The Central Bank of Kenya (CBK) has released a worrying report detailing how more than a quarter of employees in small and medium enterprises (SMEs) have been compelled to work for free.
The statistics obtained in March 2021 showed that 27 percent of the staff in the SME industry, a major employment sector, were working without receiving any payment.
This is despite the fact that most businesses were recovering from the economic fallout which had been caused by the Covid-19 pandemic.
This is a sharp increase from 9 percent in 2020 when the country recorded the first case of Covid-19 leading to restrictions.
“A larger share of employment was unpaid, indicating a reduction in the quality of jobs,” CBK noted in a survey that had a sample size of 1610 respondents from different parts of the country.
During the period of March 2021 when most staff went home with nothing in their pockets, President Uhuru Kenyatta in consultation with the Ministry of Health officials had banned social gatherings, suspended movement into four counties which and further extended dusk to dawn curfew.
The measures put in place by the government greatly reduced the operating hours of most business hence impacting the total income generated by the SMEs.
The data shows that sales recorded by SMEs during this period reduced drastically to nearly half compared to pre-Covid-19 period. That shows how much the sector has been suppressed.
Businesses deployed salary cuts and sent employees on unpaid leave while others closed down completely highlighting the impact government restrictions caused to the SME industry which is the highest employer in the country.
Most of the staff who were working without pay were reduced to beggars depending on other family members for survival.
The CBK report says 54 percent of those affected were getting financial assistance from their families and friends, while 19 percent turned to Saccos as banks shied away from lending to SMEs.
The sector has been adversely affected by the impact of Covid-19. Despite the state lifting some of the restrictions, recovery has been a slow process.
The pandemic has knocked the sector so badly that it has reduced its chances of receiving loans and grants from continental banks and commercial banks.
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