Economy

1.7m jobs lost during Covid-19 lockdown

jobs

Jobseekers queue to submit applications. FILE PHOTO | NMG

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Summary

  • Young people were the hardest hit by job cuts compared to their counterparts aged above 35 years in an economic setting that is plagued by a hiring freeze on the back of sluggish corporate earnings.
  • This is a major blow to jobseekers, especially the close to one million young people who graduate from various educational institutions every year.
  • The Quarterly Labour Force Survey indicates that nearly 4.64 million people were jobless at the end of June, up from 2.94 million at the end of March — the month when Kenya reported its first case of Covid-19.
  • This means that 22.61 percent of the 20.5 million labour force, up from 14.3 percent in March, reflecting significant business disruptions in the wake of the pandemic.

About 1.72 million workers lost jobs in three months to June when Kenya imposed coronavirus-induced lockdown that led to layoffs and pay cuts.

Data from the Kenya National Bureau of Statistics (KNBS) shows the number of people in employment fell to 15.87 million between April and end of June compared to 17.59 million the previous quarter.

Young people were the hardest hit by job cuts compared to their counterparts aged above 35 years in an economic setting that is plagued by a hiring freeze on the back of sluggish corporate earnings.

This is a major blow to jobseekers, especially the close to one million young people who graduate from various educational institutions every year.

The Quarterly Labour Force Survey indicates that nearly 4.64 million people were jobless at the end of June, up from 2.94 million at the end of March — the month when Kenya reported its first case of Covid-19.

This means that 22.61 percent of the 20.5 million labour force, up from 14.3 percent in March, reflecting significant business disruptions in the wake of the pandemic.

“We cannot ascertain for how long this damage will last. We need to be prepared to manage businesses within the Covid- 19 environment,” Federation of Kenya Employers executive director Jacqueline Mugo told the Business Daily.

“Businesses that quickly adapt to the new normal and come up with strategies for survival will most likely come out of this crisis season much faster and better.”

The jobs report reflected a grim period for workers and businesses during the peak of Covid-19 restrictions covering travel mass gathering and a dusk-to-dawn curfew.

The restrictions were imposed on March 25 and on July 6 the government announced the phased reopening of the country, lifting restrictions on travel in and out of Nairobi and Mombasa as well as allowing air travel to resume.

Young workers between the ages of 20 and 29 years accounted for 63 percent of the lost jobs or 1,158,466 positions.

Those between the ages of 35 and legal retirement age of 50 accounted for 312,316 positions or 17 percent of the lost jobs.

This is an indication that corporate Kenya was keen to keep experienced staff on their payroll and also points to creating redundancies at the minimal costs to firms struggling to preserve cash amid a plunge in sales.

The number of people in employment has been rising since Kenya started making public the job report in March 2019 before the economy started shedding jobs in January.

Workers on payroll or business increased from 16.35 million in March 2019 to a peak of 18.1 million in December. It dropped to 17.58 million in March and 15.87 million in June.

However, the State defines the unemployed as people who do not have a job and have actively been looking for employment in recent weeks, leaving out those who have given up on landing work.

Under this definition, the government puts the number of unemployed Kenyans at 1,841,918, or 10.4 percent, which is double 961,666 in the quarter ended March. “The highest proportion of the unemployed was recorded in the age groups 20-24 and 25-29, each registering over 20 percent,” the KNBS analysts wrote in the report.

“The same age groups also had the highest increase of over 10 percent each in unemployment over the three months reference period.”

The number of formal jobs generated by the economy fell to a seven-year low in 2019.

The economy generated only 78,400 new formal jobs last year, but informal jobs rose from 744,000 in 2018 to 767,900 last year.

Figures for this year will be hit by the effects of the coronavirus disease.

Companies started reporting falling sales ahead of Kenya imposing restrictions to curb the spread of coronavirus.

Kenya has confirmed nearly 34,315 cases of the coronavirus and 577 deaths, with cases continuing to climb. The outbreak has battered the economy, with the Treasury projecting growth will slow to 2.5 percent this year from 5.4 percent last year, due to the impact of the pandemic.

While the phased reopening of the country in July 6 has triggered a rise in business activities, firms have continued to shed jobs.

Gradual easing

A survey of business activities in Kenya’s private sector shows fastest pace rise in a year in July on the back of a gradual easing of coronavirus lockdown measures, said the Stanbic Bank Kenya Purchasing Managers’ Index (PMI).

The index jumped to 54.2 in July, from 46.6 in the previous month, well above the 50.0 mark that separates growth from contraction. July’s level was the highest since June last year.

“Even despite the overall index picking up around June and July, the job sub-index is still below 50 (signalling a drop),” said Stanbic Bank head of Africa research Jibran Qureishi.

“Private sector firms continue to shed jobs. The concern I have heard is that a lot of these jobs won’t come back at the flick of the switch, they will take time.

And that brings about the underlying issues for private consumption and investments spending as well.”