Kenya Power is set to lay off nearly 2,000 employees in a phased voluntary employee separation (VES) exercise it estimates will save it nearly Sh1.54 billion annually in staff costs upon completion in June 2023.
The management of the near-monopoly power distributor says the exercise will be implemented in three phases between May and June next year at a one-off cost of nearly Sh5.30 billion.
The exercise is aimed at cutting the workforce by 20 percent by letting go of 1,962 largely aging employees and replacing them with 830 younger, agile workforce at a cheaper cost. The successful implementation of the VER programme will see Kenya Power’s staff count fall to 8,711 employees in June 2023 from 9,843 in January.
Acting chief executive Rosemary Oduor explains in a circular to the board for approval that the move will cushion the firm against spiralling staff costs which have in the past five years been growing at a pace that is more than double the revenue generated.
“The company, because of low attrition rate, has an ageing and expensive workforce resulting in staff cost growing at nearly twice the rate of revenue growth,” Eng Oduor says in a circular to the Governance Committee of the firm’s board dated January 24.
Critical requirements
“In an environment where low operational costs and agility are critical requirements, productivity and quality of service have been negatively impacted.”
The interim boss added: “This calls for the company to put in place a human capital focused on a business sustainability plan that will enhance effective customer engagement, manage staff costs and infuse agility while at the same time managing knowledge transfer.”
The reforms come at a time the government has pledged a raft of reforms aimed at enhancing efficiency in the operation of the national electricity grid to lower cost of power for businesses and homes.
The first phase of the reforms has seen electricity bills fall as much as 15 per cent, with a similar drop expected after March.
Kenya Power’s staff costs grew at an average of 12 per cent to Sh17.61 billion between 2016 and 2020 against a growth of 5.4 per cent in revenue to Sh133.18 billion, an internal analysis of the company’s performance shows.
Three equal batches
Staff attrition — the share of employees exiting the firm — averaged 4.26 per cent between 2017 and 2021, a rate Ms Oduor says is lower than an ideal 10 per cent annually.
If approved, the VES programme will see staff leave in three equal batches of 654 on May 1, January 30, 2023, and at end of June next year.
The majority of the 1,962 staff targeted are artisans (571), technicians (180), engineers (155), clerks (151), drivers (138), craftsmen (131), commercial services officers (122), and meter readers (110).
The mass layoffs will create vacancies of 1,384 under the proposed workforce structure.
But only 60 per cent, or 830, of them — comprising 221 in management and 610 union employees —will be filled at Sh963.95 million, spread equally in the three phases.
The company estimates the cost of layoff and hiring new staff at Sh6.26 billion to be funded in three equal phases in May, January 2023, and June 2023.
The Kenya Transport and Allied Workers Union said Kenya Power is yet to discuss the layoff plans with it. “The union has not received any official communication on staff voluntary separation or intended redundancy if any. However, if the management intends to carry out staff reduction in either form, the union is open to social dialogue as regards to the terms and conditions of the separation,” union acting General Secretary Kosgey Kolil said. BY DAILY NATION