Govt economist faults staff layoffs

April 8, 2009

, NAIROBI, Kenya, Apr 8- A government official has faulted the move by some corporate organisations to lay off their workforce as the effects of the hard economic times continue to bite.

Planning Secretary Stephen Wainaina told Capital Business on Wednesday that the retrenchment would only derail government’s efforts to save the economy from contracting further.

“Retrenchment is not an option. If you retrench employees you affect the levels of productivity in the country because the people who would have contributed to the recovery process are not available to provide their labour,” he explained adding that when this happens economic growth is negatively impacted.

Mobile phone service provider Zain Kenya recently sent home 141 employees while the region’s biggest brewer, East African Breweries, has said it was considering right sizing its staff.

But while appreciating that the companies that are carrying out this exercise are doing so to weather the storm, Mr Wainaina reckoned they should instead try to utilise their reserves and invest in human capital.

He pointed out a skilled labour force is one of the key resources that the country has and which should be guarded jealously.

“We know that they are really suffering because of the second wave of the credit crunch but they should try to make use of the resources that they have saved in the past to ensure that they invest in people so that when the crisis abates we are able to move back on track quickly,” he advised.

Mr Wainaina said although currently the government does not have any plans to accommodate the people who are being laid off, it was monitoring the situation closely.

Developed countries have come up with rescue packages for the business community but the Ministry of Planning official said the Kenyan government should give incentives to encourage the companies not to result to this strategy and save jobs.

“Even though the government may not directly support these people (dismissed ones), this is something that cannot be ignored and the first step in such a process is to do monitoring,” he emphasised.

Asked his opinion on whether the government should result into printing money as a way of ensuring the availability of additional resources for investments like an economist had recommended, Mr Wainaina dismissed this as an unfeasible option.

He said should the government opt for this alternative, it would lead to runaway inflation (when production is not going up) which diminishes the level of confidence that the business community has in an economy.

“You have seen the case of Zimbabwe. Who would want to invest in a country where inflation is so high?” he posed.

Mr Wainaina proposed that the government should act fast to restore confidence that it has the right fundamentals to weather the storm and ‘lead from the front’.

“We know that this is a global problem but the government has to ensure that means that it has to monitor what is happening around the world and act accordingly,” he concluded.


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