Menace
of unemployment in Kenya
Unemployment occurs
when people are without work and actively seeking for limited slots of work
opportunities. The unemployment rate is a measure of the prevalence of
unemployment. According to International Labour Organization (ILO) report, more
than 197 million people globally or 6% of the world’s workforce were unemployed
in 2012. Market mechanisms are the major causes of unemployment skyrocketing
and ironically they also resolve unemployment.
Unemployment has become
a menace in Kenya since more jobs are lost than created. External environment
may have become an obstacle to creation of employment opportunities.
Interventions imposed on the labor market such as unionization, bureaucratic
work rules, minimum wage laws, taxes and other regulations many a time
discourage hiring of workers. The current regime should intervene strategically
to increase demand for labor lest unemployment becomes a national threat.
Eveready Battery
Company, Inc., an American manufacturer of battery brands recently reached a
decision to close Eveready East Africa’s Nakuru plant. Eveready was facing
cut-throat competition from cheap battery imports mostly from china. The
cost-cutting move meant the company had to retrench 99 employees thus adding to
unemployment menace. They instead opted to source batteries from Egypt, its
affiliate. “We blame cheap imports for the closure of our factory and several
others in Kenya,” said the plant manager. Indeed we are ‘creating’ jobs in
Kenya. Once Eveready, a dream employer for most graduates in late 1990s leaves
Kenya market then all is not well. We need to fix the causes and not the
symptoms.
Cadbury, a British
Multinational Confectionary company also announced closure of its Nairobi
factory at the end of October. Their reason being a global transformation
strategy meant to reinvent its supply chain. The move will leave about 300
Kenyans who worked in the plant either as permanent or casual employees become
unemployed. Upon closure the company will import its products from Egypt to
sell locally. As unemployment is becoming a menace, Egypt is set to benefit
from our misfortune. It is difficult to comprehend how you stop operations
making a significant number of active workforces to be unemployed without
consulting the stakeholders.
Kenya’s economy largely
relies on the agriculture sector which contributes 25.3% of GDP. 2.63% of the
national GDP is from horticulture while 1.29% is from the flower industry.
Horticulture is one of the top foreign exchange earners in Kenya, generating
approximately US$ 1 billion annually. All the good news is set to evaporate
overnight due to the effects of the new taxes by the European Union (EU).
150,000 people stand to lose jobs should horticulture industry collapse as it
has threatened to. Kenya’s European Union market share of about 38% is in
danger, the situation will get worse, and the consequences are better imagined than
experienced. When the backbone of our employment hope, agriculture, starts to
stumble instead of creating more employment opportunities then we are in
danger.
Diversification is the
best option for any entity that needs to stay afloat in the face of competition.
Local and foreign factories should review their marketing and operational
strategies to counter foreign competition. The multinational firms should also
increase operational efficiency to create employment opportunities instead of
jeopardizing them. The best option is for youths to embrace entrepreneurship as
they make significant percentage of the Kenyan active workforce.
written by:
Moffat Onyancha
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