Job cuts loom at Posta as State mulls taming Sh1.7bn wage bill

Posta employees could be facing the axe as the government moves to tame the company’s Sh1.7 billion wage bill in a bid to keep the State agency afloat.

A task force established to chart the Postal Corporation of Kenya’s (PCK) turnaround has released interim findings calling for greater use of ICT systems to enhance efficiency.

“This means in implementing the recommendations there will be need to put in place measures to reduce cost and this may call for restructuring of the PCK organisational structure and come up with an optimal staffing level,” said Broadcasting and Telecommunications PS Sammy Itemere in a response to the Business Daily queries.

ICT secretary Joe Mucheru had on December 19 said that Posta’s workforce was “bloated”.

Although he did not directly allude to retrenchments at the corporation, he said the government would have to determine whether the employees currently working at Posta were “suited for the work” given the company’s new technological strategy.

Postmaster-general Dan Kagwe says most of the employees inherited from the now-defunct Kenya Posts and Telecommunications Corporations (KPTC) are set to retire soon — which will also help to take care of the company’s wage bill problem.

By 2018, Mr Kagwe says, the corporation ought to have shed 20 per cent of its employment base. In the current year, at least 200 workers have retired.

The corporation has 3,500 employees — although this figure is in question. The management has been tasked with carrying out a head-count of active employees.

“Luckily, most of our employees were employed 30-35 years ago by KPTC. The problem will solve itself in the natural way,” said Mr Kagwe.

The wage bill eats up 65 per cent of the corporation’s revenues. Mr Kagwe says that this ought to be reduced to about 30 per cent. Apart from relying on retirement to cut-down the wage bill, Posta also plans to grow its revenues faster.

2015/2016 was the worst financial year on record for Posta as the firm recorded a Sh1.5 billion loss though revenues stood at Sh2.67 billion. The company had in 2014 paid a Sh17.3 million dividend to the Treasury.

It was in the context of the poor performance that Mr Mucheru overhauled Posta’s board earlier this year and appointed Mr Kagwe as post-master general.

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In 2016/2017, Posta has the ambitious target of hitting Sh4 billion revenue and returning to profitability.
In this strategy to grow revenues the PCK has bet heavily on technology.

Essentially, the corporation sees e-commerce and electronic payments driving growth in coming years. 

Posta has existing agreements with online shopping platforms Kilimall and Jumia to facilitate product delivery.

The PCK is not satisfied with having to rely on these companies to draw customers. The parastatal says it is developing its own platform for small businesses to sell their products online. The PCK is also piloting a mobile money wallet among its employees.

In 2015, Posta lost a lucrative government cash-transfer contract to the KCB Group because it did not have payment card and biometric technologies.

The company last week called for banks to provide card issuance services in its the first step towards recovering this lost business.

MPost, a service that links up post-office boxes to mobile phone numbers, has at least 20,000 users since its launch in August.  The company has 450,000 post-office letter boxes, 11 per cent of which were unoccupied as of October as Kenyans opt for electronic and short messages to letters.

The number of letters sent by Kenyans between 2003 and 2015 dropped 34 per cent.

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