Kenya loses more than 1.7mn jobs due to COVID-19

Employment by private sector firms fell by 16 per cent between March and April as the Government of Kenya put in place a range of national containment measures. Moreover, the government of Kenya has proposed creation of the Unemployment Insurance Fund, part of the post-Covid recovery blueprint to ease the pain of loss of income. The state targets implementing the fund within the next financial year starting July 2022. Stephen Obiro, Head of Advocacy, Consulting & Partnership at Federation of Kenya Employers joins CNBC Africa for more.

Tue, 31 Aug 2021 10:38:41 GMT

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AI Generated Summary

Employment in the private sector in Kenya dropped by 16% between March and April as a result of national containment measures imposed due to COVID-19.
1.7 million jobs were lost in the informal sector and 173,000 formal jobs have been wiped out since 2015, exacerbating the unemployment crisis.
The Kenyan government has proposed the creation of an Unemployment Insurance Fund to aid laid-off workers but faces challenges in financing and implementation.

Kenya has been grappling with the devastating impact of the COVID-19 pandemic on its economy, particularly in the employment sector. A recent report indicates that employment by private sector firms plummeted by 16% between March and April as the government imposed strict national containment measures. The repercussions of the crisis have been deeply felt across various industries, including tourism, hospitality, and international travel. Stephen Obiro, head of advocacy consulting and partnership at the Federation of Kenya Employers, shed light on the dire situation facing the country's workforce. According to Obiro, a significant number of businesses struggled to adapt to the new working conditions, with only 10% of employers managing to transition 20% of their staff to remote work successfully. This left the majority of employees without work and companies grappling with disrupted operations, cash flow issues, and supply chain disruptions. The impact on the job market was staggering, with 1.7 million jobs lost in the informal sector and 173,000 formal jobs wiped out since 2015. Despite efforts by the government to implement measures such as tax reductions and exemptions to cushion workers from the effects of the pandemic, the situation remains dire. The removal of these supportive measures at the beginning of 2021 has further exacerbated the challenges faced by businesses and employees. Furthermore, recent tax hikes are expected to have adverse effects on the cost of doing business, hindering the country's economic recovery and potentially leading to prolonged high levels of unemployment. In response to the escalating crisis, the Kenyan government has proposed the creation of an Unemployment Insurance Fund to provide relief for workers who were laid off and are unable to find new employment due to illness. However, the implementation of this fund, slated for the next financial year starting in July 2022, presents its own set of challenges. Obiro highlighted the complexities of financing such a fund in a country with high levels of unemployment and the need for more immediate solutions to address the pressing needs of both employers and employees. The Federation of Kenya Employers advocates for strategies that focus on supporting businesses to enhance productivity, resilience, and market access as a more effective means of jumpstarting the economy and reducing unemployment rates.