Assessing the cost of job losses to citizens and the nation at large

BY NBM WRITER The average person is believed to be a few weeks from financial trouble without a paying job. This is the harsh reality that many Kenyans have woken up to in recent weeks and months as companies have continued to lay off staff. Although the signs of job losses in the Kenyan economy have been there, many individuals who have lost jobs have suffered financially, emotionally and even had strains on their relationships. There isn’t a specific study on the Kenyan population to ascertain the exact impact of job losses to the Kenyan population, several studies have been conducted elsewhere on this topic and the Kenyan scenario is no exception. In the long run, the studies show, job losses have had adverse effects not just to individuals, but the society and the economy of countries at large. From a macro level, job losses directly affect individuals; these may be the breadwinners of their respective families or individuals who just sustain themselves. Cost to the individual The average individual once employed is normally assumed to practice financial prudence and this means that they do not spend their entire income, that they set aside a small fraction of their total income for savings in case of any emergency. So when an individual loses his or her job, which more than often is their primary source of income, they dig into their savings to help mitigate the job loss. This in turn dwindles the savings and thus the average savings that individuals tend to have drift towards a zero. They eventually become dependent, and therefore a burden to the government, family, friends and society at large. Prolonged unemployment leads to skeptism and pessism at the value of education and training, workers who spend years out of work see no need to invest in long periods of training that some jobs need because, after all, they will just end up jobless. Does it make sense to spend five or six years training as a doctor or an engineer only to end up being unemployed? The years and resources are too huge to even contemplate such a scenario yet this is the harsh reality that Kenya stares at. This makes it unattractive for young individuals to take up training in some courses that require extensive training and the negative effect on this is that it robs the country’s economy the requisite personnel and skill set that is needed for some jobs especially those that need the technical know-how. By being unemployed over time, individuals lose their skills that might have been acquired over a long period of time, this too robs the economy talents that are usually difficult and expensive to acquire. Cost to the society While this too remains tough to measure, prolonged unemployment in a country destroys relationships. Those who are employed start viewing their unemployed counterparts as a liability and even may see them as ‘lazy’ especially when they have never lost a job themselves or do not know how tough it is to find a job once you have lost it. Crime may rise. A number of individuals steal or con others because they want to make their ends meet. Those who are employed may need protection from the unemployed and this forces channeling of scarce resources towards beefing up security Cost to the country Government collect taxes from the employed members of her population so that they can in turn provide them with better services; good roads, Medicare and security. Thus, when a number of her citizens lose jobs, there will be in turn lower levels of income tax collected from the dwindling working force and this will then force the government to seek other sources of finance like borrowing and, even worse, cut back on spending in certain sectors just to balance their expenditure and income. Companies will face low demand for their products and services, while the same companies will continue to face high government taxes. With the cost of operations rising, this will force some of the companies to shut down, lay off staff or even move out to other countries. This has been a major problem to several companies in Kenya like Cadburys and Eveready who were forced to move to other ‘friendlier countries’ to continue their operations. Economies of developing nations are banking heavily on automation and technology and thus countries need to incentivize their populations through scholarships to pursue technical courses, otherwise the skilled manpower of the nation will be compromised. It is always expensive for companies when they seek to recruit employees only to find that those around lack the technical knowledge they need. It thus forces them to bring in expatriates or spend more in the training of the staff to acquire the necessary skills. While the economists will majorly look at the cost of job losses in terms of figures and numbers and relate it to the economy and the Gross Domestic Product (GDP), the social costs to and individual, the society and the nation at large is becoming a major worry in many nations and Kenya is not an exception.

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