We must fix the runaway unemployment

Jobseekers in Mombasa. FILE PHOTO | NMG

Never before has job insecurity been so serious in this economy. Just this week, we received the news that London-based brewer Diageo, the parent company of East African Breweries Limited (EABL) is set to retrench more than 100 employees working at its business support centre in Nairobi.

Diageo becomes the latest to announce major job cuts in corporate Kenya in the past one year. The evidence may be anecdotal, but the estimate from newspaper reports is than 2,000 high-quality jobs have been lost in retrenchments implemented by companies including Bamburi Cement, Standard Chartered Bank (Kenya) and Britam. Stanbic Bank also recently drew a plan to lay off up to 200 employees.

We are at a point where even blue-chip companies, the big corporates that have been declaring huge profits year upon year and paying handsome dividends and bonuses to their shareholders, are now eager to send workers home.

Telkom Kenya has announced that it will be retrenching 72 percent of its employees. It is a sign that the ICT sector, often trumpeted as the engine of the emerging “new economy” and touted as the home of well-paying jobs, has entered into the fray of shedding off jobs.

Has retrenchment become a corporate fad? The answer is no. My own view is that corporate Kenya - especially the manufacturing sector- is reacting to dwindling consumer demand by shedding off labour, selling furniture and non-core assets, and postponing any decisions on CapEx. In a sense, the widespread job insecurity in the economy is the reality check that should tell us the rosy economic picture we are fed by Kenya National Bureau of Statistics (KNBS) does not reflect the reality on the ground.

The patterns of the retrenchments we are witnessing will vary both in magnitude and timing with some companies implementing one-time massive layoffs, and others opting for waves of layoffs executed in phases.

Jobs must be, first and foremost, productive. Capitalism is about constantly juggling with factors of production — land, labour and capital — to achieve optimal profits. The corporates are not to blame for the wave of job cuts and layoffs we are witnessing right now.

What we are experiencing is but a reflection of the pressures exerted on balance sheets of companies by the prevailing economic slump in the country. Widespread job insecurity in an economy can, in the long run, harm productivity.

In academic literature, widespread job insecurity has been to stress, an upsurge in industrial disputes and worker militancy.

This economy must now deal with the twin maladies of crippling youth unemployment and widespread job insecurity. Clearly, the most telling shortcoming in our development strategies is failure to register the singular and critical nature and importance of the unemployment problem in this country. In all the major policy documents, the gravity of the problem is acknowledged.

At every opportunity, the determination to resolve the problem is proclaimed. But this is never really reflected in actual policies. Unemployment and the poor conditions of labour are not a major political issue in this country.

You will not hear or see political agitation against job cuts or workers organising themselves to resist retrenchment. Instead, retrenched employees are encouraged to seek counselling on how to cope with joblessness.

We need to put the fight against youth unemployment and conditions of labour on top of the development agenda.

We must navigate the economy back to actual production goods and services - away from speculation on assets such as stocks and property. Under the Big 4 agenda, we have said that we will move manufacturing to a level where it contributes 15 percent of GDP.

Yet when you look at trends, the opposite is what is happening. In the last ten years, the sector’s contribution to GDP has remained below 10 percent.

The goal we have set will not happen if we don’t get rid of graft in the spending on infrastructure projects we are currently doing in the building of new ports, new railway lines, maintaining our airports and roads.

Manufacturing will not rise again unless we reduce the price of electricity, reduce the time our courts take to conclude civil cases, and eliminate the multiple licences that add to the cost of doing business in this economy.

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