Details of A Proposed Unemployment Fund Meant To Cushion Workers After Job Loses

KEY POINTS:

  • Job loses has forced the manufacturers to think of a scheme which will cushion workers.
  • KAM says such a scheme will see workers who are involuntarily forced out of work continue earning some income.
  • Insurance scheme could be funded jointly by the workers and employers akin to contributions to the National Social Security Fund (NSSF) or fully by the State.
  • KAM suggest the proposed fund should be designed to allow workers to either work part-time or remain “formally with the business even if not working at all until normalcy.

Job loses have skyrocketed in the country since the start of Covid-19 leaving most people vulnerable and without any other source of income to sustain themselves.

This plight of job loses has forced the manufacturers to think of a scheme which will cushion workers.

In a policy proposal, the Kenya Association of Manufacturers (KAM) says such a scheme will see workers who are involuntarily forced out of work continue earning some income for the time they are unemployed or work part-time.

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The insurance scheme could be funded jointly by the workers and employers akin to contributions to the National Social Security Fund (NSSF) or fully by the State.

The policy toolkit, drafted by KAM jointly with consultancy firm KPMG, and offered to the Treasury and Labour ministry comes in the wake of Covid-19, which has triggered jobs cuts and unpaid leave.

“[They] should set up an unemployment insurance fund to pay benefits to covered workers who become involuntarily unemployed and meet specified eligibility requirements to cushion them in times of unemployment,” say KAM and KPMG researchers in the document.

KPMG and KAM suggest the proposed fund should be designed to allow workers to either work part-time or remain “formally with the business even if not working at all to ensure quick resumption of activity once normalcy returns”.

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KAM lead researcher Simon Githuku said Kenya could borrow from Germany’s and France’s frameworks in setting up such a scheme.

About 1.72 million workers lost jobs in three months to June when Kenya imposed coronavirus-induced lockdown that included restrictions on travel, mass gathering and a dusk-to-dawn curfew.

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Data from the Kenya National Bureau of Statistics (KNBS) shows the number of people in employment fell to 15.87 million between April and end of June compared to 17.59 million the previous quarter.

Most workers will be more than willing to welcome this move by manufacturers as it will act as a shield after job loses.

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