Kenyans grapple with unemployment as Covid ravages economy

 Kenyans grapple with unemployment as Covid ravages economy

Atleast at least 5,991,768 direct and indirect jobs had either been lost or employees sent home on unpaid leave. Image – Courtesy

At least 5.9 million Kenyans have faced employment challenges with massive job losses reported across different sectors of the economy in the wake of Covid-19.

The pandemic, which first hit the country in March last year with the first case reported on March 12, continues to cause havoc in the economy, whose growth for 2020 has been projected at paltry 0.6 per cent by the National Treasury and Planning.

This is a downgrade from 2.5 per cent the National Treasury Cabinet Secretary Ukur Yatani had projected in April after the country started feeling the impact of the pandemic.

Data compiled by the Kenya Private Sector Alliance(Kepsa), and shared with the government indicated at least 5,991,768 direct and indirect jobs had either been lost or employees sent home on unpaid leave.

This, as companies and businesses, mitigate the effects of the virus which has hit key sectors.

…at least 5,991,768 direct and indirect jobs had either been lost or employees sent home on unpaid leave.

KEPSA

Reduced Economic Activity

The close to six million jobs affected is seven-fold what the economy created in 2019, where according to the Economic Survey 2020, the country recorded 846,300 new jobs in the year.

Listed companies have issued profit warnings, businesses closing with those still in operations struggling to remain afloat.

Households are struggling to make ends meet with some city dwellers forced to relocate to the villages for lack of employment in the city.

The government introduced dusk to dawn curfew, currently between 10 pm and 4 am, nearly a year now to mitigate the spread of the various.

This reduced economic activities mainly in transport, hotel industry, entertainment sector, manufacturing among other key sectors.

Tourism and travel remain among the worst hit where about 3.1 million jobs have been affected.

At least 5,000 bars, entertainment spots, and restaurants have been closed in Nairobi since March with another 4,000 in Mombasa.

Those affected include hotel employees, pubs and restaurants, tour operators, airlines and travel agents.

Suppliers and support services in the industry have also been hit, with hotels forced to contemplate low occupancy especially now after the festive season, this Christmas and New Year when the domestic market was active.

At least 5,000 bars, entertainment spots, and restaurants have been closed in Nairobi since March with another 4,000 in Mombasa.

Country-wide, more than 20,000 joints were shut, according to the Pubs Entertainment and Restaurant Association of Kenya (Perak).

“Most entities have been forced to send staff home as business hours remain limited because of the night curfew,” Perak executive officer Eunice Ogea said.

Closure of bars has disrupted value chains, deepening the negative impact of the pandemic on the economy, the Alcohol Beverages Association of Kenya chairman Gordon Mutugi notes.

The other sector that has been hurt is the construction and real estate, including casual labourers, where more than 450,000 jobs were lost within six months.

In the gender and youth sector, about 500,000 jobs were hit, with sector players noting women and youth are among those suffering most in the pandemic period.

The other sector that has been hurt is the construction and real estate, including casual labourers, where more than 450,000 jobs were lost within six months.

“ Given the inevitability of job losses across sectors, ensure justice and fair treatment of women, youth and PWDs during staff layoffs,” Kepsa, led by CEO Carole Karuga notes in the report shared with the government.

Towards the end of the year, about 50 per cent of construction sites were not in operation with businesses such as real estate agents, valuers, property management and security struggling.

Layoffs

According to the Federation of Kenya Employers (FKE) CEO Jacqueline Mugo, companies have been writing to the Labour Ministry hinting their plans to lay-off staff.

A huge number of companies sent employees on leave as they waited to see how things would unravel.

Kenya’s President Uhuru Kenyatta has extended the nationwide night curfew until March 12, a move that will continue limiting business hours where some economies such as Nairobi and Mombasa had made strides into becoming 24-hour economies.

…companies have been writing to the Labour Ministry hinting their plans to lay-off staff.

FKE

During last year’s Labour Day address, the President warned that over half a million Kenyans could lose their jobs within six months due to the Covid-19 pandemic.

The sports, arts and culture sectors have seen 400,000 jobs lost along the value chain. 90 per cent of the sector has been negatively impacted based on the premise that the sector is crowd-based.

In agriculture, which includes the value-added space, at least 350,000 jobs were affected with more than 200,000 being laced on unpaid leave.

In the manufacturing sector, 30,000 direct jobs were lost.

SMEs

At least 75 per cent of micro-enterprises closed shop in the last few months according to yet another survey by Kepsa.

Transport and storage had a closure of about 58 per cent of businesses, education (57%) while wholesale and retail trade had 50 per cent of businesses closed.

The sectors have however recorded resumption of business, albeit on a slow pace.

Loss of customers for the manufacturing sector was at 88 per cent, market access challenges (63%) and difficulties collecting accounts receivable, that is bills and tax refunds, at 63 per cent.

At least 75 per cent of micro-enterprises closed shop in the last few months according to yet another survey by Kepsa.

KEPSA

The environment, water and natural resources have seen 20,000 jobs lost, healthcare (20,000 jobs ), logistics and transport (10,000 jobs), security (10,000 jobs), and the energy and extractive 5,000 job losses were lost.

Some jobs have however been created through ICT in the sector; with educational technology which combines the use of computer hardware, software, and educational theory and practice to facilitate learning, creating a huge area of potential growth.

The National Treasury and Central Bank of Kenya(CBK) have downgraded 2020 GDP to below one per cent from an initial projection of 6.2 per cent.

Economic Recovery

It is however expected to improve this year with projections of 6.4 per cent, to be driven by the agriculture sector, improving international trade and recovery of businesses and industries post-Covid.

Globally, the World Bank expects the economy to expand by four per cent (4%) in 2021.

This is pegged on the assumption that an initial Covid-19 vaccine roll-out becomes widespread throughout the year.

However, the recovery will likely be subdued, unless policymakers move decisively to tame the pandemic and implement investment-enhancing reforms, the World Bank said in its January 2021Global Economic Prospects.

…Projected economic growth is pegged on the assumption that an initial Covid-19 vaccine roll-out becomes widespread throughout the year.

WORLD BANK

Although the global economy is growing again after a 4.3 per cent contraction in 2020, the pandemic has caused a heavy toll of deaths and illness, plunged millions into poverty and may depress economic activity and incomes for a prolonged period.

Top near-term policy priorities are controlling the spread of Covid-19 and ensuring rapid and widespread vaccine deployment.

To support economic recovery, authorities also need to facilitate a re-investment cycle aimed at sustainable growth that is less dependent on government debt, the World Bank says.

“While the global economy appears to have entered a subdued recovery, policymakers face formidable challenges—in public health, debt management, budget policies, central banking and structural reforms—as they try to ensure that this still-fragile global recovery gains traction and sets a foundation for robust growth,” said World Bank Group President David Malpass.

END

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