A past graduation ceremony. The government needs to offer avenues for acquisition of new skills that will be required as the economy evolves. FILE PHOTO | NMG
What you need to know:
In 2016 alone, over 20 companies, including a host of banks and manufacturers laid off thousands of employees, leaving families across the country without a source of income.
The Economic Survey 2017 noted that the business environment has recently seen companies lay off workers, especially in the banking sector, where there was a decelerated growth of 3.7 per cent in the financial and insurance activities.
Early this year, UAP-Old Mutual Group joined the string of companies that sent employees home to navigate a stormy business environment.
Since 2016, there has been a global economic and financial crisis, especially with the recent major political shifts in big economies including the US, France, Spain, Japan and Britain. Locally, the August 8 General Election has not helped businesses either.
According to the International Labour Organisation ILO, the global GDP growth hit a six-year low in 2016, at 3.1 per cent, well below the rate projected in the previous year.
The global unemployment levels and rates are also expected to remain high in the short term, as the global labour force continues to grow. It is expected that those in search of employment will outstrip job creation in 2018, resulting in an additional 2.7 million unemployed people globally.
In fact, the number of unemployed people in emerging countries (Kenya included) is expected to increase by approximately 3.6 million between 2016 and 2017.
During this time, the unemployment rate in emerging countries is expected to climb to 5.7 per cent, compared with 5.6 per cent in 2016.
Looking ahead, global economic growth is expected to pick up modestly in 2017 (3.4 per cent) and 2018 (3.6 per cent).
However, the ILO report further highlights that the forecasts for growth for 2017 have continually been revised downwards over recent years (from over 4.6 per cent forecast in 2012 to 3.4 per cent forecast in 2016) and there is persistent elevated uncertainty about the global economy.
The rather disappointing economic performance in 2016 and the below-trend outlook for 2017 raise concerns about the ability of the economy to generate a sufficient number of jobs and improve the quality of employment for those with a job.
Additionally, there are concerns as to whether the economy will ensure that the growth gains are shared in an inclusive manner. Countries around the globe are facing the twin challenges of repairing the damage caused by the crisis and creating quality employment opportunities for new labour market entrants.
Kenya is no exception to these global dynamics and several major employers have closed shop or cut jobs in the last one year.
In 2016 alone, over 20 companies, including a host of banks and manufacturers laid off thousands of employees, leaving families across the country without a source of income.
The Economic Survey 2017 noted that the business environment has recently seen companies lay off workers, especially in the banking sector, where there was a decelerated growth of 3.7 per cent in the financial and insurance activities.
Early this year, UAP-Old Mutual Group joined the string of companies that sent employees home to navigate a stormy business environment.
While acknowledging that it had not been the best of times for businesses in the country, UAP Old Mutual Group CEO Peter Mwangi said the company was going through restructuring, which had inevitable impact on employees.
The insurance company laid off close to 100 workers in February 2017 in a process that involved redeployment and redundancies.
Last year, the MD of Sameer Africa Limited #ticker:FIRE, Allan Walmsley, announced that the only tyre manufacturer in Kenya, would close its manufacturing plant in the country from September 30 after an approval by the Capital Markets Authority.
As many companies felt the heat of a sluggish economy, the Kenya Revenue Authority (KRA) missed its 2015/2016 target by Sh6.5 billion because of corporate taxes.
The current tough economic environment in a developing country like Kenya is likely to have long-term effects on the socio-economic development of its people. Looking at traditional employment sources in sectors like agriculture, transport, communication, and financial services, the situation has been moving from better to worse.
These are indicators that change is rife, and we need to focus on more technology–oriented sectors that do not require huge capital investments to generate economically gainful activities.
Additionally, the government needs to offer avenues for acquisition of new skills that will be required as the economy evolves.
The World Economic Forum’s Future of Jobs Report, 2016 indicates that on average, by 2020, more than a third of the desired core skill sets of most occupations will be comprise skills that are not yet considered crucial to the job today.
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