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By Ochieng’ Ogodo

As concessioning of the Kenya Railways Corporation (KR) draws nearer, the fate of its employees has come vigorously to the fore. Around 3,000 redundancies (5,500 including casual staff) are expected among the permanent Kenyan workforce of 6,200, once the South African-led Rift Valley Railways Consortium takes up its 25-year contract to run the railways of Kenya and Uganda early this year.

One of the contentious issues is the formula used to arrive at this number of planned redundancies. According to John Chumo, Kenya Railway Workers’ Union (KRWU) general secretary, the government has never given any clear explanation of how it managed to identify the scale of cuts required long before the opening of concessioning tenders.

“They have been quiet and this raises various questions about the government’s sincerity in the whole matter,” he said.

The proposed mass redundancies follow a previous reduction in staff numbers in 2002 from around 12,000 employees to the current 6,200. According to Chumo, the company argued that KR was spending an unsustainable 70 per cent of its operational income in servicing the salaries of employees. The cuts were expected to bring the monthly wage bill to a manageable 30 per cent of operational costs, and allow for the retention of the remaining employees.

The union says the plans affecting the current workforce are at variance with the government’s published economic recovery strategy for wealth and employment creation 2003-2007 and will plunge many families into extreme poverty.

There are also suspicions that the proposed redundancies will prepare the way for concessionaires to bring in cheaper casual labour in the near future.

Union demands

While the union continues to fight the principle of redundancies, it has come up with a list of demands in the event of the expected sell-off taking place.

“If the government insists on going ahead with this scheme, we will demand payment of three months’ salary for each of the years completed in service irrespective of grades, even casual employees,” said a spokesperson.

The union is also demanding a special contract severance payment of KES100,000 (around US$1,360). It wants employees housed by the corporation to be given at least three months to vacate. And it insists that future transport costs from work to the respective destinations of retrenched employees will thereafter be met by KR.

“Nobody should be removed from the houses until all their dues are settled and enough time also given to relocate,” the union spokesperson said.

KR public relations manager Judy Sidi Odhiambo claims another union demand, of retraining and counselling for retrenched workers, will be met, though no specific government programme has yet been revealed. “This time we will give it a human face, as opposed to past incidences,” she said. World Bank rail restructuring programmes usually allow for such programmes but generally are of little use if no alternative paid employment is identified.

Critical as well is the issue of retirement benefits, which have been a cause of concern even before the current concessioning process began. The union claims most of the 6,000 staff retrenched in the last round of cuts are yet to receive their pension and other dues. KR appears anxious to reassure workers that it has a professional commitment to meeting its obligations this time around.

The Kenya Railways Corporation staff retirement benefit scheme became operational in October 2005, and takes over pension responsibility from KR in January 2006. The new scheme will operate as a separate legal entity from KRC and will be managed independently by a board of trustees.

“KR will comply with all the requirements of the Retirement Benefits Authority (RBA) and will not interfere with the management of the scheme,” Odhiambo stated. She insisted minimum pensions would be raised, annual increases guaranteed and accrued liability amounting to KES12.645 billion (US$170 million) met.

“This will be covered by identifying assets in addition to an additional liquid funding for which the government has made provision,” she said.

Union fears

Despite all these reassurances, the union remains sceptical. It fears that the assets identified by KR to pay for the new pension scheme are yet to be realised.

“Once the concessionaire takes over, it will be difficult to follow up this matter,” Chumo explains. More fundamentally, he is far from accepting of the need for redundancies.

Chumo argues that KR is not making losses because of a bloated workforce. In his view the current workforce is lean, and the losses result from inept and politically instigated management. Currently KR is transporting 12 per cent of freight haulage from the port of Mombasa instead of the 80 per cent allocated to it by the Kenya Ports Authority.

Established in 1978, KR has presided over a business performance constantly on the decline. In 1983 KRC transported 4.3 million tonnes of freight. By the fiscal year 2004/05, the throughput had plummeted to a measly 1.89 million tonnes.

KR admits this performance has impacted very adversely on rail’s share of the transport market. In a report titled “Getting the rail back on track”, the company states: “As a consequence, despite increasing volumes of international and local freight traffic, KRC’s market share of freight has been on a steady decline from 70 per cent in the 1970s to 50 percent in the 1980s and less than 20 percent in the 2000s.”.

The inefficiency of KR’s service has prompted most businesses to opt for road transport to convey their cargo. The roads are today taking more freight traffic, leading to rapid road damage and resultingly high road maintenance costs. This also contributes to the high rate of road accidents, and high freight charges which result from reduced competition between the transport modes.

KR today runs up a deficit of KES 220 million every month. The corporation is in financial straits and cannot procure critical spares and maintenance input, pay for essential supplies, or even guarantee to pay staff salaries and monthly pension dues in time. It is currently reeling under an accumulated debt of KES 20.5 billion.

Revival efforts

Various attempts to turn around KR’s performance, especially in the late 1980s, have been in vain. In 1988 the government implemented the Short Term Action Programme (STAP) which financed procurement of some new locomotives (Class 94) and critical locomotive and wagon spares.

The programme also led to corporate reorganisation and reorientation into a business-led structure.

Under the Public Enterprise Reform Programme of 1992 KR was classified as a strategic state corporation, which was to be restructured but retained under the public domain. Staff rationalisation under this programme reduced the workforce from 22,000 in 1992 to around 12,000 by 2002.

There was also private sector involvement through outsourcing of the equipment maintenance service and allowing the Magadi Soda Company to operate trains on some of its networks. But KR performance continued to deteriorate. The government also withdrew its financial support.

These failures have led to the current shift in policy and the wholesale concessioning which, it is hoped, will give KR a new lease of life.

Ochieng’ Ogodo is a Nairobi-based freelance journalist.

Women will be hardest hit Says Grace Arwa, assistant national treasurer of the Kenya Railway Workers’ Union The retrenchment of employees will affect mostly women, the majority of whom are clerical and secretarial staff. The buyers are clear that they will need mostly technical staff, where women are very few. Where there are five clerks for instance, four will go, and one, with the use of a computer, shall remain. In the office where I work, the personnel section for the traffic department, we are four ladies and one man. They talk of us working longer hours though they know it is not easy for women because of their responsibilities at home. They say one secretary can cover for about four offices – these are lost openings for women. Most of these women are single parents. We just do not know what to do. According to the government’s retrenchment package, people will go home with one month’s salary for every year worked, which is nothing if you have a family. The government also insists that no pension will be paid until one reaches the age of 55. We feel we are stranded.