Socio-Economic factors affecting employee management in Kenya

September 1, 2010 | IHRM Journal

The priority given to individual as opposed to the collective relationship varying between companies depending on the values of management. Employee relations management is about ensuring the organizational change is accepted and then implemented.

The business environment in which employers operate is constantly changing, and it is important for them not only to be aware of the specific shifts in employee relations policies resulting from such changes, but to monitor the external environment to anticipate possible changes and developments and draw up a contingency plan to deal with these changes when they arise. The social-economic and political environments locally as well as globally have been continuously changing over the last two decades. With the advent of globalisation, the changes that occur around the world have contributed to and helped shape the Kenyan socio-economic as well as political environments.

1. SOCIO-ECONOMIC CHANGES

a) Education

Over the years, there has been an emphasis on the importance of education in improving the standard of living in the country. As a result of this, the level of education of the general workforce in Kenya has increased with a large percentage of the population having attended at least secondary school education. The effect of this is that employees are more aware of their rights and cannot be taken for granted.

The elite employees are very clear on what their rights are and hence employers challenge is to ensure they comply with the law, against which they risk being sued by their employees if their needs are not met. Development of human capital (knowledge, education, training and skills) and expertise of firm’s workers is crucial to management. The interest in employment is moving away from manual and clerical workers to knowledgeable workers who resist commands. Commands as common in the military may not motivate such employees in business environment.

b) HIV/AIDS

The HIV/AIDS pandemic is one of the most profound developments in the social arena which has had effect on all aspects of the society including the economy. The effect of HIV/AIDS on the organization spans from the death of employees to the cost of medical care. The government has enacted laws to protect the rights of persons with HIV/AIDS and ensure freedom from discrimination at the workplace. These laws include the HIV/AIDS Bill, and The Employment Act.

The Employment Act, No.11 Section 5, No employer shall discriminate or harass directly or indirectly, against an employee or prospective employee on grounds of race, colour, sex, language, religion, political or other opinion, nationality, ethnic or social origin, disability, pregnancy, mental status or HIV status There is growing involvement of the law in Human Resource Management issues now than before, including laws of hiring, firing, equal opportunities and conduct of industrial relations. The net effect is that there is more need to follow the law to avoid legal suits and costs associated. For instance, a firm cannot simply hire and fire nor discriminate against employees with HIV/AIDS without attracting legal action against management.

c) Work Life balance

Recognition of the importance of the worklife balance by many organizations is now pushing employers to develop flexible working arrangements in order to maintain a productive work force. Furthermore the law protects employee such that an employee is entitled to at least 1 rest day in a week and in cases where they work beyond normal working hours they are to be paid overtime.

d) Workforce Diversity

Socially the workforce is becoming diverse. More women, minority group members and older workers enter the work place in large numbers. This brings differences in demographic factors such as age, sex, etc and variation in values and cultural norms to the fore. Effective management of this diversity is very important to management as it may affect employee relations in the industry.

Following the new Employment Act that allows for women paid maternity leave of 3 months without forfeiting their leave, employers have fought this hard through the Federation of Kenya Employers arguing that it will translate to huge costs on the part of the employers. The most affected would be firms whose workforce is mostly comprised of women such as in flower farms. This is because in their absence, during the maternity leave they would requireto be paid while the employer seeks alternative resource to carry out the duties as business has be go on.

The steady increase in greater female employment gives rise to new career conflict. Marriage ties can undermine secrets of the organization and business intelligence. When an employee has a family relocation is disruptive especially where children are in school. The problem of selling a home, leaving friends, purchasing new house, establishing a family unit in a new community, problem of relocating doctors and identifications of firm to carry out appliances repair for a family. These worries may affect performance and may result in employees refusing to take a transfer.

This may result into disciplinary action being taken. Many older employees are likely to remain in employment due to termination of traditional benefit plans. For instance, in the Civil Service, the government has realized that the Pension Scheme is unsustainable as more and more people live longer after retirement.

The government is therefore considering increasing the retirement age from 55 to 60 years. This retaining of older people is likely to occasion the need to retrain older workers in new technologies. There is also the challenge of generation gap which may lead to conflicts and affect the relations between the older and younger employees.

2 ECONOMIC CHANGES

The economic environment is influenced by the macro-economic policies a particular government chooses to implement. Government policies in respect of the levels of Employment, Inflation, Taxation, Interest rates, Exchange rates have a direct effect on employee relations.

This is because they have an impact on the relative balance of bargaining power between the buyers and sellers of labor services and thereby the rules and regulations that govern employment conditions. For example if we are in a period of high inflation, high levels of taxation and high interest rates, the stability of business is threatened. This can lead to higher levels of unemployment and a consequent reduction in employment conditions or redundancies and layoffs. Even when individuals are in work, a less favorable economic climate will impact on the relative balance of bargaining power. The government’s economic and legal policies have major implications for the outcome of employee relations behavior.

When economic policies are directed towards the creation of full employment and the maximizing of economic growth, the relative bargaining power of the employer is weakened but that of the employee is strengthened. Government economic policies give the highest priority to reducing inflation by lowering household and corporate spending and reducing public expenditure, then the demand (spending power) in the economy will fall, and as a consequence so will the demand for labour.

The result will be ‘labour surpluses’, giving rise to redundancies and increased unemployment. If government introduces legislation favorable to employers’ interest, the bargaining power of employers relative to employees is evidently strengthened. If conversely, a government introduces legislation favorable to the interests of employees and trade union, the bargaining power of employees relative to employers is strengthened. Some of the changes that have been experienced in the Kenya are inclusive of the following:

• There has been a steady increase in the inflation rate (around 18% in Feb and rose to 30% by end June 2008) which has in turn resulted in an increase in the cost of living in the country. The number of people who are living below the poverty line are said to be on the rise with many families living on less than a dollar per day.

• Additionally, the unemployment rate has been steadily rising over the past two decades with a large percent of the country’s youth being most affected. Emphasis is shifting from creating formal employment for the youth to economically empowering them to enable them become self-employed.

• Economic changes in the global arena such as rising oil prices directly impacts on the Kenyan economy by resulting in rising fuel and consumer prices.

By William K Birech is a Senior HRO/Administration at the Rural Electrification Authority and can be reached on wbirech@rea. co.ke or wbirech7@yahoo.com