Survey: COVID-19 has wiped out 80 per cent of private sector jobs created since 2015


Survey: COVID-19 has wiped out 80 per cent of private sector jobs created since 2015
FKE Executive Director Jacqueline Mugo addresses the press on September 25, 2020.

In Summary

  • The survey puts job losses marked by the modern private sector between March and July this year at 173,743 jobs against 218,800 new jobs in the formal private sector between 2015 and 2020.
  • The revelations from FKE members further execrated the current unemployment situation in the country and the continued shift of employment from the formal to the informal sector.
  • Employers are pushing for greater cushioning to facilitate a soft landing including a deeper cut on corporate tax and the creation of wage relief fund.

The COVID-19 pandemic has wiped out 80 per cent of all formal private sector jobs created since 2015, this is according to a new survey by the Federation of Kenyan Employers (FKE).

The survey puts job losses marked by the modern private sector between March and July this year at 173,743 jobs against 218,800 new jobs in the formal private sector between 2015 and 2020.

According to survey involving 122 private sector firms, the mean number of employees in each entity fell to 372 as of August 1 from 405 on February 25 representing an average loss of 33 jobs per company.

The trend in job cuts is meanwhile set to continue with 51 per cent of firms indicating plans to further trim their workforce over the next six months.

No single respondent has reported not planning to dismiss any of their staff while a majority 72 per cent of companies have let go between one and 20 percent of their employee base.

“These unfortunately indicates that more jobs will be lost with more than one million incomes being at risk, “said FKE Executive Director Jacqueline Mugo.

At present, the lost jobs between March and July are representative of 8.3 per cent of the entire formal private sector which stands at 2.06 million as per data from the 2020 Economic Survey by the Kenya National Bureau of Statistics (KNBS).

Meanwhile, firms continue to identify high labour costs as constraints with human resource departments presently freezing new staff recruitments.

The revelations from FKE members further execrated the current unemployment situation in the country and the continued shift of employment from the formal to the informal sector.

According to data from the KNBS quarter two labour force report, 1.7 million Kenyans lost their jobs between April and June this year bringing the total number of layoffs in the country to 1.9 million in this year alone.

FKE members have attributed the sustained job losses to the lack of proper cushioning by government with two-thirds of surveyed funds indicating present fiscal measures have not been effective in averting job shedding.

The employers are pushing for greater cushioning to facilitate a soft landing including a deeper cut on corporate tax and the creation of wage relief fund.

Individuals lucky enough to remain in employment will meanwhile be forced to wait longer for the restoration of salaries at 100 percent as firms continue to battle supply chain disruptions and cash-flow constraints.

“How long pay cuts last will be dependent on each enterprise and consensus between staff, employers and unions. Some firms have argued it would be better to earn less and retain jobs,” added Mugo.

The outlook on extended job losses mirrors a similar survey by the Stanbic Bank Purchasing Managers Index (PMI) in August which indicated continued job cuts irrespective of pockets of rebound in the economy.

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Story By Kepha Muiruri
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