Diaz: Employees still integral to businesses amidst COVID-19 pandemic

Diaz: Employees still integral to businesses amidst COVID-19 pandemic

When the government implemented strict measures to contain the COVID-19 pandemic including the partial closure of the economy, job losses became a predictable eventuality in the aftermath.

As His Excellency President Uhuru Kenyatta would later put it, the decision to partially shut the economy was a hard choice between two rights- the clear winner emerging to be the health and indeed a good decision for the nation safety.

Among the worst hit sectors were tourism and entertainment as local flights, hotels, bars and entertainment joints shut down.

The dusk to dawn curfew which first commenced at 7pm to 5am further trimmed daily work hours below the tradition eight hours represented by the 9-5pm routine.

Back in April, the evening rush hour moved back to 3pm as Kenyans from all walks of life dashed to beat the after dusk curfew.

Subsequently, the low output characterizing the COVID-19 period forced employers to trim staff bases in a cost management venture that saw thousands more sent home on unpaid leave.

Jobs losses and salary cuts.

Job losses continue to characterize the country’s labour force to date despite an ease to restrictions to manage the pandemic.

However, the economy has been rebounding revealing an ironic turn out of affairs.

For instance, according to the monthly published Purchasing Managers Index (PMI) by Stanbic Bank which measures the performance of the private sector, business activity improved for a second straight month in August.

The demand for goods and services had rebounded with an improvement in customer footfalls.

The macroeconomic environment was indicative of expansion with new export orders rising to all-time record during demand with demand from local goods in Europe being the highlight.

Nevertheless, local firms continued to shed jobs in what emerges as a continued sacrifice of employees in a move to drive down business costs.

For instance, staff costs declined for a fifth straight month in the survey’s series with the report indicating firms still viewed costs as too high.

1.7 million

August’s private sector performance came just days after the release of the second quarter report by the Kenya National Bureau of Statistics (KNBS).

According to report covering April to June, Kenya had lost a further 1,716,604 jobs in the period.

The number of the employed tumbled to 15.9 million at the end of June from 17.8 million in March.

The revelation which added to the loss of in-excess of 200,000 jobs between January and March reveals the dent created in the country’s labour force with the shrinkage in the number of the employed signaling a worse off dependency ratio.

The clear number of the unemployed however remains masked by a huge number of individuals outside the workforce which includes individuals who have been long-term unemployed.

Moreover, the jobs report is a mere look at the rear-view mirrors with the worst having already struck.

During the period, the country would learn of the collapse of key businesses including Nairobi’s iconic InterContinental Hotel.

Troubled carrier Kenya Airways (KQ) would fly into an even greater turbulence as the suspension of passenger travel pushed down revenues by nearly 40 per cent in the first six months of the year alone.

The firm declared redundancies as part of its strategic plan to stay in the air with hundreds of staff members set to exit the firm at the end of September.

The loosening of restrictions including the lift of an intercounty travel ban between the counties of Nairobi, Mombasa and Mandera along with the revision of the night-time curfew are however expected to ease the pain slightly but control safety protocols.

However business invested in bars and other entertainment joints such as clubs and cinemas are yet to mark relief as many now switch to new business ventures.

Employees first

The customer is always right- goes a popular cliché. The belief of putting the customer first likely puts employees into second footing and perhaps inform the decision to sacrifice staff in a cost cutting venture.

Ironically however, businesses have on average seen a pick in demand and are presently dealing with works backlogs informing a linear option to keep employees on board.

While not all business have multiple options on staff retention, entities who have established a quick rebound in operations can easily retain their staff members many of whom are already on reduced pay including staggered unpaid leave days.

In assessing this decision, enterprises must establish the importance of employees.

According to Liz Ryan, the Chief Executive Officer and founder of the Human Workplace, product development and quality are directly dependent on the existence of employees ranking them higher than customers.

Influence over customer relationships and an employer’s brand are also tied to employees who emerge as an integral and crucial part of organization.

While automation and digitization makes for an alternative to keeping staff, customer experience has dictated the importance of a human touch in the engagement of clients with businesses.

The human face to face, with mask on, or real voice on communications makes a substantial difference in outstanding customer relation management.

As such, employers should be looking to keep their full complement of staff to achieve maximum output.

Alternative cost-cutting

Dan Price, the CEO of Fintech based firm Gravity in the US emerged as an unlikely hero last year after taking a one million dollar pay cut to earn less than a tenth of his original salary in an effort to boost the livelihoods of his employees.

The pay cut allowed the company to pay an average 70,000 dollars a year.

Domestically, management can deploy a near similar strategy to keep their full complement of employees.

A benefits rationalization program across companies could allow enterprises to save on costs without necessary trimming their staff bases.

However, the private sector cannot go at it alone. Unfortunately, Kenya may or has no means to establish significant buffers to employment such furlough schemes. Nevertheless, the government still has a few tools to intervene.

For instance, the government can rapidly actualize the recently adopted Sh56.6 billion stimulus package which incorporates key remedies to businesses.

Among the top intervention include the implementation of the Sh3 billion MSME credit guarantee scheme which would open the taps for crucial funding the private sector.

Additional measures include the consistency of release of VAT refunds and pending bills to suppliers.

We also need to encourage the youth to grow existing and start new entrepreneurship especially with support from the private sector business programs.

Let’s keep safe and lift others in the next quarter as Christmas and end year draws closer in the coming final 2020 quarter.

Chris Diaz,
Director EABC and Trustee Brand Africa