Economy

Lossmaking Posta awaits Cabinet nod to sack staff

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Postmaster-General Dan Kagwe. FILE PHOTO | NMG

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Summary

  • The troubled parastatal is seeking government permission to reduce its staff and put others on short-term contracts as it attempts to arrest a massive decline in revenues and profits.
  • According to an internal document, Posta wants to reduce its employee numbers by an undisclosed number as the cash-strapped state-owned firm strives to cut costs and improve efficiency.

The restructuring of the loss-making Postal Corporation of Kenya (PCK) is awaiting approval from the Cabinet, Post Master General Dan Kagwe has said.

The troubled parastatal is seeking government permission to reduce its staff and put others on short-term contracts as it attempts to arrest a massive decline in revenues and profits.

“We are awaiting Cabinet Memo approval (to proceed with restructuring)” Mr Kagwe said in response to Business Daily queries.

According to an internal document, Posta wants to reduce its employee numbers by an undisclosed number as the cash-strapped state-owned firm strives to cut costs and improve efficiency.

But, the telco will have to overcome strong opposition from employee unions before it can implement this proposal.

“There is need to undertake rationalization aligned to job evaluation, skills audit, succession planning and voluntary retirement,” says Posta in its 2019/2022 revised corporate strategic plan.

Posta plans to put its staff including senior managers under three-year renewable contracts, which will be based on performance, away from the current permanent and pensionable terms.

ICT principal secretary Esther Koimett said earlier a Cabinet memorandum had been developed to restructure the loss-making parastatal and transform it as an emerging e-commerce business.

“The ministry will request government facilitation to upgrade infrastructure network, debt restructuring, staff rationalization and capital injection for PCK among others,” she told the National Assembly’s departmental committee on Information, Communication and Technology in October 2020.

The increased uptake of digital forms of communications such as email, SMS and social media apps has led to a decline in the use of physical letters as a means of correspondence hitting Posta hard.

The loss-making parastatal that is currently struggling to stay afloat operates 640 post offices and partners with about 5,000 stamp vendor licensees across the country.

Mr Kagwe earlier told MPs that by June 2020 the corporation had accumulated losses to the tune of Sh5.9 billion. Posta says it needs Sh1bn yearly to keep branches open.

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