Nearly a quarter of firms in the manufacturing and services sectors have cut full-time jobs in the last three months on the back of weaker demand for goods and services, deepening the crisis in the labour market.
A Central Bank of Kenya (CBK) survey on chief executive officers (CEOs) of over 1,000 companies shows that 23.5 percent of manufacturers and 23.9 percent of firms in service sectors such as hospitality had by June 2025 reduced the number of full-time staff than they did at the end of March.
The same survey showed just 11.8 percent and 10.9 percent of manufacturing and service firms, respectively, increased the number of full-time workers during the review period.
A majority—64.7 percent in manufacturing and 65.2 percent in the services sector—maintained their staffing levels, reflecting a cautious hiring stance amid weaker demands for goods and services.
The survey showed 41.2 percent of manufacturing firms told CBK they have seen a decline in sales compared with the levels in March while 52.9 percent posted a growth. In the services sector, 38 percent saw a decline in sales while 35.9 percent saw a rise, even as 26.1 percent saw unchanged sales.
The shedding of full-time jobs has come in the period 47.1 percent of the manufacturers reacted to reduced sales by cutting on production volumes and therefore requiring fewer employees.
The survey usually targets CEOs of key private sector organisations including members of the Kenya Association of Manufacturers, Kenya National Chamber of Commerce and Industry, and the Kenya Private Sector Alliance.
In a separate CBK survey capturing market expectations of 37 banks and 302 non-banking firms such as manufacturers and hoteliers, more than a third of the firms ruled out increasing their workforce this year.
“Non-bank players had mixed expectations about hiring in 2025. Thirty-four percent of the respondents indicated that they would not hire due to rising operational costs, increased taxes, and levies, delayed government payments, and plans to leverage ICT to reduce manual operations,” said CBK in the survey.
The outlook deals a blow to job seekers in an economy that last year created 782,300 new jobs, down from 848,100 a year earlier, according to data from the Kenya National Bureau of Statistics (KNBS) which showed 90 percent of the jobs were in the informal sector.
On the other hand, 34 percent of the respondents indicated that they would hire to support business expansion, replace existing staff, and attract new talent.
Prospects for an expanded workforce were higher in banks where 44 percent said they would “definitely” increase headcount on the back of continued branch expansion, adoption of digital strategies, and replacing existing staff.
Previous CBK surveys have been pointing to weakened demand across sectors, with manufacturing singled out as the most hit.
CBK noted in the latest survey that more respondents in the manufacturing sector recorded subdued business activity. This is reflected in lower levels of demand orders, sales growth, and production volume.
The persisting subdued demand and decline in sales have seen CEOs in the manufacturing sector ask the government to intervene through a stimulus programme.
However, the latest proposals from the Treasury are suggesting a hit, with the government targeting to lift tax exemptions on a number of goods.
