The Reality of COVID-19 Related Job Losses

By December 2, 2020Evolve Insights

As it appeared in the Daily Nation on December 1st 2020
Dr Lucy Kiruthu

Do you know someone who has lost their job? Do you know someone who is on unpaid leave because of the COVID-19 pandemic? It is most likely that you do. In the last eight months, it has not been business as usual. I have spoken to several Kenyans whose jobs no longer exist. I know of many others whose companies are downsizing and some whose businesses are really struggling to stay afloat. The COVID-19 pandemic has completely disrupted the world of business and the labour market. In mid-March 2020, the International Labour Organization (ILO) had predicted that the pandemic could result in the loss of 25 million jobs worldwide. The actual number of jobs lost so far is considerably higher than estimated with labour income globally having dropped by 10.7% according to ILO. In this last quarter of 2020, ILO is estimating that 245 million full-time equivalent (FTE) jobs will be lost.

The COVID-19 pandemic has severely contracted the global economy. Many businesses irrespective of their location, size, or industry have been disrupted. Last week, ILO released a survey of 4,500 enterprises in 45 countries focusing on business disruptions due to the pandemic. The survey showed that the greatest challenge experienced by businesses is insufficient cash flow to maintain staff and operations. As such, many businesses have reduce their operational expenditures and postponed capital expenditures. Other challenges according to the survey are disruptions in the supply chain. Unable to maintain their staff, many businesses have had no choice but to make the tough call to lay off. In Kenya, we might not have the actual statistics of jobs lost but I believe they are in millions. Our travel and tourism sector has been seriously hit. The reality of the massive job losses continues to hit hard across the country. It is unfortunate that we have no provision in law for unemployment benefits as is common in the developed countries.

To assess the impact of COVID-19 on businesses in Kenya, many conferences have been held and several surveys conducted. Between 14th September and 15th October, the Kenya Private Sector Alliance (KEPSA) for example conducted a survey to assess the impact of COVID-19 on businesses and jobs. 58% of the respondents indicated that they had retained all their employees and 4% had hired. The survey pointed out tourism, education and construction as worst hit by retrenchments. Unlike large and medium-sized corporates that may offer severance packages, many micro and small businesses are not able to do so.

The pandemic continues to be a major source of job insecurity in Kenya and beyond. It is not clear how many more jobs will be lost. Being laid off is not easy; it is a very emotive process. As such, business leaders need to handle it with care and compassion. How they communicate the decision for lay off is important and so is the support they give the employees to assist them transition. As family and friends, we too need to show compassion to those that have lost their jobs, as they are not to blame. Fortunately, it is not all doom and gloom; some have taken the job loss as an opportunity to rethink their career direction. Others have put on their entrepreneurship hat and are settling into new sectors. Some are reskilling and strategizing ready to make the next move.

Dr Lucy Kiruthu is a Management Consultant and Trainer. Connect via Twitter @KiruthuLucy

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