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Alarm As Four Kenya Firms Sack 1,700 Staff In Three Weeks

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Four Kenya based companies have announced nearly 1,700 job cuts in just about three weeks, shinning a spotlight on the worsening unemployment crisis in the country, Business Daily reports.

The four firms – East African Portland Cement Company (EAPCC), Telkom Kenya, Stanbic Bank of Kenya and East African Breweries Limited (EABL) – have already notified employees of the looming layoffs, citing the need to trim their payrolls.

The dismissals are expected to hit hard the affected households, as breadwinners lose their income at a time of rising costs of living.

The job losses, across four distinctive sectors of the economy, signal a widespread economic problem of stagnated job creation attributed to weak consumer demand, technological changes which have killed traditional occupations and stiff intra-industry competition from more technologically advanced rivals.

Stanbic Bank was the first about three weeks ago to announce a redundancy targeting an estimated 200 staff, while Athi River-based cement maker EAPCC last week said it would let go all its 800 workers.

Labour laws

The cement processor in another statement released on Friday withdrew the Thursday statement, with the CEO clarifying that the company would need to comply with labour laws with regard to the redundancy of unionisable employees.

Portland Cement had declared redundant all jobs, including those of top management, effective October.

EAPCC managing director Stephen Nthei is scheduled to have a meeting with all staff on Friday to elaborate on the matter.

Mr Nthei last week said roles will be merged to have a headcount of not more than 600 staff while those rehired will have to take a 40 percent pay cut.

“We have a workforce whose total cost, compared to the productivity, is very high. Our target is to operate with less than 600 people earning less than what they are earning now,” said Mr Nthei.

EAPCC spent Sh3.04 billion to pay its 936 employees in the financial year ended June 2018, a 96 per cent jump from Sh1.56 billion spent on 1,265 employees the previous year.

Profit warning

The firm has issued a profit warning for the financial year ended June 2019 after half-year losses widened by 30.7 per cent to Sh1.26 billion.

The board attributed this on increased input prices, a sluggish market as well as production challenges arising from tight working capital position.

Telkom Kenya has also joined the list of firms set to lay off workers in a bid to slash its wage bill.

The telco is set to merge with its competitor Airtel Kenya with the hope of turning around its fortunes through the combined outfit.

Telkom late last month that 575 workers, being about 72 per cent of its entire workforce, will be laid off ahead of the merger.

This will mean that in just three years, 1,375 workers have lost jobs at Telkom, which had about 1,600 employees as at 2015.

Telkom Kenya and Airtel, the Kenyan subsidiary of Indian telecom giant Bharti Airtel, want to merge their mobile, enterprise and carrier services to form a single joint venture company to be named Airtel-Telkom.

Telkom will transfer all its mobile operations, enterprise and carrier business from Telkom plaza within Nairobi central business district to Airtel offices in Parkside Towers, along Mombasa road.

“As a consequence of the transaction, Telkom Kenya will discontinue the transferred business and must terminate the employees that are deployed to serve in these functions,” the firm told employees last month.

Retain workers

However, workers could get some respite if the competition watchdog orders Telkom Kenya and Airtel to retain the workers for a certain period, going by the anti-trust agency’s recent directives.

EABL’s parent firm, Diageo, is also set to retrench more than 100 employees working at its business support centre in Nairobi, mostly in human resource and finance departments.

The Diageo Africa Business Service Centre (ABSC), the only shared service centre in Africa and one of five globally, will be shutting down and its role outsourced to other markets.

The looming layoff adds to that of Stanbic Bank which, despite having booked growth in profit, wants to cut about 225 jobs to make it more agile.

“As we become more digital, it means we have to reorganize some functions to make us future-ready and be able to compete as a business,” CEO Charles Mudiwa defended the move even as the lender posted 14.4 per cent jump in half-year profit to Sh4 billion.

Stanbic joins the list of lenders that have continued to shed jobs in recent years.

Banks dominate

Banks dominated the list of job cuts through early retirement schemes and natural attrition, reflecting the continued focus on digital products at the expense of expensive branch network.

Last year, Barclays Bank of Kenya (BBK), Equity Group, Housing Finance (HF), KCB Group, Stanbic Bank and Standard Chartered Bank recorded a 1,592 reduction in their combined headcount on continued realignments attributed to new digital delivery channels.

This could be worsened when KCB buys NBK, Commercial Bank of Africa merges with NIC Bank as both deals will end up in duplicated roles that will have to be trimmed.

Layoffs were also recorded by Britam, British American Tobacco, Shelter Afrique, Deacons East Africa and ARM Cement.

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