Kenya: Firms Freeze Jobs Growth Plans on Covid Slowdown

Jobseekers queue to submit their applications. FILE PHOTO | NMG

A majority of Kenyan firms do not expect to increase their number of employees this year, citing ongoing economic hardship due to the Covid-19 pandemic.

A market perceptions survey carried out by the Central Bank of Kenya (CBK) ahead of the Monetary Policy Committee meeting held last week shows that non-banking private sector firms, especially in the agriculture sub-sector, are slightly more optimistic about the prospects of creating new jobs compared to banks.

The survey found that 32 per cent of the polled non-bank private sector firms were either expecting an increase or strong increase in employment levels this year compared to 2019, while 46 per cent forecast employment levels to remain the same.

In the banking sector, 28 per cent of the lenders said they expect an increase in jobs, with a majority (64 per cent) expecting job levels to remain unchanged while only eight per cent projected reduced jobs.

“Most banks expected to maintain their current workforce, though some expected expansions in the course of the year that would require more staff, while others did not plan to replace any exiting staff,” said CBK in the survey report.

“Agriculture sector respondents reported improved demand and expected hiring in 2021 compared to 2020, while others cited reduced production, and those in the tea sector cited the new Tea Act, which requires restructuring and cutting labour costs through outsourcing strategies.”

The survey was carried out in the first three weeks of March, which was before the March 26 announcement of new, tougher anti-Covid measures that include a lockdown on Nairobi, Nakuru, Machakos, Kiambu and Kajiado counties, longer national curfew hours, closure of bars and sit-in dining for restaurants in the five counties.

In the survey, 43 per cent of the players in the tourism sector had expressed expectations of increased business and therefore employment, drawing their optimism from the rollout of the vaccination programme in the country.

This optimism is however likely to be punctured now by the new restrictions locally, and also the tit-for-tat measures announced by the Kenya and UK governments to restrict visitor entries from each other’s jurisdictions.

The sector was the worst hit by the pandemic last year, and was just beginning to show signs of recovery before the latest blow.

In the manufacturing sector, the majority of respondents (48 per cent) said they expect employment levels to remain unchanged, with 31 per cent expecting an increase while 21 per cent see a decrease in jobs. Those who were pessimistic about new jobs cited higher production costs and depressed demand for their products.

The CBK survey targeted senior executives of 316 private sector firms, comprising 39 banks, 14 microfinance banks (MFBs) and 263 nonbank private firms including 63 hotels.

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