Uganda’s employment prospects not bad

Katherine Atim picked up a call from her manager informing her the contract she signed with the company had been terminated because it could not sustain its employees anymore. She had been working with the company for almost a year and when the Covid-19 pandemic started, she continued working from home.

“It was of course heartbreaking that after giving a company your best, you are just laid off in these difficult times and other employees are retained. It is very disturbing that the company is still operating and making money but decided to lay off people. Poor lady is dying with pending bills and with nothing to do,” Liza, her friend, says when she talks about Atim.
Mabel Nabulya works in the tourism sector. She says many tour guides including herself are now jobless. “Some of our friends had to refund money they had already used to book for the upcoming trips. A few tourists opted to postpone their trips but most asked for a full refund,” she says.

With the country on lockdown for more than a month as Covid-19 pandemic continues to impair economic activity, the labour sector is one of the most hit. As early as March, government expressed concerns about job losses and the extent is yet to be known.
“There is no number to the job cuts for now because we have asked employers to submit to us employee returns and those include figures on how each entity has been affected. We are still receiving those entries, once they are in, we shall do analysis and provide results,” Frank Mugabi, Ministry of Gender, Labor and Social Development communications officer said in a phone interview on Thursday.

Employees at risk
Mr Douglas Opio, executive director Federation of Uganda Employers (FUE) explains how demand in varying sectors is impacting employment. Tourism, hospitality, labor export, flower firms, transport among other sectors are operating at reduced capacity.
“The situation is quite serious in the tourism and hospitality sector. Most hotels are doing pay cuts of up to 50 per cent. They will not pay in May. Companies involved in externalization of labour are sending workers on unpaid leave,” Opio says.

The second edition of the International Labor Organization (ILO) Monitor on Covid-19 and the World of work, released on April 7, 2020 indicates that through the massive economic disruption, the pandemic is affecting the world’s workforce consisting 3.3 billion people. Employment is in a decline both in terms of number of jobs and hours of work.
Job losses and pay cuts are required as they are seen as a way to save. Human resource experts say staff costs is the biggest expenditure for most organisations. Whereas in the short term, redundancies will be costly, there are savings in the long term.

“It depends on the nature of the business. It might range from about 18 per cent to 52 per cent of the operating costs,” Opio says.
Assessment by Mr Herbert Zake, a human resources and public relations consultant forecasts that employees who are able to work from home will be able to retain jobs. Suggestions indicate the crisis will have more impact on some sectors than others.
For instance, he suggests there will be a rise in uptake of information communication technology (ICT) so these particular professionals will be in business as companies will want to have applications and other ICT solutions to serve their clients in the new normal. Staff in essential services will continue to thrive such as in health, education and restaurants doing deliveries.

Insurance might thrive as companies want to buy policies to cover unforeseen calamities like this one. Logistics may not change as deliveries have to be made.
“Retail businesses might suffer. Airlines, hotels, bars, events management businesses and those in the sale of non-essential items will suffer, decor, furniture, construction and other luxuries. People would rather save than invest in such because of the uncertainty ahead,” Mr Zake explains, “All organisations will relook at their working models and realign them to the new realities.”

The ILO report indicates sectors of accommodation, food services, manufacturing, wholesale, retail trade, real estate and business activities employ 1.25 billion workers around the world and depending on the country’s context, these workers are facing a drastic and devastating reduction in working hours, wage cuts and layoffs.
Some jobs will be lost forever but experts warn that this is dependent on the sector and business.
“Take for instance, waiters will lose jobs. Boda bodas making deliveries will thrive so a waiter can become a boda rider to make deliveries. Banks may close brick and mortar branches and instead use online banking and Automated Teller Machines on a grander scale. Branches are expensive to run. You must pay rent, utilities, staff, fuel, food for staff, run generators among other things,” Mr Zake says.

Others confirm that the current situation explains nothing about the state of the labor market which is largely informal, 80 per cent to put statistics to it. They note that majority of informal sector workers tend to get back to work pretty quickly after a shock given the low cost of investment required.
“The job cuts happening in the formal sector are more likely to be temporary and government must put in a stimulus plan to increase demand after the pandemic. Most of it will be recovered. New ones will emerge as well as a result of import substitution and new markets,” Mr Opio says.

Managing cuts
There are those strongly advising companies not to cut jobs in the name of the crisis. Accounting firm, PwC which is also a major graduate trainee recruiter says there won’t be any job cuts. If anything, it will be recruiting.
“If business is slow, the discussions should be with your staff. Tell them if you have been paying Shs1m, they can now earn half instead of losing them. There are many unemployed people but few are employable,” Francis Kamulegeya, PwC Uganda country senior partner says, “you may lay-off temporary workers because they are easy to get when business picks up, plus you don’t have permanent contractual obligations to them. Permanent workers should be shown loyalty.”

For the labour market to bounce back, some sectors and their businesses will need more help than others. Companies, through FUE, have called for government to defer payments such as National Social Security Fund (NSSF), Pay As You Earn, corporation tax, value added tax among others. They want to receive grants, subsidies as well as business interruption loans through Uganda Development Bank and other financial institutions.

This is besides providing loan guarantees for their businesses. Government has also been asked to increase the use of local content in its procurement, pay outstanding liabilities owed to employers, explore new market opportunities, review rates for utilities, increase investments in infrastructure and offer tax credits to employers who keep their employees during this pandemic.
According to FUE, government has made commitments towards increasing investment in infrastructure among other things. These proposals, experts say, should get the sector running again.

Government is biggest spender but if you think about how much money is spent and how many jobs are created, if you look at how many roads are built, the hydro power projects and the number of engineers or contractors, they are not that many so it is important to tap our local capacity through building industries, value chains,” Kamulegeya says.
“Deferrals are good because they help cash flow. Government does not have free cash to give out but can give you time to pay your obligations. I do not believe in a cut in corporation tax because it is paid out of profit. If you are going to make profit, maybe you need more time to pay tax and that is the deferral.”

BUSINESSES BOUNCING BACK
Need help. For the labour market to bounce back, some sectors and their businesses will need more help than others. Companies, through Federation of Uganda Employers, have called for government to defer payments such as National Social Security Fund, Pay As You Earn, corporation tax, value added tax among others. They want to receive grants, subsidies as well as business interruption loans through Uganda Development Bank and other financial institutions.

Thrive. The insurance might thrive as companies want to buy policies to cover unforeseen calamities like this one. Logistics may not change as deliveries have to be made.
The ILO report indicates sectors of accommodation, food services, manufacturing, wholesale, retail trade, real estate and business activities employ 1.25 billion workers around the world and depending on the country’s context, these workers are facing a drastic and devastating reduction in working hours, wage cuts and layoffs.