Home » Covid-19: furlough and lay-off may become permanent

December 6, 2021    By admin


Labour Day on 1 May 2020 in Uganda was a public holiday which may have gone unnoticed by many people. At that moment, many people are worried about the Covid-19 itself since it has claimed hundreds of thousands of lives already. The pandemic forced Governments to implement lockdown measures to reduce the speed of spread. Unfortunately, the virus continued to spread in February, March, April and now in May 2020. Secondly, citizens are worried about their income and wealth which has declined due to the after-shocks of lockdown measures. The International Labour Organization estimated that 195 million people worldwide could lose their jobs due to the pandemic. The African Union estimated 20 million job losses on the African continent. In Uganda, the hotel industry estimates 400,000 could lose jobs and flower industry is also limping.  

Where are the Ugandan figures coming from? A number of organization premises are closed due to the lockdown measures, but this does not mean that the organization has folded due to Covid-19. It is expected to resume business once lockdown is lifted. However, a number of organizations have already communicated to their employees to the effect that they consume their annual leave with pay. Once the annual leave is exhausted (inevitably due to the long lockdown), the employees could be on unpaid leave or salary cut (furlough) or could be laid off altogether. Most of these organizations are private and unregulated, hence are not required to file employee returns to a particular Government of Uganda authority or agency. However, the Uganda Revenue Authority could be able to observe a decline in number of employees and employment taxes via the monthly Pay As You Earn. However, these returns do not cover all the employees in Uganda.

The Uganda Government is set to announce a phase-by-phase lifting of the lockdown measures in May 2020. In the two months of lockdown, some employees were unable to work at all because their tools are locked up in office and their stakeholders or clients are also locked down. Some employees were able to work-from-home but majority of organizations experienced reduced income and revenue. Even after unlock down, social distancing will be required in most offices and public places. Consequently, not all employees will be at office at the same time. Perhaps only 30%-50% of all employees may be required at office premises at any point in time. Even the private and public transport system may require social distancing with private cars restricted to 1 or 2 people instead of 5-7 and a public minibus restricted to say 8 passengers instead of 14; hence fewer employees at work places.

The World Health Organization said the pandemic was “far from over”. Consequently, the furloughs and lay-offs may become permanent as organizations balance their budgets. If an organization cannot afford to pay all existing employees well and on time, it will collapse eventually. Therefore, employees could start thinking of creating their own jobs in the short-term and utilize their accumulated work experience and savings to startup. Once the NSSF Bill is passed by Parliament in 2020, some of these unfortunate employees who have lost jobs could access some mid-term savings. When the organizations return to good financial health, the jobs can be regained. For those not yet saving with NSSF or SACCO, it is a wake-up call to start saving 5-10% immediately to avoid being caught flat-footed in next crisis. Those employees still with jobs should not become complacent.