Eight Nairobi Securities Exchange #ticker:NSE (NSE)-listed firms spent Sh2.7 billion to lay off workers last year as others cut their employee numbers through natural attrition, disclosures in the companies’ annual reports have shown.
The staff redundancies raise queries on the ability of Kenya’s economic growth to generate quality jobs for millions of unemployed youths. The economy grew by 6.3 percent last year but some analysts have said this was not felt in some sectors. The economy rebounded last year from a growth rate of 4.9 percent in 2017, but companies continued to shed off workers citing a difficult business environment.
Banks dominated the list of job cuts through early retirement schemes and natural attrition, reflecting the increasing shift to digital banking which requires less staff numbers. The annual reports show that six listed banks that disclosed their employee numbers let go nearly 1,600 staff in one year. This is an indicating that retrenchments are much bigger when companies that do not disclose their staff redundancies are taken into account.
Barclays Bank of Kenya (BBK) #ticker:BBK , National Bank of Kenya (NBK) #ticker:NBK , Standard Chartered Bank of Kenya #ticker:SCBK , KCB Group #ticker:KCB and Housing Finance (HF) #ticker:HF all spent money on layoffs as did Britam, the insurance firm that owns shares in HF.
StanChart spent Sh611 million last year to lay off staff, being 3.5 times higher than the Sh173 million spent in 2017. The redundancies drove up staff costs for the year by 8.9 percent to Sh7.65 billion despite the overall number of employees at the end of the year dropping by 20 due to replacements.
StanChart closed the year with 1,567 employees, 53 percent of who were female. There were 1,238 employees in management while 247 were unionisable, being an increase by 34 from the previous year.
Another lender, NBK, spent Sh541.25 million to lay off 112 employees. This saw staff costs rise 12.5 percent to Sh4.41 billion.
“To drive efficiency and increase productivity, the Group implemented voluntary early retirement,” says NBK which is in takeover discussions with rival lender KCB.
KCB proposes to maintain NBK as a stand-alone subsidiary after acquisition, and thereafter fully integrate the lender into KCB Bank Kenya Limited within a period of about two years.
KCB says this transitional integration period will help streamline human resources, systems, processes and procedures ‘‘to realise the full value of the envisioned efficiencies and productivity synergies post-acquisition.’’
KCB’s staff size dropped for the third year in a row to 7,192 employees. The lender’s employee numbers dropped by 263 from 6,483 at the end of the previous year, cutting its payroll costs by Sh2.14 billion. This saw the bank incur Sh175 million on redundancy costs, down from Sh2 billion spent the previous year. BBK followed the trend, spending Sh479 million on retrenchment as staff numbers dropped for the fourth year in a row. It conducted a voluntary staff exit scheme with 78 full time staff taking it up. The total headcount, however, dropped by 142 to close the year at 2,128 employees. From having 6,900 employees in 2007, BBK’s headcount has been falling over the years on digitisation efforts and search for increased efficiency.
HF, which posted the first loss in over a decade, spent Sh403 million on redundancies last year, up from Sh368 million spent in 2017. It had announced that it would trim its workforce by nine percent (about 36 employees).
“We also undertook a redundancy exercise intended to streamline the business in tandem with the digital strategy implementation,” says the mortgage financier in its annual report. In insurance, Britam capped a difficult year with Sh664 million spent on layoffs as it sunk into Sh2.2 billion net loss — its worst performance in over 12 years. The insurer laid off 110 staff in an early voluntary exit programme having announced in March last year that the layoffs would enable it remain agile, relevant and responsive to changes in market conditions. This saw its operating expenses rise 12 percent to Sh8.24 billion
“Staff were offered a voluntary early retirement package which included the payment of all contractual dues and an ex-gratia payment which was well above industry practice,” Britam discloses in its latest annual report.
“There is pressure, as with any listed company, to control employee expenses and increase profits and returns for shareholders,” the insurer says.
Layoffs were also recorded by British American Tobacco, which spent Sh29.8 million on exit schemes. Deacons East Africa and ARM Cement, which fell into administration, also laid off employees.