Economy

Employers peg jobs on liquidity and right taxes

jobs

FKE executive director Jacqueline Mugo: We ask for favourable taxes and less politics. FILE PHOTO | NMG

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Summary

  • Employers and experts have warned of an extension of last year’s job loss streak in 2020 unless the State addresses policy uncertainty and cash shortage.
  • A number of investors have opted to hold onto their cash while the firms in operation are reluctant to expand on fears of running into the rough waters.
  • Last year saw a number of executives being dragged to courts over tax evasion claims.

Employers and experts have warned of an extension of last year’s job loss streak in 2020 unless the State addresses policy uncertainty and cash shortage.

A number of investors have opted to hold onto their cash while the firms in operation are reluctant to expand on fears of running into the rough waters.

“Generally, firms decided to freeze hiring in 2019 because it was a very tough year with very little liquidity in the economy,” Federation of Kenya Employers (FKE) chief executive Jacqueline Mugo told the Business Daily last week.

“To reverse this trend and get the economy to produce more jobs, the government should go slow on politics and also ensure that companies are being taxed favourably,” said Mrs Mugo.

Last year saw a number of executives being dragged to courts over tax evasion claims.

Mrs Mugo's sentiments were echoed by Mr Ken Gichinga, chief economist at Mentoria Consulting who similarly predicts continued hemorrhage of jobs “until the government addresses low cash circulation in the economy.”

“The cash in circulation dropped to its lowest point since 2014, particularly after the demonetisation which saw money supply drop by Sh60 billion,” said Mr Gichinga.

About 13 companies sent home hundreds of workers in 2019, shining a spotlight on the worsening unemployment crisis in the country.

TOUGH ENVIRONMENT

The firms that sent home workers due to a tough operating environment in the country included Jumia, Simba Corporation, Sanlam, Silverstone airline, insurance firm Britam, Barclays Bank, Telkom Kenya and Stanbic Bank of Kenya.

Others were East African Breweries Limited (EABL), East African Portland Cement Company (EAPCC), National Bank of Kenya (NBK), Ola Energy and betting firm SportPesa.

The job losses, across the main sectors of the economy also paint a grim outlook in the sector expected to generate 800,000 new decent jobs under President Uhuru Kenyatta’s ambitious socio-economic transformation strategy, the Big Four agenda.

GM COTTON

Last month, the Cabinet endorsed the growing of genetically modified cotton in the country in effort to boost supply of raw material to the textile industry.

Under the Big Four Agenda, the textile industry is expected to help generate up to 50,000 jobs by 2022.