Path to sustainable businesses and jobs stability in Kenya beyond layoffs

In recent months, Kenya has experienced a concerning surge in mass layoffs across various sectors, including banking, manufacturing, technology, and media.

This wave of job losses has not only disrupted thousands of livelihoods but also triggered ripple effects in the economy, straining household consumption, increasing social vulnerability, and weakening aggregate demand.

Although firms may view retrenchments as a quick solution to balance the costs during challenging economic times, the long-term implications on brand reputation, talent pipeline, and macroeconomic stability are far more damaging. It is time for a shift in approach.

Instead of relying on the easy option of layoffs, Kenyan firms can first seek a more holistic and cooperative approach that will not undertake a myopic course, one that takes into account the triangular relationship between financial sustainability, socio-economic welfare, and responsibility development.

In this regard, the government should also emerge as a practical economic partner and create an enabling environment enabling enterprises to provide jobs and yet remain operational.

Layoffs are often the symptom of deeper structural or macroeconomic pressures—declining revenues, shifting demand, inflationary costs, and technological disruptions. Nevertheless, they ought to be the last resort but not the default plan.

The structural forms of internal adaptation companies could consider include wage renegotiations, role redistribution, unpaid leaves and rotations, or partial working hours restrictions. These options provide workforce sustainability and institutional knowledge required to recover after any crisis.

It would also be possible to save costs through executive compensation freezes, delays on non-essential capital investments and downsizing of redundant operations by digital enablement without suffering the social scar of job losses.

A stakeholder capitalism lens has to be used in the private sector, and the companies need to make it clear that profitability and employee welfare are not mutually exclusive concepts.

Firms facing acute financial stress situations due to liquidity pressures need to communicate quickly to the appropriate government ministries, such as the Treasury, the Ministry of Labour, and the various sectoral regulatory bodies.

Kenya needs to institutionalise a corporate-government distress support framework, similar to models in Germany or Singapore, where companies under duress can apply for temporary relief in exchange for preserving employment levels.

This relief may be in the form of partial or complete payroll tax deferrals, short-term corporate deferrals of tax, wage subsidies to low-level workers, and access to concessional working capital through State-backed facilities.

The way forward for Kenyan companies must be one of innovation, negotiation, and shared responsibility. By rejecting the binary choice between survival and social impact, firms can emerge more resilient and inclusive. Layoffs should be the exception, not the norm.

With proactive policy support, fiscal incentives, and strategic foresight, Kenya can chart a course where businesses thrive, and citizens work with dignity.

These measures require explicit conditionality, such as maintaining a minimum percentage of employees during the support period and reporting quarterly on progress.

Kenya should also consider the establishment of a National Employment Sustainability Fund (NESF) to assist companies in navigating economic shocks.

Through joint public-private partnerships, the fund would serve as a stabilisation cushion to businesses in times of contraction. Subsidies that are funded over time by government, donor agencies and industry players can help prevent mass layoffs of employees without putting the firms out of business and can provide them with time to reorganise.

Tax breaks ought to be given to companies that demonstrate intentions to upgrade and re-skill employees and not make them redundant. As an example, a company that redesigns a redundant position as a new unit in relation to digital operations should receive tax credit or even training allowances.

Organisational agility and cost-efficiency mechanisms are some of the measures that companies ought to invest in to be competitive.

This entails having business processes digitised, using shared services models and remote working plans where possible to reduce overheads. There is also strategic outsourcing, demand forecasting and supply chain diversification that can cushion the firms against shock in revenues without having to retrench.

Moreover, re-skilling and cross-functional training of employees can give them the authority to assume hybrid jobs so that the company will remain productive despite a smaller workforce. By repositioning the workforce as a value-creating asset rather than a cost burden, firms will build resilient organisations fit for the future economy.

The solution to the problem of massive layoff cannot be a lone actor; mass layoff is a coalition of the willing. There should be a coordinated dialogue between private companies, government agencies, labour unions, and development partners and devise solutions that should be sustainable.

Such multi-stakeholder discussions must be geared towards coming up with industry-based resilience compacts that would see to it that jobs are averted even in turbulent economic times.

The writer is an Economist and a Business Expert. Email: [email protected]