Employees income shrinks by 76pc over coronavirus

Monday, April 6th, 2020 00:00 |
Coronavirus test samples.

Noel Wandera @NoelWandera

Income for the Kenyan worker has reduced by 76 per cent on the back of Covid-19 pandemic, making it the highest in Africa, says a new report by research firm Consumer Insight Africa.

According to the research, which sought people’s forecast on effects of the pandemic on day-to-day life, Kenya has been disrupted at the rate of 86 per cent.

Based on an online research targeting 2,359 respondents from 10 African countries among them Kenya, Tanzania and Uganda between March 28 to 31, the research forecasts how long food and other essential supplies would last in the event of a total lockdown.

This echoes Stanbic’s purchasing managers index for March which notes that activity has declined sharply, as job numbers decrease amid cancelled or reduced new orders, leading to a steep fall in total sales.

New orders from foreign clients declined at a record pace in March as the pandemic led to a marked reduction in exports worldwide.

Trade relations

During that period, Kenyan businesses particularly noted a drop in new orders from Europe.

As a result, employment was lowered for the first time in 11 months as companies reported less pressure on both current workload requirements and backlogs. 

Input buying was likewise reduced, leading to a solid decline in inventory levels.

“Arguably, there will be a notable impact on economic output this year as supply chains globally are disrupted and negative demand shocks are felt too. But of course timing will be everything.

The longer the duration, the more acute or severe the impact will be,” said Jibran Qureishi, Stanbic regional economist for East Africa.

In efforts to curb the spread of the virus, employers are coming up with ways to work around the situation, with non-essential staff working from home as mitigation measures against the spread of the virus.

Consumer Insight Report notes that changes with respect to work have affected productivity levels, with respondents saying this new arrangement is either less effective or not effective at all.

Trade relations

“For Kenyans in particular, working from home does not seem to be working too well, with 81 per cent of those interviewed saying that it is either less effective than usual or totally ineffective,” said Consumer Insight Africa managing director Ndirangu Maina.

As workers and students try to wrap their minds around the new normal, businesses are finding themselves at a loss as they scurry to remain on top of the crisis amidst quickly changing consumer habits.

The report indicates that Kenyan consumers prefer home-care products at 49 per cent, food at 44 per cent, personal care products at 37 per cent, and painkillers at 31 per cent shunning cigarettes and alcoholic beverages whose purchases reduced by 72 per cent and 62 per cent respectively.

Stockpiling is becoming normal, with research findings indicating that hoarding in the face of the virus is likely to grow further in coming weeks.

Kenyans planning to stockpile is highest among African countries at 68 per cent, compared to Nigerians at 58 per cent and South Africans at 31 per cent, though 27 per cent of Kenyans interviewed say the food they currently have in stock is unlikely to last them beyond a few days.

Across the surveyed African markets, Ndirangu says the most credible news sources are TV, radio, and newspapers at the rate of 88 per cent, 87 per cent and 84 per cent respectively.

“Notably, even though there is a high usage rate of social media, this medium is less credible because of the pervasiveness of fake news,” says Ndirangu.

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