Sanlam plans job cuts to stay afloat

Sanlam Kenya Plc #ticker:PAFR has joined a growing list of companies which have opted for job cuts to either protect profit margins or stay afloat, painting a grim outlook for the corporate sector.

The firm will next month layoff tens of its staff as part of a cost-cutting strategy aimed at trimming operating costs by more than Sh200 million.

Sanlam joins East African Breweries which targets 100 workers, State-owned East African Portland Cement (more than 800), Stanbic Kenya (225) and Telkom Kenya (575), in restructuring plans aimed at slashing payroll expenses.

The voluntary early retirement (VER) programme, which only affects Sanlam’s insurance business, primarily targets workers aged 50 and above but is open to younger staff.

The firm, whose shares are traded on the Nairobi Securities Exchange, on Thursday gave interested employees up to October 4 to apply for the scheme which will be effected at end of that month.

Chief executive Patrick Tumbo did not disclose the number of targeted staff, insisting the management has discretion on who leaves based on skills the company wants to retain.

The company, Mr Tumbo said, could not have afforded a restructuring programme last year when it plunged into a Sh1.5 billion net loss largely due to bad past investment decisions, prompting shareholders to recapitalise the business.

“You don’t send people away empty-handed. When the harvest is good, that’s when you can throw a party,” he said.

“At least we have something that we can shake hands with because we are not chasing them away. Some of them will become our business partners, others have expressed interest in becoming our service providers.”

The South African majority-owned firm has offered to pay a month’s salary for every three years of service, write off a third of outstanding in-house loans and retain the affected staff on medical cover for the remainder of the year.

They will also be paid for accrued leave days and pension dues in line with prevailing regulations and laws.

Employees who have been on its payroll for less than three years will go home empty-handed in terms of send-off package if they opt for the scheme or are affected.

Sanlam has 193 staff comprising nine at the group level, 110 in life business and 74 in general business.