Flower jobs wither as costs soar

The flower industry is facing headwinds with more sector players laying off more staff.

One of the largest local growers, Finlay’s Kenya, sacked more than 1,000 workers this week, bringing the number of people who have lost their jobs in the industry to 5,000.

Industry players blame high taxation, rising costs of inputs and lack of government support for the job cuts. Growers have been opting out to set up businesses elsewhere.

With appetite for Kenyan flowers relatively steady in key markets such as Europe, growers can only blame the high cost of doing business for the ensuing discomfort in the sector.

The industry is a top foreign exchange earner. Export earnings from cut flowers grew by 37.7 per cent to Sh113.2 billion and accounted for 73.6 per cent of total fresh horticulture exports earnings in 2018, according to the Economic Survey 2019 by Kenya National Bureau of Statistics. 

Kenya Flower Council (KFC) chief executive Clement Tulezi says the government is to blame for the current mess.

Labour costs

Terming Finlays Kenya’s decision as ‘normal’, Tulezi said the cost of production is at an all-time high, but the government has ignored their plight.

“We learnt of Finlays’ case two years ago. They said that the cost of labour was too high and they could not cope given the flower prices,” said Tulezi.

This, coupled with the high cost of energy, farm inputs, land and double taxation from both the national and county governments, is making investors shy off from the market.

“We control a sizeable amount of the gross domestic product but the government is ignoring us and instead concentrating in some moribund industries that make no economic sense,” said Tulezi.

KFC also took issue with levies by county governments which according to them, should not apply to exporters.

The laxity by the taxman to pay tax refunds has also been biting sector performance. 

Tulezi said some flower growers were owed up to Sh600 million in value added tax refunds, adding that majority were finding it difficult to operate with huge deficits.

East Africa Chamber of Commerce and Industry director Njuguna Kamau said Naivasha, which hosts 68 per cent of flower farms, has had its fair share of losses after Karututi, one of the largest flower farms, closed shop, rendering 4,000 workers jobless.

“Oserian and other smaller companies have also laid off workers in cost cutting measures negatively affecting the once vibrant economy of the lake side town,” he said.

Kenya Plantations and Agricultural Workers Union Naivasha branch secretary Ferdinand Juma said the uncertainties put the future of workers in a precarious position.

To adopt, most growers have changed employment terms to contracts, meaning there is little workers can do to renegotiate their monthly wages.

“Most farms are employing workers on short-term basis against the labour laws while some are outsourcing,” he said.

Oserian and Shalimar flower companies are outsourcing services. They have let go of employees, only to re-hire them on new contract terms.

“This spells doom for the sector that was once considered the preferred destination for many employees and the government, through the Ministry of Labour, can only intervene and save the situation,” said Juma.