Non-bank private sector companies intend to shed 19 percent of the workforce they had last year, a July 2024 Central Bank of Kenya (CBK) survey shows, extending a series of cost-cutting measures in a tough economy.
This is an increase from March and May, when top non-bank executives told the CBK they would shed 18 percent of the workforce they had last year. It is also a notable change from the beginning of the year, when non-bank employers had indicated that they would shed 15 percent of the workforce they had in 2023.
“Respondents were asked about their expectations on the number of employees they expected to retain in 2024 compared with 2023. Bank and non-bank private firms showed mixed hiring expectations for 2024,” the CBK’s July Market Perceptions Survey said.
The survey targeted chief executives and other senior officers of 354 private sector companies, including 38 commercial banks, 14 microfinance banks and 302 non-bank private sector companies, including 84 hotels, through questionnaires administered online, via email and in hard copy.
According to feedback from company officials captured in the survey, more than 300,000 jobs could be shed as companies cut costs.
For example, non-banking executives said that of the employees they had last year, they "definitely won't" retain 19 percent of them in 2024. This suggests that 393,984 workers in the non-banking sector could be laid off, according to data from the Kenya National Bureau of Statistics, which showed that non-banking private sector companies employed 2.07 million workers in 2023.
“Respondents expressed concerns about the need to apply cost-cutting measures by utilising the available resources and maximising returns, the low and slow growth in business due to reduced incomes, reduced demand, high cost of operations and lower sales, high overheads, high wage bill and reduction in customers,” the CBK said.
Industries that have faced layoffs this year include the media, manufacturing, and trade.
The survey asked company executives to classify their current workforce into those they see they “definitely will”, “probably will”, “probably won’t” and “definitely won’t” retain this year, with their workforce last year as the baseline.
The non-banking companies also reduced the number of employees they guarantee to retain on their payroll this year from 7 percent of the workforce in 2023 to 6 percent. Since the beginning of the year, company executives have said that they will "definitely" retain 7 percent of their workforce in 2023, but in July they backtracked for the first time.
Firms across sectors continue to struggle, although bank executives are more hopeful of increased hiring, increasing the number of employees they "definitely will" retain this year to 28 percent from 24 percent last year.
“Banks largely expect to hire more in 2024 to support continued branch expansion and growth in business launch of new products, and to replace exiting staff,” the Central Bank said.
The survey notes that in other sectors, companies are relying on expected business growth, improved demand and the need to replace exiting staff to increase hiring.
