With the ravaging COVID-19 pandemic, businesses in Africa and the rest of the world are finding themselves in a catch-22 situation.
On one hand, the disruption occasioned by the highly contagious disease is already painting a bleak economic outlook for the short to long term, with pay cuts and layoffs being considered to slash running costs for businesses to survive. On the other hand, these companies have to take into consideration welfare of staff in their employ, who derive livelihoods from the firm and would be impacted by the layoffs.
It does not help that this unprecedented pandemic remains largely uncertain. No one can say for sure when the coast will be finally clear for business to roar back to life, normally or in whatever shape. In addition to this, even when business resumes, the future is blurred with risk of a lull kicking in initially or snowballing into the forecasted full-blown economic recession on a global scale.
With every additional confirmed infection and death, the noose tightens around necks of executives to pull the plug to maintain the business as a going concern. Productivity is at bare minimum, revenues are dwindling or totally drying up, with no reprieve in sight, yet there is payroll, alongside other fixed costs. Besides, the pandemic has introduced some new budget lines to cater for personal protective equipment, sanitizer, face masks, among others, in addition to the pressure to demonstrate good corporate citizenship by supporting causes against the virus.
While many businesses are increasingly being left with no option but to close shop, or at a bare minimum, enforce a pay cut, others are rethinking their strategy on the fly, to ensure business continuity. This has been the case with Kitui County Textiles Center in Kenya that has taken up production of face masks to meet surging demand and keep staff in jobs. This has helped it evade inevitable austerity measures as has been the case globally, where major carmakers and airlines have announced halting of operations, accompanied by suspension of staff contracts. In Kenya, many flower firms that were amongst the first to be hit by the restriction in travel froze pay and sent workers home.
In the midst of all this, some firms have taken the bold decision to publicly declare that no member of staff will be negatively impacted by the prevailing pandemic. One such firm is Philip Morris International that is promising employment security, financial stability and special recognition to its staff. It argues that support to staff is an integral part of its efforts to address impact of the pandemic on communities. In an announcement, the firm indicated that there will be no termination of employment during the crisis and all planned restructuring has been put on hold. Staff have also been assured of compensation during this period, irrespective of their ability to deliver on their duties. In a recent interview the Human Resources Director, Sub Saharan African Region, Philip Morris International, Khady M.N.Sarr, said,
“It is precisely in such difficult and unprecedented circumstances that as an employer we need to stick together with our employees. Whatever the impact the COVID 19 crisis will have on our business, we commit not to terminate any employment and to continue paying salaries whether or not our colleagues can fulfill their professional obligations. People are our greatest assets and here we are putting our money where our mouth is”.
On its part, Unilever has committed to protect its workforce from ‘sudden drops in pay, as a result of market disruption or being unable to perform their role, for up to three months’. The firm has undertaken to cover ‘employees, contractors and others who we manage or who work on our sites, on a full or part-time basis’. This is in addition to supplying all staff with a weekly supply of ‘safety hamper’ that includes hand sanitizer, hand wash, disinfectant and bleach. This is to help staff keep the virus at bay.
MTN Group, on the other hand, has opted to raise a Sh225 million (R40 million) Global Staff Emergency Fund from directors, management and staff to support those amongst them worst affected by the pandemic. This is in addition to MTN Nigeria as disclosed in a notification by the company secretary, Uto Ukpanah.
The bulk of enterprises however, have had to rely on measures by governments to cushion them from effects of the pandemic and safeguard livelihoods of staff. This has ranged from stimulus packages, tax relief, restructuring of credit and concessional financing. It is unlikely that these measures will be able to fully assuage demand for this much-needed leg up to totally avert job losses.
So far, some of the worst affected industries have been aviation and hospitality, which play an important economic role, with restricted movement grounding operations. Already, Kenya Airways has announced a pay cut for its senior executives and board members.
This is a difficult time for corporate leaders, striking a delicate balance to ensure long term interests of employees, alongside other stakeholder groups are taken into consideration. It is also a good time for firms to demonstrate that they really care about the welfare of staff, in their times of desperation.
Lucy Ndegwa is the HR Consultant and Managing Partner at Myers Group Limited