenyan businesses expect both domestic and external demand to remain subdued in the coming months, it is unlikely that we will see an improvement in employment intentions in the near term,” reads part of the Standard Chartered business sentiment indicator survey.

The survey measures how optimistic businesses feel about current and future economic conditions. The businessmen said their confidence levels had dropped due to rapid decline of orders, production capacity, employment and increase in input prices.

Kenya Revenue Authority earlier in the year stated payroll taxes grew by 9.5 per cent last year compared to an average 20.7 per cent the previous three years, indicating a deterioration of the employment market.

“Our research indicated the slowdown was caused by the freeze in public sector wage increments and weak growth in large corporate sector payrolls (growth of 3.4 per cent),” said commissioner general John Njiraini.

Steel industry reported losing more than 20,000 jobs last year following a slump in the commodities market.

The National Treasury was forced to introduce higher tax measures formetal imports this year in efforts to protect the industry from further job losses.

“Our iron and steel mills are closing down due to unfair competition from cheaper imported iron and steel products,” said finance secretary Henry Rotich while justifying new tax measures.

The corporate actions put into focus government numbers which show the economy created 850,000 new jobs last year at a time when several companies are cutting back and the state has announced a recruitment freeze.