The Nation Media Group, Kenya’s leading media house in terms of earnings, has today announced temporary pay cuts for its employees as COVID-19 crisis in Kenya continues to squeeze revenues.
After two months of putting on a brave face, NMG has finally yielded to the inevitable cost-cutting measures taken by its peers as business shrinks due to reduced economic and social activities across the country. The government has announced strict measures, such as locking down key high-risk towns and social distance protocols, to contain the spread of Coronavirus.
Higher pay, more pain
Like other media houses, NMG is out to protect jobs, but at the cost of everyone feeling the pinch. NMG has structured its pay cuts according to pay scale, which exempts those earning below Ksh50,000 from the shave.
The pay cut ranges from 5% for the lower end of the target group and 35% for the high-end, including the CEO, Mr Stephen Gitagama. Even directors have taken a shave on their earnings.
Staff earning below Ksh50,000 – drivers and other support staff – form about one-third of Nation Media’s nearly 800-strong employees. The pay reduction takes effect from 1st May 2020.
The staggered pay cut is intended to cushion those who earn less from deep financial pain. “Management has so far undertaken several cost-saving interventions to keep the business running and continue to deliver services to our customers. As part of these measures, the Board of Directors have taken a reduction on their directors’ fees,” says NMG CEO Stephen Gitagama.
NMG had initially braved the Covid-19 impact, paying full salaries for two months since the outbreak was announced in mid-March, even as its rivals moved swiftly to cut their losses.
“This is an extremely tough decision, and we understand the impact this will have on you and your family,” Mr Gitagama says in a circular dated 29th April.
“However, please be assured that we have considered several other alternatives, and the decision taken is the most sustainable option in the current circumstances. This unavoidable action is temporary and will be reviewed every three months depending on the company’s performance and as the COVID-19 situation evolves.”
Royal Media Services, which runs Citizen TV and other radio stations, was the first to cut staff salaries by 20-30%, followed by Radio Africa Group and Standard with a similar scale. Mediamax stretched it further by slashing salaries by up to 50%.
Employees at Mediamax and unionisable journalists at Standard Group have contested the salary decreases in court. But Mediamax CEO Ken Ngaruyia has given his employees an ultimatum to take up the pay cut or face unspecified consequences.
Fall in advertising
Meanwhile, Nation Media Group’s Move is not surprising. Since COVID-19 outbreak was announced and counter steps enhanced, it was just a matter of time. Revenues from advertising and circulation at NMG have been falling 40%, as newspaper readers keep to their homes, and advertisers hold their budgets.
It is not clear whether all staff have been sold to the idea, but the company has engaged various financial institutions, including the Nation Sacco and banks, to restructure staff loans during the Covid-19 crisis period. Sources said it has also restructured company loans it has extended to its staff to buy cars and houses.
“Where required, we shall provide you with letters to present to your financial services providers for extension of any special incentives and/ or moratoriums that you may be eligible for as a result of this temporary salary reduction,” he said.