Business & Financial News

Some 250 CEOs plan to trim staff Even as the Labor Market shows rallying signs

Kenya's economy has been growing sluggishly over the past decade, which means new jobs are not being created at a rate that is good enough to absorb the growing number of people joining the active labour force each year.

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By Isaac OGANGA

Some more than 200 company executives are planning to cut their workforce in the coming weeks in a bid to help tame their operation costs brought by a wobbly economy.

This is according a Central bank survey which polled 1,000 Chief executives in various fields, with 25.7 percent of those sampled considering sending their staff home.

This even as Kenyan private sector businesses reported a rise in employment numbers at the start of the year, according to the January headline PMI which rose by 49.8 during the month up from 48.8 in December, and was almost level with the 50.0 mark which signals a stabilisation.

It was a period that ended a four-month run of decline in business growth. However, the rate of job creation was only slight overall. Firms noted an increase in staffing often cited the hiring of short-term workers as demand conditions stabilised and outstanding workloads rose.

In fact, the volume of outstanding business at Kenyan firms ticked higher over the course of January, marking the first increase for three months. However, the rate at which backlogs rose since the previous survey period was only mild.

“The Kenya Purchasing Managers Index (PMI) rose in January as business conditions for the private sector stepped closer to stability. Agriculture, construction and service sector companies reported increased activity.

However, there were further declines in manufacturing and the wholesale and retail sectors, with firms remaining under pressure from insufficient cash flow. Still, jobs increased in January as demand conditions stabilized.

New export orders grew for an eleventh straight month as demand from the UK and Germany picked up, presumably due to Kenya’s weaker exchange rate,” said Christopher Legilisho, Economist at Standard Bank.

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